From the figure, we can see different entry modes for new entrants in market, let’s discuss about each kind of entry modes and will come to the point which kind of entry is suitable for the proposed company which can lessen the barriers. The selection of an appropriate entry mode in a foreign market can have significant and far-reaching consequences on a firm’s performance and survival (Davidson, 1982; Gatignon and Anderson, 1988; Root, 1994; Terpstra and Sarathy, 1994). For example, an inappropriate entry mode may block opportunities and substantially limit the range of strategic options open to the firm.
Exporting is commonly used when someone talks about export mode in general. According to Chung & Enderwick (2001:443) one of the most common options are export modes. Bradley (2005:225) speaks about exporting in general terms as the quickest way and also the easiest way of entering a new foreign market. This approach is initially used to gain knowledge and experience of the new market (Chung & Enderwick 2001:443; Porter 2004:277).
Exporting: – In Chung & Enderwick (2001:443) article it is said that the exporting is a low commitment of resources & Low investment choice. It has the disadvantages with low profit return and little control over the firm. After the companies gain the knowledge and experience the needs from the host country that can now try to increase their presence in the new market and start to use other export strategies (Chung & Enderwick 2001:444; Bradley 2005:227).
Albaum & Duerr (2008:308) explains indirect export as when the exporting manufacturer uses a firm in the domestic country to do the exporting for them. The negative effect of the entry mode is that the company has no control over the international market entry strategy and it does not allow the firm to have their own entry strategy either.
Direct exporting occurs when the producer sells directly to the importer or buyer located in a foreign country (Root 1994:57; Albaum & Duerr 2008:321). With this type of entry mode very little or no knowledge about the foreign market is needed from the manufacturers’ point of view (Root 1994:57). This entry mode has three advantages, the first one is partly or fully control over the foreign market plan, the second on are concentration of marketing effort on the manufacturer’s product line. Third advantage is quicker feedbacks information from the target market, which can help adapt the product faster. The last advantage according to Root (1994:57) is better protection of trademarks, goodwill, patents and other intangible property. One requirement for this entry mode is that the exporter needs to learn the procedures and documentation of export shipments and the international payments arrangements to be able to use this mode.