Final answer:
Global market-entry strategies include exporting, which has the least risk; licensing, which allows for royalties with minimal involvement; joint ventures, which involve shared risks; and direct investment, which offers the highest control but also the highest risk.
Step-by-step explanation:
Global market-entry strategies are methods that companies use to enter foreign markets and these strategies vary in the degree of risk they present, the control and commitment of resources they require, and the return on investment they promise. The four main strategies are:
- Exporting: Selling goods or services produced in one's own country to customers in foreign countries. This has the least amount of risk but also offers lower return potential. It requires minimal investment as the business may use existing production capacity and distribution channels.
- Licensing: Involves granting a foreign entity the right to use a company's trademarks, patents, or technology in exchange for a license fee or royalties. It is a low-cost entry strategy that can offer steady income streams with minimal involvement.
- Joint venture: Occurs when two or more companies form a new business entity to share resources, risks, and profits. It offers a higher control than licensing, and risks are shared between the companies.
- Direct investment: Refers to a domestic firm actually investing in and owning a foreign subsidiary or company. This strategy involves the highest risk but can also lead to the highest returns and involves significant control and participation in the foreign market.
By understanding these strategies, firms can more effectively evaluate their international expansion plans and choose an approach that best aligns with their global business objectives.