Around the globe people are drinking Coca Cola, walking on Nike shoes, or eating a Big Mac from McDonalds. It becomes easier these days for a company to establish itself in a foreign country. The world is getting smaller because of the technological revolution and the internet. Hereby, it becomes easier to do business with foreign partners without using an airplane. Another reason is the disappearance of trade barriers by governments like tariffs, trade quotas, and restrictions on foreign direct investment. This makes it easier to sell products and/or services in foreign countries. This constantly growing process is called globalization. Globalization is an ongoing process of global economic, political and cultural integration, whereby production is spread out across the world, driven by information-, communication technology, and international trade. The firms that drive the globalization process are mainly multinational enterprises. The 500 largest multinational enterprises are responsible for 50% of the world's trade (Rugman and Verbeke, 2003). However, small and medium sized enterprises, firms with up to 200 employees, seem to be restrained with regard to going abroad. The problem that these companies are facing, regarding going abroad, deal with the assumption that foreign operations are inherently risky, and the difficulty of coming up with the right entry strategy. In recent decades, a lot of international business researchers discussed the best entry mode to enter a foreign market. Drawing upon the literature, it is argued by Pan and Tse (2002) that the choice of entry mode can be examined from a hierarchical perspective. In the model, the authors explain that managers first structure various entry modes into multi-level hierarchy and define a set of evaluation criteria for each level. The first decision, when a firm decides to expand into foreign markets, depends on two related but distinct issues, namely equity based and non-equity based entry. If the firm chooses non-equity, the next consideration is the choice between export and contractual agreements modes. Export is further divided into direct export, indirect export, and others. Whereas the category contractual agreements is further divided into licensing, research and development contracts, alliances, and others. On the contrary, if the firm chooses the equity mode, there are two options, namely: an equity joint venture or establishing a wholly owned subsidiary. Assuming that a firm has decided to adapt an equity joint venture mode, then it can choose again between three options: minority equity joint venture, 50% share equity joint venture, and majority joint venture. This is also true for the wholly owned subsidiary, only in this case here the modes are greenfield, acquisition and others. This model described above can be seen as a decision-making tree with different levels. For example, the first level is the decision between non-equity and equity mode. This model of Pan and Tse (2002) contradicts with the internationalization model which states that a firm should expand internationally at a slow and cautious pace (Rugman, 1980). This researcher sees internationalization as an incremental (small steps) learning process where companies use a basic mechanism to learn about markets they would like to enter. The process follows the following steps: 1) licensing; 2) exporting; 3) establishment of local warehouses and direct local sales; 4) local assembly and packaging; 5) formation of a joint venture; 6) foreign direct investment. The latter consists of establishing a wholly owned subsidiary overseas. When a firm follows this pattern from step 1 until step 6, the risk will increase. The main problem with the internationalization model is that firms do not always want to start with licensing due to risk of leaking important information or knowledge. This could result in a negative return on investment. Although it should be noticed that risk of leakage is only low when the operating markets are highly segmented. There are some factors that affect the choice of entry modes. A firm should take these into consideration before it makes a decision for a specific entry mode. Factors that influence the choice are prioritized location, risk orientation, power distance, extent of interaction between host and home country, and industry factors (Pan and Tse, 2002). Prioritized locations are special zones reserved by host countries for foreign business activities. For a focus firm, these zones are easier to enter and less risky to invest in. When a host country has prioritized locations a firm should choose the equity mode choice. The level of risk in host countries also influences the choice of entry mode. There are two kinds of risk: contextual risk, explained as external uncertainties which are embodied in the market environment like political-, ownership/control-, operations-, and transfer risks; transactional risk, arise internally from the opportunistic behaviour of firms such as defaults on their obligations. Adopting a non-equity mode gives foreign firms a better chance to understand what the risks are because the duration is often shorter and determined for a specific period of time so this makes it easier to forecast the severity of the risks. Firms from high uncertainty avoidance cultures will obviously be more cautious. Therefore, firms from high uncertainty avoidance cultures prefer non-equity entries, and firms from low uncertainty avoidance cultures are more willing to adopt equity modes. Power distance deals with the relationship orientation of managers. A high power distance country is where a high degree of inter-personal inequality and hierarchy exist and are considered acceptable by managers of that country (Hofstede, 1994). In a country with a low power distance, managers see themselves equal with employees of other levels. Therefore, firms with high power distance are more likely to choose an equity entry mode. Countries can have different trade relationships with each other. If the countries have a high bilateral trade volume it means firms have more knowledge of their markets. The more bilateral trade there is between countries, the more likely a firm will choose an equity entry mode because firms already have experience with the market (Pan and Tse, 2002). Furthermore, long diplomatic ties could mean that a firm has a higher trust in another country which means that firms will more likely invest in these countries. There are two industry variables often used in international business literature: capital intensity and advertising intensity (Pan and Tse, 2002). In markets with a high advertising intensity, firms need to protect their brands and will favour an equity entry mode in their choice. In addition, in markets with high asset turnovers, a firm will more likely internalize their operations overseas, also by an equity entry mode because one asset investment can mean more sales. Literature references Hofstede, G. (1980), Culture's consequences, Management science, No. 40, pp. 4-13. Pan, Y. and Tse, D.K. (2000), The hierarchical model of entry modes, Journal of International Business Studies, No. 31, pp. 535-554. Rugman, A.M. (1980), A new theory of the multinational enterprise: internationalization versus internalization, Journal of International Business Studies, No. 14, pp. 23-29. Rugman, A.M. and Verbeke, A. (2004), A perspective on regional and global strategies of multinational enterprises, Journal of International Business Studies, No. 35, pp. 3-18.