1.

Exporting

Exporting is a standard international expansion method. It involves marketing and direct sale of
domestically manufactured products in foreign markets.

Exporting is one of the most established and traditional methods of international expansion. It does not
require setting up manufacturing units in the target country. Hence, the investment is low.

Pros

-Exporting ensures fast entry into the market

-The degree of risk is low in exporting

Cons

-Low degree of control

-Inadequate access to local market information

-High transportation costs and risks

2. Licensing and franchising

Licensing is a popular method of international expansion. Here, a licensor gives a licensee the right to
use its intellectual property (like patent, copyright) for a royalty fee.

Suppose you own a restaurant in the US popular for a special Chicken wrap. Now you want to expand
the business to India. Producing the product in the US and sending it to India is not possible in this case.
And setting up a production factory requires high investment and resources.

Pros

-This mode of international business expansion allows fast entry

-The cost of entry and risk is low

Cons

-The degree of control is less

-There is a risk of legal or contractual issues

-The franchisee or licensee may become a competitor

3. Partnerships & strategic alliances

Among the international expansion models, partnerships and strategic alliances are mutually beneficial.
It involves forming partnerships or alliances with local firms in the new market.

This method of international expansion allows both businesses in partnership to achieve their goals.
For example, you form a strategic alliance or partnership with a local firm in a new market. It will benefit
you because your access to market information will be easy. On the other hand, the firm will also benefit
from your resources. Hence, it’s a two-way deal and beneficial for both.

Pros

-The risk involved is low.

-The investment reduces due to shared costs between partners

-Partnership firms or strategic alliances are considered as local entities

Cons

-The business-related costs are higher compared to methods like licensing or exporting

-There might be integration issues between cultures

4. Mergers & acquisitions

A merger is when two businesses merge or come together. And acquisition is when one takes over the
other.

One of the best international business expansion methods, mergers and acquisitions, lets you enter the
new market quickly.

With mergers & acquisitions, you are either merging or acquiring an already established organization.
So, several resources, supply chains, and distribution channels become yours. Thus, the entry is pretty
quick and easy.

Pros

-Mergers & acquisitions offer quick entry to the new market

-Provides easy access to various resources, market information, supply chain, distribution channels, etc.

-The risk involved in this entry mode is comparatively low

-Apt for industry consolidation

Cons

-The method involves high investment as currencies play a significant role

-There might be integration issues with the home office

5. Greenfield venture

Businesses often use this as one of the entry modes of international expansion. This method involves
establishing a new, wholly-owned subsidiary in the foreign market.

Also, known as Foreign Direct Investment (FDI), this method is comparatively slower as it takes time to
set up the operations in the new country.
Greenfield venture provides direct ownership and a high degree of control. However, the method also
demands high-level investment and resources.

Hence, most companies use this method of international expansion only after they have gathered
experience in foreign markets.

Pros

-It offers a high degree of control

-Provides new opportunities to the business

-Appropriate as a long-term international expansion strategy

-Businesses can gain local market knowledge easily

Cons

-Greenfield venture requires high investment

-It involves high risk

-It takes time to enter the market using this method of international expansion

-The international expansion entry mode demands high resources and complex strategic planning

6. Working with global PEO or EOR

Besides these five common methods of international expansion, this is another entry mode often used
for entering new markets.

Partnering with a global PEO also ensures that any entry mode you select becomes enhanced. A global
PEO or EOR works with you and assists you to determine how well-suited your infrastructure is for the
expansion process.

A PEO conducts the research and collection processes and analyses the legal implications. They can also
support talent acquisition, legal compliance, and global payroll obligations.

Pros

- PEO can save your money and time

-It can protect you from legal risks

-It can also assist you with talent acquisition and managing workers' compensation programs.

Cons

-You may experience a delay in communication

-As a business, you might be liable for PEO’s mistakes

-You might lose control over internal HR processes

-Opt for a Smooth Global Expansion Process with Multiplier