Financial Risk Management in Global Expansion: Which Market Entry Strategy is the Most Effective in Financial Risk Management?

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Diterbitkan: Aug 16, 2025
DOI: https://doi.org/10.64458/asbnic.v1.28
Kata Kunci:
Financial Risk, Market Entry, Risk Management, International Business

Isi Artikel Utama

Ammar Yasira Wahyudi
Institut Teknologi Bandung, Indonesia
Miguel Cervantes
Rennes School of Business, France

Abstrak

This research investigates the effectiveness of market entry strategies with financial risk. The main question is which strategy from the selection of exporting, licensing and franchising, joint ventures and foreign direct investment is most effective in managing financial risk. This research encompasses prior research, experts’ opinion, online sources, books, and real-life cases without focusing on a specific industry or region. Beginning with an introduction to the historical context and current trends in market entry strategy and financial risk, addressing the problem of insufficient risk management in global expansion leading to failure. The methodology involves a detailed analysis of qualitative data from literature review and experts' opinions to understand the relationship between market entry strategies and managing financial risk. The study concludes that there is no superior market entry strategy in dealing with their financial risk; the effectiveness depends on the context and the objectives of the company. Exporting is low risk but offers limited control, licensing and franchising has a balance between risk and control, Joint venture offers shared risk but requires heavy investment in time, FDI involves the highest risk but with potential high profitability. This research concludes licensing and franchising is generally the most effective in managing financial risk due to their risk transfer mechanism, but other risks will occur. It is recommended that companies utilize the benefits of each strategy, progressing from low commitment strategies like exporting to high commitment options like FDI. Further research should focus on specific industries or regions for more detailed insights.

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