Entry Mode & Local vs Global

Pick an entry mode in one sitting: first decide, activity by activity, what travels unchanged and what must be adapted, then weigh three feasible modes against your own priorities. The order matters: the mode answers a need and is not a preference.

Entry mode: strong research base (meta-analyses broadly support the transaction cost logic, with effects that vary by context). Standardize or localize: mixed (the two pressures are real; the neat organizational types built on them have only moderate support as description). The weighted table is the library's own structure: it organizes judgment and does not predict results.

Use it when:

• You have chosen a target market (for example with 7.11 Market Screening Table) and must now decide how to enter.
• You are unsure how much of your offer, pricing and service to change for the new market.
• A partner or distributor has offered a deal and you want to know what you give up by accepting it, or you must justify the mode to others.

Skip it when:

• You have not yet checked readiness or the market: start with 7.10 Internationalisation Check and 7.11 Market Screening Table.
• The mode is already decided and only the operating model is open: go straight to the Optional sections on decision rights and the first 12 months.

Two research streams meet here and pull in a useful tension. Entry mode research stands on strong ground: Anderson and Gatignon (1986) framed the choice as a trade-off between control and resource commitment, where the right amount of control depends on how easily your advantage leaks and how much local knowledge you lack, and Hill, Hwang and Kim (1990) tied the same choice to strategy and transaction conditions. The standardize-or-localize question draws on the integration-responsiveness framework (Prahalad & Doz, 1987; Bartlett & Ghoshal, 1989), where the evidence is more mixed: the two pressures are real, but the types built on them have only moderate empirical support.

Neither question has a universally right answer, only answers that fit the pressures of one market and the advantages you bring. That is why the local-or-global table comes before the mode. Heavy localization pushes toward partner-rich modes, a mostly standardized offer can travel lighter, and a mode chosen first is preference wearing analysis. Weighted scoring helps only if the weights are set before you see the scores (Keeney, 2002). The trade-offs line is the actual decision: every mode gives something up, and naming it separates choosing from hoping.

Scoring a mode the law blocks wastes the exercise. Check ownership limits, licensing requirements and local content rules first, from the official source for the country.

Strong answer: "Foreign ownership in this sector is capped at 49 percent (illustrative): wholly owned modes are out; JV, licensing and export remain." Not: "Probably some restrictions."

Target market, strategic goal, advantages to lead with (from 7.15) and exportability constraints (from 7.16):

Ownership or licensing limits, with source:

Three feasible modes (of export, licensing, franchising, joint venture, acquisition, greenfield), and the modes ruled out with the reason:

Illustrative example: the business, weights and scores are made up. It continues the oat drink producer from 7.10 and 7.11, this time for Germany.

Context: reach about thirty grocery stores in 18 months. Gate: no mode is blocked by law, but label rules apply to all. Shortlist: export through a distributor, licensing, joint venture. Acquisition and greenfield are ruled out (too much cash, too slow).

Local or global: standardize recipe, brand and quality standard. Localize labels and compliance, retailer terms and customer service in German.

Weights: control 3, low risk 3, low investment 4, speed 5, learning 3, protection 3 (sum 21, maximum 105). Totals: export 76, joint venture 66, licensing 64.

Decision: export for the first 12 months. Trade-off: less control over shelf execution and slower learning about shoppers, for fast listings and no fixed local cost. Central: recipe, brand, price floor. Local: promotions and shelf visits. Risk: the distributor favors bigger brands; mitigate with quarterly targets and an exit clause. Revisit the joint venture after ten listings.