Topic 2 - Entry Modes

Question 1

Why do companies use Mergers & Acquisitions (M&A)?

Answer 1

Fast market access, gain local knowledge, eliminate competition

M&A strategies enable companies to quickly adapt to new markets and leverage existing resources.

Question 2

What are common market entry barriers?

Answer 2

Legal, cultural, economic restrictions; tariffs; high startup costs

These barriers can significantly hinder companies looking to enter new markets.

Question 3

Name the 5 main entry modes.

Answer 3

• Exporting
• Licensing/Franchising
• Joint Venture
• Greenfield Investment
• Acquisition

Each entry mode has its own advantages and risks.

Question 4

What is a Greenfield Investment?

Answer 4

Building a business from scratch in a foreign country

This approach allows full control over operations but involves higher risks.

Question 5

What is a Joint Venture?

Answer 5

A shared company owned by two firms (usually local + foreign)

Joint ventures can facilitate market entry by leveraging local expertise.

Question 6

What is the waterfall entry strategy?

Answer 6

Sequential market entry—one country at a time

This strategy allows for focused resources and reduced risk.

Question 7

What is the sprinkler entry strategy?

Answer 7

Simultaneous entry into many markets

This approach can maximize market presence quickly but requires significant resources.