Question

Which method of entering international markets generally involves the least risk?

Answer 1

Answer:

Exports: Exporting your products directly to the international market is the least riskiest methods for the organisations in going global and reaching international customers.

Explanation:

Why organisation goes in the international markets

An organisation enters in the international market to expand its operations, increase its sales, consequently, increase profits.

Possible available methods to enter international markets

There are many possible methods available by which an organisation can enter in the international Markets, which are manifested below:

1: Exporting your own products to international market

In this method, an organisation produce their own products locally in their own premises and factories and start sending and selling them to the other markets worldwide.  

2: Hiring agents in the international market or having contracts with them

In this method, an organisation tries going international by contacting some foreign agents. Afterwards, it depends whether to hire them temporarily or permanently, or to have some mutual contract with them for selling their products in that market. Moreover, it also depends if they want to get their product manufactured in that country or not.

3: Going global by Franchising/Licencing, Strategic Alliance, Joint Venture or opening Foreign Subsidiary directly.

Here, organisation goes global by giving the exclusive rights of producing its products, using its brand name and selling them in the foreign market, by franchising/licencing. (Franchising is purely a term used for the companies who deal with the products which also needs to be manufactured, whereas, Licencing is used for the service organisation)

In strategic alliance, an organisation joins hands with other foreign organisation(s) and become business partners to achieve some agreed upon results while remaining independent entities.

In Joint venture organisations create a totally new company by pooling their resources, capabilities and expertise sharing all the profits and risks.

In Foreign subsidiary, an organisation from the local country, set up its an entirely new unit, premises and operational facilities there in the foreign country by utilizing its own resources.

Which Method is the least Riskiest and why?

As it has been manifested above that what each method entails, and what is required in each method. Exporting your goods directly from your country to the international market by having them manufactured locally is the last riskiest because you have control of your own operations, products, manufacturing facilities, quality, furthermore, no additional investment is needed to look after your foreign operations at all, therefore, much less risk is involved here in exporting as compared to the all other available methods.