How to Enter a New International Market: The 5 Entry Modes and When to Use Each

Walmart entered Germany in 1997 convinced that the world's most efficient retailer could win anywhere. Nine years and roughly a billion dollars later, it sold its stores and left. German shoppers didn't want a stranger bagging their groceries, didn't smile back at the store greeters, and already had Aldi and Lidl doing low prices better. The problem was never Walmart's model. **The problem was that Walmart exported a model instead of entering a market.**

I have spent years taking businesses built in Spain into new countries — wine into the United States through our Miami office, hospitality and real estate across borders inside a group founded in 1890. The decision that has mattered most in every one of those moves is not *which* market to enter. It is *how* to enter it — how much capital to commit, how much control to keep, and how much of the local reality to let in.

## The number that should scare every expansion plan

Ambition is not the problem. One widely cited figure puts it starkly: roughly **75% of companies fail to make their international expansion profitable within 24 months.** Most of those are not failures of the market. They are failures of the entry mode — companies that committed too much capital before they understood the country, or too little to ever build a real position.

The entry mode is the structural choice underneath everything else: how you sell, who you hire, what you own, and how fast you can retreat if you are wrong. Get it right and a modest budget buys you a durable foothold. Get it wrong and the best product in the world dies on a foreign shelf.

## Five ways into a new market

There is a spectrum of entry modes, running from low commitment and low control to high commitment and high control. Each trades risk for reward in a different way.

### 1. Exporting — sell in, commit little

Exporting means making your product at home and selling it abroad, usually through a local distributor or importer. It is the lowest-risk way in: you keep your factory, your team and your balance sheet at home, and you test real demand with real customers before betting on the country.

**Exporting is the reconnaissance mission of international expansion — cheap, reversible, and the fastest way to learn whether a market actually wants what you make.** The trade-off is control: your distributor owns the customer relationship, sets the pace, and can drop you for a competitor. This is how most wine, food and consumer-goods businesses — ours included — take their first step abroad.

### 2. Licensing and franchising — rent your model

Licensing lets a local company use your brand, recipe, patent or process in exchange for a fee or royalty. Franchising is its packaged cousin: you hand over a whole business system — think McDonald's or Marriott — and the local franchisee funds and runs the outlet.

You expand using someone else's capital and local knowledge, which makes it fast and light. The risk is that your brand is now in someone else's hands. A sloppy franchisee damages a name you spent decades building, and you cannot always take it back cleanly.

### 3. Joint ventures — marry a local partner

A joint venture pairs you with a local partner who brings market knowledge, relationships, regulatory cover and often distribution, while you bring product, capital or technology. In some countries — historically China, India and parts of the Middle East — a local partner has been a legal requirement, not a choice.

**A good joint venture buys you years of local learning you could never accumulate alone; a bad one buys you a partner whose interests quietly diverge from yours.** Alignment on control, profit split and exit terms — written down before the honeymoon — is what separates the two.

### 4. Acquisition — buy your way in

Acquiring an existing local company gives you an instant market position: customers, staff, licenses, distribution and brand, all on day one. When speed matters and the target is sound, nothing is faster.

But you inherit everything — the culture, the liabilities, the tired systems and the people who did not ask to be bought. Most cross-border acquisitions that disappoint do so not at the negotiating table but in the months after, when [two companies fail to become one](/en/news/post-merger-integration-why-acquisitions-fail-after-deal-closes).

### 5. Greenfield — build it yourself

A greenfield entry means building your own operation from the ground up: your subsidiary, your factory or stores, your hires, your standards. It is the highest commitment and the highest control. Everything is yours — including every mistake.

Greenfield makes sense when your advantage lives in *how* you do things and no local partner or target can replicate it. It is slow and capital-hungry, and it is how you build a permanent, wholly-owned position when you are certain the market is worth it.


## The real question: commitment versus control

Strip away the labels and every entry mode is answering two questions: **how much are you willing to commit, and how much control do you need to keep?**

- Low commitment, low control: **exporting, licensing**.

- Shared commitment, shared control: **joint ventures, franchising**.

- High commitment, high control: **acquisition, greenfield**.

The disciplined move is to match the mode to your confidence in the market, not to your ambition for it. Enter light when you are still learning, and deepen commitment as certainty grows. **The companies that endure abroad almost never bet the balance sheet on a country they have not yet proven — they earn the right to commit by learning cheaply first.**

## Why great companies still fail abroad

The graveyard of international expansion is full of world-class operators:

- **Target** opened 133 stores across Canada in 2013 and shut them all by 2015, absorbing roughly $2 billion in losses. Empty shelves from a broken supply chain and prices that undercut its own brand promise did it in — two years, gone.

- **Home Depot** entered China in 2006 betting on do-it-yourself. Chinese consumers, with cheap labor available and a do-it-for-me culture, never wanted the warehouse. It closed its big-box stores in 2012.

- **Starbucks** rushed into Australia in 2000, opening dozens of stores fast in a country with a mature, sophisticated café culture. It closed about two-thirds of them by 2008.

The pattern is consistent. Each company assumed its home-market playbook was the product. **The market did not reject the company — it rejected the company's refusal to adapt to it.** The entry mode is where that arrogance shows up first: too much commitment, too fast, with too little local truth built in.

## How we took a Spanish business into America

When we brought our wines into the United States, we did not build a distribution empire on day one. We entered through export and local distribution — Manzanos Wines USA, run from Miami — because it let us learn the American market, its three-tier regulatory maze and its buyers before committing heavy capital. Distribution first, presence second, depth as the market proved itself.

That is the same logic behind every durable expansion in a group that now reaches more than 75 countries: start where you can learn cheaply, and let earned confidence — not ambition — decide when to commit more. Choosing the right partners in that first phase is [its own discipline](/en/news/how-to-select-international-distributors-global-sales-networks).

## Key Takeaways

- The mode you use to enter a market often matters more than which market you choose — most expansion failures are entry-mode failures, not market failures.

- Entry modes run on a spectrum from low commitment/low control (exporting, licensing) to high commitment/high control (acquisition, greenfield).

- Exporting is the cheap, reversible reconnaissance mission; greenfield is the slow, total-control endgame. Durable expansions usually move along that spectrum over time.

- Every mode answers two questions — how much to commit, and how much control to keep. Match the mode to your confidence in the market, not your ambition for it.

- Even world-class operators (Walmart, Target, Home Depot, Starbucks) fail abroad when they export a home playbook instead of adapting to local reality.

- Joint ventures and franchising buy local knowledge and speed but hand over control — align on profit, control and exit terms in writing first.

- Enter light, learn cheaply, and earn the right to commit — the pattern behind expansion into 75+ countries.

## Frequently Asked Questions

### What are the five most common international market entry strategies?

The five most common are exporting, licensing/franchising, joint ventures, acquisitions, and greenfield (wholly-owned) investment. They range from low commitment and low control (exporting) to high commitment and high control (greenfield). The right choice depends on how much capital you can risk and how much control you need over the brand and customer.

### What is the best market entry strategy for international expansion?

There is no single best strategy — the best mode matches your risk tolerance, capital, and how well you understand the market. As a rule, enter light (exporting or licensing) when the market is unproven to you, and deepen commitment (acquisition or greenfield) only as your confidence grows. Betting heavily on a country you have not yet learned is the most common and expensive mistake.

### What are the four types of international market entry methods?

Frameworks vary, but a common four-way grouping is: exporting, contractual entry (licensing and franchising), joint ventures and strategic alliances, and foreign direct investment (acquisition or greenfield). Each step raises the level of commitment, control, risk and potential reward as you move from exporting toward wholly-owned operations.

### Why do companies fail at international expansion?

Most fail by committing too much before they understand the market — exporting a home-country playbook instead of adapting to local customers, competition and regulation. One widely cited figure suggests roughly 75% of companies fail to make their international expansion profitable within 24 months. Walmart in Germany, Target in Canada and Home Depot in China all trace back to the same root: assuming the home model was the product.

### What is the difference between greenfield and acquisition entry?

A greenfield entry means building your own operation from scratch — your subsidiary, facilities and hires — giving you maximum control but slow, capital-heavy growth. An acquisition means buying an existing local company, giving you an instant market position but inheriting its culture, liabilities and systems. Greenfield suits businesses whose advantage is hard to replicate; acquisition suits situations where speed and an established local footprint matter most.

## Enter Smart, Then Commit

The companies that build lasting positions abroad are rarely the boldest on day one. They are the ones who chose an entry mode that let them learn before they leaned in — and who adapted the model to the market instead of the other way around.

Before your next border crossing, decide the mode before the map: how much you can afford to commit, how much control you need, and how cheaply you can learn whether the market truly wants you.

To see how a family-owned group founded in 1890 has grown across eight industries and 75+ countries by entering markets with discipline, explore [the story of Manzanos Enterprises](/en/about).

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