There are five types of entry modes for companies that want to enter international markets. The entry mode types are exporting, licensing, partnering, acquisition and finally venturing. They are also called as Greenfield venturing. Exporting to a country is often the lowest risk in ventures; however, it has the negative impact of low levels in control. Licensing and franchising ensures there is much faster entry, but once again low control and awareness necessity of legal environment could add some amount o risks.
Partnering and strategic alliance is a much more complete entry form, and this is usually done when there is an established partner with similar interests in the new country. This is a high cost venture. Acquisition is where a company takes over another business, and finally the Greenfield venture is where the company launches its own subsidiary. This requires maximum knowledge of the political-social-economic and legal set up of the country. It is high cost, and is risky but gives the maximum control.
If these strategies are followed as a sequence, export is the best selection to start the sequence, followed by licensing and partnering. The acquisition strategies and the subsidiary strategies are better handled later, as it requires the company to have a better knowledge about the country.
Political risks of the country are those risks in the country that are seen to threaten the international venture. A state of political instability would mean business structures would not have the proper backup to be setup. Also, political and economic risks would mean the country will have less amount of infrastructure to support the ventures. In the case of economic risks, the company would also suffer having less demand for its products, as people would not be interested in making purchases when the economic stability of the country is not good.