Before choosing to operate international, every firm must make strategic decisions to sustain its operations. The three decisions greatly influence the future of the firm. This paper elaborates on the three foreign entry decisions that a firm has to make in relation to a given scenario.
Which Foreign Market?
Every company that desires to grow its activities to other countries should do an evaluation on the profit capability. If the benefits, costs, and risks can be balanced in the right way when the company does business in a country, the country is considered as an attractive market. The instructor was very conscious of the benefits, costs, and risks of running his business. The fact that he serves an online customer base means that his market size has the potential to grow. The relationship between benefit, cost, and risk is well balanced since he is not affected by factors, such as political threats.
After the guitar instructor made a decision concerning the foreign market to enter, he started considering the appropriate time of entry. From the scenario analysis, he chose to enter a market that has not been flooded by other similar firms. Considering the aspect of the advantages, his service will be a first mover, and will be widely accepted by many people.
Scale of Entry and Strategic Commitments
When a firm has made the above two decisions, it has to consider the scale of entry. The instructor chose to use the small scale entry. This strategy is efficient since it will allow the instructor to get more information about a foreign market, and therefore help him reduces the risks.