Market Entry

11 Key excerpts on "Market Entry"

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  eBook - PDF

  Navigating Strategic Decisions

  The Power of Sound Analysis and Forecasting

  • John E. Triantis(Author)
  • 2013(Publication Date)
  • Productivity Press

    (Publisher)

  155 © 2010 Taylor & Francis Group, LLC New Market or Business Entry This chapter is an extension of the new product development (NPD) discussion and builds on and supplements those analyses and evaluations for new market or new business entry projects. Entry into a new market means starting operations in a new geographic area or market strata, with a reference point being the experience in the markets the company is currently operating. Entry into new busi-ness areas on the other hand entails sailing into unknown waters with no reliable reference points other than the decision maker’s, the forecaster’s, and the project team’s investigations, and their prior experiences. The former case requires an SDF solution that is highly intensive in its environmental assessment, while the latter entails that plus more in-depth understanding of trends and objective evaluation of internal competencies and capabilities in the context of the new company strategy. The focus of this chapter is on new market or business entry that is strategic in nature, which means they are long-term commitments that involve substantial financial and human resource investments. Under this criterion, entry into new parts of a country the company has a presence in, entry into a new market stratum, and market development are not part of this discussion. However, entry into a foreign market or new business is a major piece, and the underlying reasons for such projects include 1. Severe domestic market crowding and pressures, aging or outdated products, services, and technologies. 2. Preemptive competitive positioning to meet international customer needs, introducing new products, services, technologies, or ideas and testing their acceptance. Entry into a new similar business is undertaken to establish long-term market presence, or due to cost and portfolio management considerations.

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  eBook - ePub

  Basics of International Business

  • James P. Neelankavil, Anoop Rai(Authors)
  • 2014(Publication Date)
  • Routledge

    (Publisher)

  In deciding to go international, a company must choose an entry strategy to achieve its international expansion goals. Entry strategies set the stage for an international company’s success in its expansion into overseas markets. Choosing the right entry strategy saves money and time, provides strategic advantages, and lessens the risks associated with international operations. The choice of a particular entry strategy is most often a result of athorough analysis of the company’s strengths and weaknesses and a comprehensive external environment analysis that includes the market potential. Some key internal factors that are considered include a company’s core competencies and its risk threshold, or how much financial risk the company is willing to take. In entering a foreign market, a company can choose from a minimal investment option to one that requires a large investment. International companies can choose from four distinct entry strategies: exporting/importing, licensing/franchising, joint ventures, and wholly/fully owned subsidiaries. Licensing/franchising, joint ventures, and wholly owned subsidiaries require direct investments in the foreign country. Each strategy is designed for gaining entry into foreign markets under varying conditions. These entries are not necessarily unique to large international companies; small and medium-sized companies also use them.

  As mentioned earlier, the selection of an entry strategy is often dictated by both internal and external factors the company faces. The firm’s size, the number of products/services it offers, its financial position, its marketing expertise, and the number of countries the company operates in are some of the internal factors that may dictate its entry strategy. In the external environment, factors such as market size, potential growth of the market, regulatory environment, intensity of competition, knowledge of the market, and the host country’s economic and political conditions might all play a role in the choice of entry strategy.

  It is also possible that once a company selects a particular entry option, it might decide to shift into another mode based on internal and external changes. For example, a company that started out as an exporter might sometime in the future decide to enter into a joint venture agreement or even invest in a wholly owned subsidiary. Toyota Motors entered the U.S. market with exports of its vehicles from Japan; eventually it built manufacturing plants in the United States to serve the growing market it had captured. International companies have sometimes taken the reverse approach; that is, after starting out as a wholly owned subsidiary, a few have downsized their operations and used exports to cater to the needs of the market. For instance, after many years of operations in India, IBM left the country and returned as an exporter of its hardware and software.

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  Handbook of Marketing

  • Barton A Weitz, Robin Wensley, Barton A Weitz, Robin Wensley(Authors)
  • 2002(Publication Date)
  • SAGE Publications Ltd

    (Publisher)

  • Internationalization. A second area is that of internationalization , the process by which firms grow from intermittent exporters to full-fledged global companies. • Exporting. A third area is that of special export-ing studies, largely empirically based research into what factors can predict how actively a firm will pursue export markets. • Negotiations. Negotiations undertaken with potential partners and middlemen for entry into a foreign market constitute a very fruitful and important research area in global marketing. Mode of Entry Firms traditionally choose between three basic modes of entry, viz. exporting , licensing , and foreign direct investment (FDI) in production. The exporting mode involves choices between indepen-dent channels (importers, distributors, and agents) or establishing a sales subsidiary in the market country. Licensing includes, for example, choosing between franchising or contracting with a foreign manufacturer to produce and market the product. FDI might involve 100% ownership, or a joint venture. Recently popular, non-equity alliances with other firms have been added as another mode of entry. The latest mode, not yet analyzed much in the academic literature, is direct marketing , with or without Internet involvement. This is an area where economists have tradition-ally been active. There is not so much marketing know-how involved in analyzing these options, and academic marketers have, in a sense, been latecom-ers to the area. Research on mode of entry into foreign markets drew its early inspiration from the economic theory of international trade. Comparative advantages were identified as a driver of a country’s exports and imports, and the choice of entry mode depended on barriers to trade, including transportation costs, companies’ levels of market knowledge, and tariffs.

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  eBook - ePub

  Foreign Direct Investment and Strategic Alliances in Europe

  • Hong Liu(Author)
  • 2018(Publication Date)
  • Routledge

    (Publisher)

  Towards a Contingency View of Market Entry Strategies: Contextual and Strategic Factors Tamar Almor

  SUMMARY. The model presented in this paper examines the relationship between contextual and strategic factors and foreign Market Entry strategies in the form of: (1) wholly-owned marketing subsidiaries, (2) international joint ventures, (3) international strategic alliances, (4) exports.

  Hypotheses are presented and tested on a sample of Israeli manufacturers who market their products in the European Union. Results show that each entry mode has a different contextual and strategic configuration, thus supporting the need for a contingency view. [Article copies available for a fee from The Haworth Document Delivery Service: 1-800-342-9678. E-mail address: <[email protected]> Website: < http://www.HaworthPress.com > © 2001 by The Haworth Press, Inc. All rights reserved.]

  KEYWORDS. Market Entry strategies, FDI, international strategic alliances, international joint ventures, export, contingency view of entry modes

  Introduction

  Research regarding choice of Market Entry mode has largely focused on contextual variables such as country of origin and industry (e.g., Almor & Hirsch, 1995; Braunerhjelm & Oxelheim, 1992; Chang and Rosenzweig, 1998; Nitsch, Beamish and Makino, 1996; Oxelheim & Gärtner, 1996), size (e.g., Agarwal & Ramashwami, 1992; Buckley and Casson, 1976; Calof, 1994) and ownership (e.g., Argarwal and Ramaswami, 1992; Kogut and Singh, 1988). Other researchers have studied strategic variables in relation to Market Entry strategies such as a firm’s strategy, knowledge transfer and its perception of the competitive environment (e.g., Anderson and Gatignon, 1986; Calof & Beamish, 1995; Caves and Mehra, 1986; Gatignon and Anderson, 1988; Kim and Hwang, 1992; Kogut and Singh, 1988; Kogut and Zander, 1993). The various studies show that contextual as well as strategic variables are related to choice of Market Entry strategies.

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  eBook - PDF

  International Business Strategy

  • Joao Heitor De Avila Santos(Author)
  • 2019(Publication Date)
  • Society Publishing

    (Publisher)

  International Business Strategy 68 Figure 5.1: International Business Entry Strategies. Source: Kozak (2014) There are three main entry strategies that most businesses use when considering entering the international trade. Most business opt for the export strategy while others either go into joint ventures with local firms in markets they want to enter or directly invest in foreign countries. The empirical research shows, however, that the United States MNC do export and transfer large levels of goods and services. A lot of this trade is performed by means of intercompany transfers. The procedure of exporting is the same, however, if the importer is a subsidiary of your MNC or an unbiased company. Step 3: Determining the Export Mode Essentially, there are two main settings of exporting: direct exporting and indirect exporting: • Indirect Exporting: In indirect exporting the maker does not embark on exporting singlehandedly. Somewhat, local intermediaries such as trading companies, export retailers, export management companies, and so on, become involved along the way. Indirect exporting allows the business to obtain a feel for International Business Entry Strategy 69 exporting without risking sizeable amounts of money. • Direct Exporting: Whenever a company works under the immediate export method, it keeps a string of marketing organizations that links back to you it to the ultimate customers (or users) of its product in the ultimate marketplace. These agencies discuss sales transactions and direct the physical motion and storage area of the merchandise and offer the other services essential to get the merchandise to the clients. The foreign firms participating in a primary export route may be unbiased intermediaries, or they might be owned by the product manufacturer. It’s important for manufacturers to get pregnant on the export route as the entire marketing channel somewhat than as a route that ceases with the international distributor or agent.

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  Agricultural Marketing Management

  • Sharma, Premjit(Authors)
  • 2021(Publication Date)
  • Genetech

    (Publisher)

  3 Market Entry Strategies Many agricultural products of a raw or commodity nature use agents, distributors or involve Government, whereas processed materials, whilst not excluding these, rely more heavily on more sophisticated forms of access. An organisation wishing to “go international” faces three major issues: i) Marketing—which countries, which segments, how to manage and implement marketing effort, how to enter—with intermediaries or directly, with what information? ii) Sourcing—whether to obtain products, make or buy? iii) Investment and control—joint venture, global partner, acquisition? Decisions in the marketing area focus on the value chain. The strategy or entry alternatives must ensure that the necessary value chain activities are performed and integrated. In making international marketing decisions on the marketing mix more attention to detail is required than in domestic marketing. Concerning investment and control, the question really is how far the company wishes to control its own fate. The degree of risk involved, attitudes and the ability to achieve objectives in the target markets are important facets in the decision on whether to license, joint venture or get involved in direct investment. Cunningham identified five strategies used by firms for entry into new foreign markets: i) Technical innovation strategy—perceived and demonstrable superior products ii) Product adaptation strategy—modifications to existing products iii) Availability and security strategy—overcome transport risks by countering perceived risks This ebook is exclusively for this university only. Cannot be resold/distributed. iv) Low price strategy—penetration price and, v) Total adaptation and conformity strategy—foreign producer gives a straight copy. In marketing products from less developed countries to developed countries point iii) poses major problems.

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  eBook - ePub

  Internationalizing Firms

  International Strategy, Trends and Challenges

  • Adriana Calvelli, Chiara Cannavale(Authors)
  • 2018(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  Therefore, the decision-making process requires defining the following elements: Control over (or ownership of) the resources that the enterprise will invest with new and old actors in its environment in order to pursue the chosen strategy; Cooperative relations (strategic alliances) that the company intends to establish with different partners along the value chain corresponding to the strategic choices made; Market relationships that place the business in relation to input providers and customers for their output. It is in this relationship that involves the contractual power the company has managed to conquer in its market through behaviour, strategic actions and managerial practices; The competition relationships that bring the enterprise into conflict with its present and prospective competitors. These can be both actual or potential competitors. Entry choices show different degrees of complexity and can follow two evolutionary paths of business-to-business (transversal) trading or the transfer of productive and oriented resources and technologies, and therefore the acquisition of inputs (non- trade); it should also be noted that the final orientation of the actions taken by the companies, not directly related to the action taken, is always to place their products and services on the outlet markets as much as possible. From the point of view of internationalization driven by the search for more defensible competitive advantages, companies tend to place their output outside domestic borders, both to increase their growth rate and to gain more strength in their actual competitors and potentials. In this sense, businesses both large and small tend, or should tend, to expand outlets

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  Principles of Marketing

  A Value-Based Approach

  • Ayantunji Gbadamosi, Ian Bathgate, Sonny Nwankwo(Authors)
  • 2013(Publication Date)
  • Bloomsbury Academic

    (Publisher)

  Anderson and Gatignon (1986) indicated that full control modes are based on sole ownership while shared control modes are based on collaboration. To investing firms, different entry modes represent varying levels of control, commit-ment and risk (Dunning, 1988; Shenkar, 1990). There are four entry modes that are generally considered when entering foreign markets. These are exporting, licensing, joint venture and manufacturing. Each has particular advantages and shortcom-ings, depending on company strengths and weaknesses, the degree of commitment the company is willing or able to make and market characteristics (Ghauri and Cateora, 2010). R&D Production Logistics Marketing Sales Service Exporting Exporting refers to situations where a firm manufactures products in one country and transfers them to markets in another country. This is probably the easiest way to gain a presence in international markets. However, there may be problems in the form of tariffs and barriers, as well as the cost of transport, which may increase the price of the product. On the positive side, this mode reduces the potential risks of operating overseas, especially when a firm knows little about the market. This method also gives firms an opportunity to familiarize themselves with a foreign country before deciding to relocate manufacturing overseas. If a company attempts to minimize the costs associated with expanding over-seas, it could choose to export goods from its home market to foreign countries. Exporting can help the company to save the costs associated with setting up wholly owned operations abroad. Many companies take exporting as the easiest approach to start their entry into foreign markets. Through this method, firms may not have many liabilities compared with other modes of entry. However, producing goods in a foreign country could sometimes prove much cheaper. There are usually high transportation costs associated with exporting.

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  eBook - ePub

  The Art of Going Global

  A Practical Guide to a Firm's International Growth

  • Olga E. Annushkina, Alberto Regazzo(Authors)
  • 2020(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  economic distance between the home and target markets will influence your internationalization strategy in two ways. Firstly, you will need to adapt your products and services to lower or higher levels of economic development in the target market to account for the different purchasing capacity of customers, whether these are businesses or end consumers. The decision as to how you do this could be aided by the input of a local partner, a potential source of knowledge about the local market. Secondly, your competitive advantage, in terms of cost leadership or superior technology, may not be relevant in markets with higher or lower levels of economic development to that of your own. Your choice of entry mode will strongly influence your firm’s ability to either transfer its competitive advantage to a new, economically different market, or to build a competitive advantage based on local resources.

  5.3.3 Why a Firm’s Strategy Matters When Decision on an Entry Mode

  The decision about the firm’s strategy in terms of which and how many foreign markes are served, which business units and which business activities are located abroad, about resources dedicated to internationalization, about its organizational structure, along with decisions about the level of adaptation of its products and services will determine the level of commitment needed to each new foreign market.

  The first necessary step is to distinguish two broad types of foreign Market Entry decisions: investments into sales and distribution or into production or research and development activities, or both.

  In this sense, the extent to which your firm’s end product is service based (and the how tangible that service is) will also significantly influence your mode of foreign Market Entry.

  For industries that are ostensibly service based, such as telecoms, fast food, or traditional or digital retail chains, a decision to expand abroad means that almost all of the firm’s value chain activities will be transferred to the new market. This is also becoming the case for other industries, where the level of service content is increasing as fewer and fewer firms define themselves as purely “manufacturing”. This is seen as a way for firms to differentiate and to increase customers’ loyalty.

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  eBook - PDF

  International Business, International Adaptation

  • Shad Morris, James Oldroyd(Authors)
  • 2023(Publication Date)
  • Wiley

    (Publisher)

  The company has helped develop or commercialize all of the top 100 drugs on the market today. 13.2 ENTRY MODES LEARNING OBJECTIVE Explain the advantages and disadvantages of different entry modes. Once a firm decides it will enter a foreign market, it needs to choose the method it will use to do so. These methods can be divided into non-equity and equity modes. Non-equity modes typically carry less risk but also bring fewer rewards. They include the entry modes of export- ing, turnkey operations, licensing, and franchising. 16 Equity modes require a larger investment and engage the foreign firm in local operations. This increases the risk of the activity but also 13.2 Entry Modes 293 allows the firm to get close to customers and thus build better products. Equity modes include joint ventures and wholly owned subsidiaries, either greenfield projects or acquisitions 17 (see Figure 13.2). Each has advantages and disadvantages, and some are better suited to cer- tain industries than others, but nearly all international expansion falls into one of these six entry modes. Next, we will discuss the pros and cons of each. Exporting Exporting is the process of producing a good or service in one country and selling it in another country. Some large companies such as GM, LG, and Apple manufacture products in one central location and then export them to markets around the globe, but many small and medium-sized firms also rely heavily on exporting. For instance, Igus—a German producer of more than 100,000 high-end plastic products such as energy chain cables, plastic bushings, and piston rings—exports products designed to more than 36 countries. The company was started in Cologne, Germany, in 1964, with products designed to help preserve the cables that supply power and control to robotic manufacturing machines. 18 While the company is limited to one production facility in Cologne, Germany, by exporting, Igus is able to sell its products around the world.

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  Market Entry in Japan

  Theory and Management in a Turbulent Era

  • René Haak, Ulrike Haak(Authors)
  • 2008(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  6 Market Entry and Market Development Strategies – Opportunities for Foreign Companies in Japan There are numerous ways to achieve success in the Japanese market and to maintain a leading position in the long term. The most familiar ways of entering and penetrating the market include the following: • licensing; • direct or indirect export; • establishing an independent sales office; • setting up franchising system; • founding a joint venture; • entering into a strategic alliance; • founding a subsidiary of one’s own company; or • acquiring a Japanese company (Kutschker and Schmid 2002). The reality of business in Japan is so extremely complex that theory-driven strategies for prospecting international markets in text- book format would be of no help to international managers. Other managers’ theories and experience can convey key information on strategic planning and on how to use Market Entry and market devel- opment tools, but they cannot replace personal experience acquired from doing business on a day-to-day basis, from communicating with partner companies and from dealing with competitors and market players in Japan. International managers must ask themselves this key question: which strategies for moving into and developing the market in Japan 101 U. M. Haak et al., Market Entry in Japan © Ulrike Maria Haak and René Haak 2008 102 Market Entry in Japan should I choose today to allow me to compete successfully tomorrow and make good profits the day after tomorrow? Using personal expe- rience and researching at the right institutions (see below), a manager doing business in Japan can draw up an interpretation grid for eval- uating alternative ways of proceeding as an aid to decision-making against the background of his theoretical knowledge.

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