The basic alternative modes of entry into a foreign market have been defined. The remainder of this chapter is devoted to a description of the process of choosing one or a combination of these modes. Though a company's unique comparative advantage will generally dictate the choice of a specific entry mode, certain general principles are applicable to the process of identifying this mode.
Franklin Root has developed a useful, logical framework for deciding on a foreign market entry strategy. Acknowledging that the complexities and uncertainties involved in the decision-making process are of immeasurable proportion, Root recognized that the question of how managers should decide on the right entry mode for a given product and a given target country/market could not be answered by a mathematically neat computer program. Rather, what is imperative is that managers systematically examine and compare the different alternative modes. 1
Root identified three rules that managers tend to follow in deciding on the right entry strategy:
- The naive rule
- The pragmatic rule
- The strategy rule
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