Answer:
There are various modes of engagement that companies can use to enter international markets. These include exporting, licensing, franchising, joint ventures, strategic alliances, and wholly-owned subsidiaries.
Exporting involves selling goods or services produced in the home country to customers in another country. This mode of engagement is relatively low risk, but companies may face challenges such as tariffs, transportation costs, and language barriers.
Licensing involves giving another company the right to use a company's intellectual property, such as patents or trademarks, in exchange for royalties. This mode of engagement allows companies to earn revenue without having to invest in foreign operations, but it also means giving up some control over the use of intellectual property.
Franchising is similar to licensing, but it involves giving another company the right to use a company's business model and brand name in exchange for fees and royalties. This mode of engagement allows companies to expand rapidly without incurring the costs of opening new locations, but it also means giving up some control over the franchisee's operations.
Joint ventures involve two or more companies coming together to form a new entity to pursue a specific business opportunity. This mode of engagement allows companies to share the risks and costs of entering a foreign market, but it also means sharing control and profits.
Strategic alliances involve two or more companies working together to achieve a common goal without forming a new entity. This mode of engagement allows companies to leverage each other's strengths and resources, but it also means sharing control and profits.
Wholly-owned subsidiaries involve a company setting up a new operation in a foreign country that is wholly owned and controlled by the parent company. This mode of engagement allows companies to have complete control over operations, but it also means incurring the costs and risks of setting up a new operation in a foreign country.
When expanding into international markets, companies must consider the economic, legal, governmental, political, regulatory, cultural, and other environments in which they operate. For example, a company expanding into Ethiopia must consider the country's economic conditions, such as the availability of resources and infrastructure, as well as the legal and regulatory environment, such as laws governing intellectual property and foreign investment. The company must also consider cultural factors, such as language and customs, and political factors, such as stability and corruption.
One example of a multinational firm operating in Ethiopia is Coca-Cola. Coca-Cola has been operating in Ethiopia since 1959 and has invested in local bottling operations. The company has faced challenges in Ethiopia due to the country's economic conditions, such as a lack of infrastructure,