Panasonic- Participation Strategy in Brazil Essay

Panasonic- Participation Strategy in Brazil - Essay Example Organizations have a range of entry modes to choose from when entering a foreign market. The choice of entry mode depends on the specific requirements of the business. Primarily, it depends on the degree of control the business wants over its operations and the risk that the mode implies (Schmidt 2010, p.18). Depending on the level of control, entry modes can be grouped into high/full controls or low/shared controls. There are advantages and disadvantages to each mode of entry, which would be discussed subsequently. 3.1.1. Exporting Exporting is done by businesses who are intending to sell home-produced products in foreign countries. It is one of the most widely used modes of entry because of its simplicity. It saves the business the cost of setting up a production facility in the target country. It is preferable because it allows the business to penetrate the market slowly and steadily, without risking much. Although it gives an insight into future expansion, exporting, however, doe s not allow for a quick feedback to its customers. Exported products have tariffs levied on them and there are a number of logistical obstructions in delivering the product from the producer to the consumer (Ireland, Hoskisson and Hitt 2011, p.176). 3.1.2. Licensing Licensing is another choice, offering benefits such as lesser capital investment and evasion of trade barriers. It allows a firm operating in the target country to use the company’s intellectual property and resources for introducing the business; albeit under the control of the licensor. Thereby, licensing does not offering autonomy over operations; in fact it makes the licensee rely more on the licensor. Licensing has lesser risks associated with it but it does not promote profitability in the long run nor ensures if the licensor would not exploit the company’s resources, becoming a competitor itself (Ireland et al 2011, p.177). 3.1.3. Strategic alliances Strategic alliances are yet another form of entry mode whereby the business works together with a company based in the local market. On the foremost basis, it allows the firm to gain strategic advantages, bypass trade barriers and to gain economies of scale. However, it requires that a lot of research is undertaken to find a company with which to corroborate with. The consequences of working with a company whose values and core objectives are not aligned with the company expanding abroad can completely undermine the purpose of such a venture. The degree of control can also cause significant ripples (Anonym 2008, p.16). 3.1.4. Foreign Direct Investment Compared to other entry modes, this mode of entry is generally feasible and allows the organisation to gain complete ownership rights of the facility without any share with a partner. It offers the organisation greater control over its operations and allows a deeper insight into consumer behaviour in the target country. Companies which cannot export products due to their characteristi c nature benefit greatly from such direct investment (Cullen and Parboteeah 2008, p.283). However a major drawback of such a venture is that it is time-consuming and not only requires extensive knowledge and skills transfer, but is also demanding in terms of capital and management (Ireland et al 2009, p.159). It is also takes time to establish the brand