The choice of a particular international market entry mode depends on a range of factors including the size of the market and its growth potential. Markets of limited size surrounded by trade barriers may be supplied most cost effectively via:

Question

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Licensing or contract manufacturing is the most cost-effective way to supply markets of limited size surrounded by trade barriers. This is because licensing or contract manufacturing does not require the company to invest in its own production facilities in the foreign market. Instead, the company can simply license its technology or products to a local company, or it can contract with a local company to manufacture its products. This can save the company a significant amount of money, and it can also help the company to avoid the trade barriers that may be in place.

The Choice of a Particular International Market Entry Mode Depends