Choice Of Foreign Market Entry Modes For Engineering Company

Entry mode is an institutional arrangement that makes possible for the entry of a company's services, technology, human skills, management or other resources into a foreign country. Selecting an inappropriate entry mode can lead to significant negative consequences. The purpose of this research was to present various entry modes, compare characteristics of each entry mode, and raise the selection recommendation for international construction industry.Case studies identified and defined 9 basic entry modes utilized in the by engineering company including: joint venture company, sole venture company, joint venture project, sole venture project, BOT project, licensing, strategic alliance, representative office, and local agent. Basic entry modes can be combined throughout the entry into a single foreign market. These entry modes can be classified into a dichotomy: permanent entry versus mobile entry, contractual entry versus investment entry, cooperative entry versus competitive entry, and operation entry versus supportive entry. The defined groups are helpful in the identification of each entry mode. However, when contractors select entry modes, they do not directly look at these groups. Instead, they make decisions based on the strategic effects of different entry modes including the risk exposure, return, control, and resource commitment.A review of prior literature on foreign market entry modes and business practices of some international contractors led to the identification of factors which may influence the entry mode selection. There are: host country factors, home-host country relationship, home country factors, and company internal factors(firm size and multinational experience).Entry mode selection is a multivariate decision problem, no single factor is likely to have a decisive influence on the entry mode for companies in general, it can only be said that such factors encourage or discourage a particular entry mode. The results were interpreted in descriptive manner for selecting superior entry modes to penetrate target foreign construction markets.