Five Possible Entry Modes for Foreign Market Development

) There are five possible entry modes for foreign market development namely

a) Exporting; b) Licensing; c) Franchising; d) Joint-venture; and e) wholly owned subsidiary. Of which, the mode of exporting might be only served for exporting physical products from home manufacturing areas to host markets--foreign markets. For service industries or service firms such as services providing by restaurant and hotel are merely operated by the other four entry modes and/ or the combination of the four for the consideration of business benefits, costs and risks in long term development of foreign market.

2) Since you do not specify what service industry, time of entry and business scale for Japan market entry decision, I would give you some generic pros and cons in setting up a wholly owned subsidiary

Pros: a) good protection your technology and know-how; b) ability to engage in global strategic coordination; c) ability to realize location and experience curve economies

Cons: high risks and costs since you are not familiarized with the culture of host countries, what market nature and what customers like and dislike.

3) Joint-venture agreement with the business partners of host countries could be 50/50 or 51/49 that depends upon who needs whom more. The shareholder of majority could exercise power over its partner, but conflicts of interest would happen eventually. Fuji-Xerox's JV-agreement by 50/50 is good example to be at win-win situation for Xerox's products are manufactured in Japan or in the third countries to tap Japan market successfully, where the Japanese consumers traditionally exile non-Japanese brands.

The benefits of JV-agreement are a) access to the host partner's knowledge; b) shared development costs and risks; c) political dependency. However it is a) inability to engage in global strategic coordination; b) inability to realize location and experience curve economies; c) lack of control over technology and know-how

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