There are a variety of legal structures that you can use to enter a new market, offering flexibility to meet the needs of your organization and the market segment you are pursuing. The various alternatives involve a number of considerations and trade-offs.
Greenfield Investment: A “greenfield” investment is the building of a subsidiary or branch in a foreign jurisdiction from the ground up. Such cross-border expansion offers the highest degree of control, but in exchange for a slower start up.
Mergers & Acquisitions: If a suitable target can be identified, M&A can be the most impactful way of jumpstarting market entry, but can be expensive, complex and depends on successful integration.
Joint Ventures: JVs are a popular means of initial expansion into a new market. A local partner can be instrumental in navigating cultural, regulatory, and business challenges and allows sharing of resources; but shared control can lead to decision-making challenges and potential disputes.
Licensing: A licensing agreement is often an expedient way to get a service or product to a new market in jurisdictions with strong property rights laws and where the product or service is adequately documented and protected in that jurisdiction.
Franchising: A franchise agreement resembles a license agreement in the risk/control profile, but franchises center around a brand and a trademark as opposed to a set of IP rights bound up in a service or product.
Piggyback Marketing: A low-cost strategy where firms with complementary, but non-competing, products share a marketing channel. The arrangement can be mutual—each firm representing the other in their respective domestic markets, or unilateral—with a smaller firm joining with a larger firm already present in the foreign market.
Distributor/Re-Seller Arrangements: Identifying an appropriate distributor or reseller in the foreign market who will buy your products or services and resell them in their territory is a fast and inexpensive option for entering a foreign market.