Advantages and Disadvantages of Entry Modes

Entry Mode

Advantage

Disadvantage

Exporting

Ability to realize location and

experience curve economies

High transport costs

Trade barriers

Problems with local marketing agents

Turnkey

contracts

Ability to earn returns from

process technology skills in

countries where FDI is

restricted

Creating efficient competitors

Lack of long-term market presence

Licensing

Low development costs and

risks

Lack of control over technology

Inability to realize location and

experience curve economies

Inability to engage in global strategic coordination

Table 14.1a

14-14

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