Which of the following lists correctly identifies six common modes companies use to enter foreign markets?

• A. Exporting, outsourcing, mergers, acquisitions, franchising, and direct investment
• B. Exporting, licensing, franchising, joint ventures, wholly owned subsidiaries, and strategic alliances
• C. Licensing, franchising, outsourcing, importing, mergers, and acquisitions
• D. Importing, exporting, direct sales, e-commerce, licensing, and outsourcing

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the concept of 'modes of entry' into foreign markets. These are the various strategies companies use to expand their business operations internationally.
2. Step 2: Identify common modes of entry, which typically include exporting, licensing, franchising, joint ventures, wholly owned subsidiaries (direct investment), and strategic alliances. These methods vary in terms of control, risk, and investment required.
3. Step 3: Review each option given in the problem and compare it against the standard list of common entry modes. For example, exporting involves selling products abroad, licensing allows another firm to use intellectual property, franchising grants rights to operate a business model, joint ventures involve partnerships with local firms, wholly owned subsidiaries are fully controlled foreign operations, and strategic alliances are cooperative agreements without ownership.
4. Step 4: Eliminate options that include terms not typically classified as entry modes (e.g., outsourcing, importing, mergers, acquisitions) or that mix modes with other business activities.
5. Step 5: Conclude that the correct list includes the six common modes: exporting, licensing, franchising, joint ventures, wholly owned subsidiaries, and strategic alliances, as these cover the main ways companies enter foreign markets.