Top International Market Entry Strategies: How to Expand Globally From the US

According to the Small Business Administration (SBA), only about 1% of America's 30 million companies export goods and services.¹ There are good reasons for that. Even companies with great products in high demand need an entry strategy. This article will help you develop an international marketing plan that fits your business.

Some key takeaways:

• 75% of companies that attempt international expansion fall short of expectations. This is because of poor market entry strategies.
• Common market entry strategies include exporting and franchising. They also include joint ventures, foreign direct investments, and e-commerce or digital entry.
• There are four key factors to consider when choosing an international market entry strategy. These are market risk, cultural differences, cost, and control.

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International Market Entry Strategies: What to Know Before Launching in an International Market

The complexities of international trade make market entry time-consuming and expensive. The evidence of that is in the numbers. 75% of companies that attempt international expansion fall short of expectations. Common reasons for that are poor market entry strategies and failure to do local market research. It can also be due to a lack of understanding of local and international laws.²

You’re not just selling a product or service when you enter a new market. Your company must adapt to new regulations, cultures, and customer preferences. Assuming it will be “business as usual” once you get through customs is a common mistake many US companies make. The rest of the world thinks and behaves differently. It’s important to take that into account.

Other variables include your industry and business model. It can also depend on the availability of resources on the ground to help establish your presence in the new country. For example, a cloud-based software platform works differently from a manufacturing company. Both need local resources like servers or distribution vehicles. Getting those in Europe differs from getting them in Asia.

Types of International Market Entry Strategies

There's no one-size-fits-all approach to international expansion. Each company must select its entry strategy based on the level of control required and the risk of importing to that country. They should also consider the potential returns if the venture is successful. There are five primary strategies for doing this:

Strategy #1: Exporting (Direct and Indirect)

Exporting is a common and straightforward way to enter an international market. The concept is simple. You take products manufactured in your home country and export them to customers in a foreign nation. This approach requires minimal investment compared to other strategies. However, your company will also have less control over how your products are marketed and sold.

There are two types of exporting. Direct exporting is shipping merchandise from your manufacturing facilities or warehouses directly to another country. Indirect exporting involves using intermediaries like export trading or management companies. You could also use international distributors that are already established in your target market.

Strategy #2: Licensing and Franchising

Licensing lets a foreign company use your intellectual property in exchange for royalty payments. It’s a low-cost way to enter a new market. However, your company won’t have much control over how the IP is used. It also puts you at risk of competitors using your technology.

Common examples of licensing include permissions to use patents and trademarks. Another example is the use of copyrights, technology, or business methods. Franchising is similar, but the franchisor usually provides a more comprehensive package. These include an established brand, business model, training, and ongoing support. The franchisee pays initial and ongoing fees for this.

Strategy #3: Joint Ventures and Partnerships

Combining your resources with those of another company in your target market can give you a significant competitive advantage. You can do this by creating a joint venture that is an entirely new business entity or by forming a strategic partnership. The former involves sharing ownership privileges. The latter leaves both ownership structures intact.

Joint ventures combine your expertise, technology, or brand with the local partner's market knowledge, distribution networks, and cultural understanding. Strategic partnerships can range from distribution agreements to co-marketing arrangements or technology sharing. Partnerships offer flexibility and can be structured to address specific market entry challenges.

Strategy #4: Foreign Direct Investment (FDI)

Foreign direct investment (FDI) is one of the highest levels of commitment to entering an international market. It can be done in the form of a greenfield investment. This means building your own company in the target market, or an acquisition of an existing company that’s already operating there. Both give you a physical presence in another nation.

FDI is not a step to be taken lightly. Failure rates are high, and return rates are unpredictable.³ Market research can offset some of that. Exports and strategic partnerships could be good preparation steps to take before going this route. Foreign direct investments provide the greatest level of control over local operations. However, the cost is significant.

According to the International Monetary Fund (IMF), foreign direct investment increased by $41 trillion in 2024. FDI in the United States is leading the way.⁴ That number is expected to increase in 2025 as import/export tariffs increase globally. That’s a compelling reason to consider an FDI strategy, but it’s best to proceed cautiously before going “all-in.”

Strategy #5: E-Commerce and Digital Entry

Modern technology has changed the way companies enter new markets. Digital products and e-commerce now make it easier to sell without being there physically. These options didn’t exist for earlier generations. You can use them by creating websites for different countries. Adding international payment options also helps reach more customers.

Your company can also adjust the digital marketing of physical products on e-commerce marketplaces like Amazon Global, Alibaba, or industry-specific platforms. These strategies require lower investment than traditional approaches. They can facilitate localization, digital marketing effectiveness, local compliance, and logistics partnerships.

International Market Entry Advantages and Disadvantages

Strategy	Advantages	Disadvantages
Exporting	• Low initial investment • Minimal risk • Quick market entry • Leverage existing production	• Limited market control • Transport costs and tariffs • Cultural distance from customers • Potential distribution challenges
Licensing & Franchising	• Low resource commitment • Rapid expansion • Steady income stream • Local market knowledge utilized	• Limited control over operations • Potential quality issues • Risk of creating future competitors • Difficult to terminate agreements
Joint Ventures & Partnerships	• Shared risk and investment • Local market knowledge • Potential regulatory advantages • Combined resources	• Shared control and profits • Potential partner conflicts • Complex governance issues • Knowledge transfer risks
Foreign Direct Investment	• Maximum control • Full profit potential • Direct market knowledge • Enhanced competitive positioning	• Highest resource commitment • Greatest risk exposure • Complex regulatory requirements • Difficult to withdraw
Digital Entry	• Minimal physical presence • Scalable and flexible • Lower initial investment • Data-driven adaptation	• Limited physical customer interaction • Reliance on local regulations • Potential logistics challenges • Digital marketing complexity

Factors to Consider When Choosing an International Market Entry Strategy

There are several factors to consider when choosing an international market entry strategy. Your business and target market are unique entities. The key to successfully integrating the two is to understand what you have to offer and what your prospective customers want.

Market Risk and Cultural Differences

International trading risk can stem from political instability, economic volatility, regulatory uncertainty, or intellectual property protection concerns. Thoroughly research these key factors before attempting to do business in a foreign nation. A misstep with any of them could cause a setback or even a collapse of your business venture.

Cultural differences are more subtle. It’s best to have your people spend some time in the country you’re planning to enter before setting up your business there. This is critical for sales and marketing purposes. It’s difficult to set up campaigns when you don’t know your audience. Assuming it will be the same as your domestic approach can be a fatal mistake.

Cost and Control Implications

No one enters an international market without a profit motive, and cost is an important variable in that equation. Each of the strategies we outlined above comes with a cost. Some are more affordable than others, but may not be as profitable. For example, strategic partnerships don’t cost much to set up, but the margins will be lower because you must split the profits.

Cost and control tend to be dependent upon one another. For instance, FDI in a new country is costly, but it gives you complete control over production, sales, and marketing in the new target area. Licensing is cheaper and seems to have the best upside, provided other companies don’t steal your intellectual property. These factors must be weighed carefully.

How to Choose the Right Entry Strategy for Your International Business

Learning about international market entry strategies is the easy part. Choosing the one that works best for your company is usually more challenging. This process requires a systematic approach that evaluates the following concerns:

Industry-Specific Considerations

Companies that sell digital products operate differently from businesses selling physical products in a foreign country. Service businesses usually need a local presence. Manufacturing firms can cut costs by opening local facilities. In other words, your industry may dictate your choice of market entry strategy. This should be at the top of your list.

Scale and Long-Term Goals

What is your vision of what your company can gain from international trade? Goals and scale are factors when choosing a market entry strategy. How big is your current business? That could also affect your strategy. Can you afford it, and is it a short-term or long-term project? The answer to that question could make this a simple decision.

What Is the Most Common Market Entry Strategy?

Exporting remains the most common market entry strategy for small and medium-sized businesses. Over 98% of American companies that sell internationally use exporting, according to the U.S. International Trade Administration. It’s a low-risk, low-cost way to test a market before making a bigger commitment.⁵

E-commerce and digital entry are also growing fast. For many modern businesses, especially in tech and media, going digital is now the first choice for entering international markets. Expect to see that continue.

What are Examples of International Market Entry?

Successful international expansion comes in many forms:

• Starbucks used a mixed strategy approach of licensing in some markets and joint ventures in others. In China, they formed a joint venture with a local partner to navigate cultural and regulatory complexities.
• Netflix initially used pure digital entry, making its streaming platform available globally while gradually adding localized content. As they matured, they began producing local original content in key markets, creating a hybrid digital/FDI strategy.
• Coca-Cola demonstrates the evolution of entry strategies over time. They typically enter new markets through exporting, then establish bottling partnerships or licenses before eventually taking ownership positions in local operations as markets mature.

Simplify Your International Market Entry with Wise

Efficiently managing cross-border finances is critical to your success. Wise Business offers a comprehensive solution designed specifically for companies expanding globally.

Some key benefits of Wise Business include:

Major local account details to receive international payments with ease No monthly account fees just a simple one-off fee for account details Manage permissions and access for your global team Receive payments from e-commerce platforms such as Amazon or via Stripe. Free invoicing tool to generate and send invoices. Create invoices using the Wise invoice generator or invoice templates. Accounting integrations, including a QuickBooks Bill Pay connection. Bill payments will be synced, matched, and categorized in QuickBooks for simple reconciliation. BatchTransfer. Fast payment of up to 1,000 people.

Unlike traditional banks that charge high fees and hidden markups on international transactions, Wise uses the mid-market exchange rate and charges low, transparent fees.

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	Editor & Business Expert:
	Panna is an expert in US business finance, covering topics from invoicing to international expansion. She creates guides and reviews to help businesses save time and make informed decisions. You can read more useful business articles on her author profile.

	Author:
	Kevin D. Flynn is a retired financial professional, business coach, and financial writer. He lives in Leominster, Massachusetts with his wife Evelyn, two cats, and ten wonderful grandchildren. When he’s not working, you’ll find him at the golf course or on his back porch reading classic sci-fi novels.

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Sources:

1. sba.gov/business-guide
2. remofirst.com
3. Foreign direct investment rates of return.
4. imf.org
5. trade.gov/export-solutions