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4 - Select an entry mode

Published online by Cambridge University Press:  05 June 2012

Xiaowen Tian
Xiaowen Tian
Affiliation:
University of Nottingham
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Summary

A mode of entry is an institutional arrangement chosen by the firm to operate in the foreign market. This decision is one of the most critical strategic decisions for the firm. It affects all the future decisions and operations of the firm in that country market. Since each mode of entry entails a concomitant level of resource commitment, it is difficult to change from one entry mode to another without considerable loss of time and money (V. Kumar and Velavan Subramanian (1997, p. 53)).

When a transnational corporation plans to move into a new overseas market it has to, first of all, think about how to enter this market. There are many ways or modes by which a TNC can enter a new market, such as exporting, franchising, licensing, joint ventures and wholly owned subsidiaries. Selecting an entry mode is one of the most important strategic decisions that a TNC has to make when it enters the Chinese market, so important that it may determine its success or failure in China. In this chapter we first review the literature on entry mode selection in international business studies, and propose an approach to the classification of market entry modes. Subsequently, in section 2, we illustrate the market entry modes available to TNCs in China, and highlight major changes in the entry modes that have been adopted.

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Managing International Business in China , pp. 72 - 93
Publisher: Cambridge University Press
Print publication year: 2007

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References

Agarwal, S., and Ramaswami, S. N. 1992. ‘Choice of foreign market entry mode: impact of ownership, location, and internalization factors’. Journal of International Business Studies 23: 1–27.CrossRefGoogle Scholar
Buckley, P. J., and Casson, M. C. 1998. ‘Analyzing foreign market entry strategies: extending the internalization approach’. Journal of International Business Studies 29(3): 539–62.CrossRefGoogle Scholar
Chu, W., and Anderson, E. 1992. ‘Capturing ordinal properties of categorical dependent variables: a review with application to modes of foreign entry’. International Journal of Research in Marketing 9: 149–60.CrossRefGoogle Scholar
Kumar, V., and Subramaniam, V. 1997. ‘A contingency framework for the mode of entry decision’. Journal of World Business 32 (1): 53–72.CrossRefGoogle Scholar
Pan, Y., and Tse, D. K. 2000. ‘The hierarchical model of market entry modes’. Journal of International Business Studies 31 (4): 535–54.CrossRefGoogle Scholar

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  • Select an entry mode
  • Xiaowen Tian, University of Nottingham
  • Book: Managing International Business in China
  • Online publication: 05 June 2012
  • Chapter DOI: https://doi.org/10.1017/CBO9780511810558.005
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  • Select an entry mode
  • Xiaowen Tian, University of Nottingham
  • Book: Managing International Business in China
  • Online publication: 05 June 2012
  • Chapter DOI: https://doi.org/10.1017/CBO9780511810558.005
Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • Select an entry mode
  • Xiaowen Tian, University of Nottingham
  • Book: Managing International Business in China
  • Online publication: 05 June 2012
  • Chapter DOI: https://doi.org/10.1017/CBO9780511810558.005
Available formats
×