Fdi Advantages and Disadvantages
|Entry Mode |Advantages |Disadvantages |
|Joint Venture |Gain immediate access to local partner’s knowledge, |Coordination between partners may not be smooth |
| |expertise, networks, and market share |Political risk exposure is high |
| |Development costs and risks are shared equally |Management structure and division of responsibilities can be |
| |Accessing additional financial resources |very complex |
| |Widening economic scope fast |Uncontrolled or unmonitored increase in the operating cost |
| |Tapping newer methods, technology, and approach you do not | Shared profit |
| |have | |
|Franchising |Rapid expansion to foreign market |Conflict with local operators |
| |Investment is minimal |Maintaining brand image and reputation may be challenging |
| |Develop brand equity quickly |Control over quality may be difficult |
| |Franchise locations may operate better and more profitably |Potentially more costly, both in upfront costs, as well as |
| |than "company owned" units |from royalty payments, etc that
|Joint Venture |Gain immediate access to local partner’s knowledge, |Coordination between partners may not be smooth |
| |expertise, networks, and market share |Political risk exposure is high |
| |Development costs and risks are shared equally |Management structure and division of responsibilities can be |
| |Accessing additional financial resources |very complex |
| |Widening economic scope fast |Uncontrolled or unmonitored increase in the operating cost |
| |Tapping newer methods, technology, and approach you do not | Shared profit |
| |have | |
|Franchising |Rapid expansion to foreign market |Conflict with local operators |
| |Investment is minimal |Maintaining brand image and reputation may be challenging |
| |Develop brand equity quickly |Control over quality may be difficult |
| |Franchise locations may operate better and more profitably |Potentially more costly, both in upfront costs, as well as |
| |than "company owned" units |from royalty payments, etc that