Strategic Entry Modes and Country of Origin Effect
The role the COO can play in the international entry strategy depends heavily on how the distribution channel is structured, especially in relation to the choice of entry mode. The entry method must be chosen with great care as a long channel can lead to the paradox of selling a product abroad at a much higher price than in the domestic market while encountering many difficulties in enhancing the product’s brand and the COO to justify the premium price. In fact, indirect and long marketing channels with many intermediaries between the company and the final customer often make it difficult to enhance the typicality of the product, its brand and its origins. However, if the company is directly present and works closely with foreign customers, the valorization of its origins as an element of differentiation is more effective. Moreover, the length of the channel has impacts on price escalation, due to the presence of intermediaries, transport costs, taxes, insurance costs, and other factors. This chapter describes the different entry modes, i.e., export modes, intermediate entry modes (contractual and equity based), and hierarchical modes, with the aim to identify in which cases management of the COO is especially critical and relevant.
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