An Indian automobile company decided to enter international markets. The company is ready to invest in marketing arrangements abroad, but not in production facilities. Suggest any two suitable modes of market entry, and explain their merits and limitations.

When an Indian automobile company decides to enter international markets, several factors influence its choice of market entry strategy. Among these, the company’s decision to invest in marketing arrangements but not in production facilities indicates that it seeks a strategy that minimizes capital expenditure, while still establishing a strong presence in foreign markets. Two suitable modes of entry that align with these objectives are exporting and licensing. Both of these strategies offer distinct advantages and limitations, which will be discussed in detail.

### 1. Exporting

Exporting is the most straightforward and widely used market entry strategy, where the company produces its products in India and sells them directly or through intermediaries in foreign markets. This method allows the company to test international markets without committing substantial resources to setting up production facilities abroad.

#### Merits of Exporting:
- Low Investment and Risk: Exporting requires relatively lower investment compared to establishing production facilities abroad. This is ideal for a company that is cautious about high capital expenditure. The company can test the international market with limited financial exposure, making it a low-risk strategy.
  
- Scalability: As demand for the product grows in international markets, the company can gradually scale up its exporting activities. This could include expanding into new markets or increasing the volume of exports to existing markets without the need for heavy upfront investment.
  
- Quick Market Penetration: Exporting allows the company to enter international markets quickly, often through distributors or local agents. The company can take advantage of the established distribution networks in foreign countries, which can facilitate faster penetration into the market.
  
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