Market Entry Strategy
A market entry strategy refers to the plan and approach a company uses to enter a new market. It involves identifying target markets, understanding local regulations and consumer behavior, and determining the most effective way to introduce products or services. Market entry strategies can include methods such as exporting, licensing, joint ventures, or establishing wholly-owned subsidiaries.
6 Key excerpts on "Market Entry Strategy"
eBook - ePub- James P. Neelankavil, Anoop Rai(Authors)
- 2014(Publication Date)
- Routledge(Publisher)
...6 Entry Strategies Companies can enter foreign markets using a variety of methods and various strategies. Each entry strategy provides unique benefits, but international companies also face many difficulties. Therefore, companies planning international expansion need to consider various factors in selecting an appropriate entry strategy. L EARNING O BJECTIVES • To learn about the various international market entry methods • To understand the decision-making process in selecting a particular entry strategy • To understand the export/import process • To understand elements of export/import strategy • To understand the differences between direct and indirect selling • To understand the differences between licensing and franchising arrangements • To understand the various strategic alliances that international companies undertake • To understand the use and importance of joint ventures • To understand why companies enter into joint venture agreements • To understand why companies invest in a wholly owned subsidiary • To understand the benefits and major issues faced by companies that invest in a wholly owned subsidiary 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...
eBook - ePubInternational Marketing (RLE International Business)
Strategy and Management
- Colin Gilligan, Martin Hird(Authors)
- 2013(Publication Date)
- Routledge(Publisher)
...Part two Market Entry Decisions and Approaches to International Marketing Planning 4 Market Entry Strategies DOI: 10.4324/9780203077771-7 For many companies, the most fundamental and far-reaching decisions in international marketing revolve around the question of the market entry strategies that are to be used and the patterns of distribution that are subsequently to be developed. There are a number of factors that account for the significance of these decisions and it is to these that we turn our attention within this chapter. Entering Foreign Markets The question of how best to enter foreign markets is the first and in many ways the most fundamental to be faced by the marketer, since it is this choice that subsequently influences and shapes the whole of the international marketing programme. If, for example, the company opts for a distributor or licensee, its ability to influence pricing and promotion is likely to be limited. If, by way of contrast, it decides to opt for its own manufacturing subsidiaries, the degree of control that can be exerted will be far higher, although this in turn will be reflected both in the set-up and the direct operating costs. In essence, therefore, the market entry decision involves a balancing of costs, control and risk. With this in mind, the marketer needs to consider carefully the various distribution alternatives that are open to him and what he wants to achieve. Once a choice has been made, he is likely to find that he has entered into a long-term commitment that can only be changed with difficulty and at a high cost. Recognising this, the three major options with which he is faced are indirect exporting, direct exporting, and foreign manufacturing. These are shown schematically in Figure 4.1...
eBook - ePubMarket Research in Practice
An Introduction to Gaining Greater Market Insight
- Paul Hague(Author)
- 2021(Publication Date)
- Kogan Page(Publisher)
...21 Using market research to enter a new market Market research is used by businesses to inform decision making. It provides objective evidence that can challenge instinct, impulse, supposition, emotion and perceived wisdom and ensure that decisions are based on rational, clearly justified criteria. The more strategically important or expensive the decision, the greater the risk to the business, and the more important market research becomes in managing that risk. Entering a new market is one of the biggest risks and biggest investments a company can take. The financial rewards of successfully entering a new market can run into the billions of dollars; conversely billions of dollars can be wasted if the market entry is unsuccessful. The ROI (return on investment) of market entry research can therefore be immense. Why enter a new market? The decision to enter a new market can be understood through the prism of the Ansoff matrix. In his article ‘Strategies for diversification’ Igor Ansoff stated that there are four strategies a company can undertake if it wishes to grow its revenue and profits. Ansoff’s matrix (Figure 21.1) looks at growth strategy by plotting existing or new products and services against existing or new markets. By ‘markets’ we mean distinct target audiences – for example different industry sectors or countries. The safest approach to growth is usually market penetration – to try to sell more and more existing products to your company’s existing target market. A product development growth strategy involves providing new products to your existing markets, and is most successful when the needs of customers are changing. The diversification strategy is the most risky strategy for growth...
eBook - ePub- Rob Dransfield, Rob Dransfield(Authors)
- 2013(Publication Date)
- Routledge(Publisher)
...These methods are outlined below and then revisited in greater detail in Section 12.6. There are three main types of Market Entry Strategy: Exporting; Joint venturing; and Foreign direct investment (FDI). Exporting This is the simplest way to enter a foreign market. The company produces all of its goods in the domestic economy and then has them transported to the export market. The products may be modified for distinct regional markets. When entering foreign markets firms may initially test the water through a low-cost method such as selling through an intermediary. This type of indirect exporting is relatively cheap and involves little investment – however, it involves sharing profit with the distributor. The next step therefore may be direct exporting. A firm can: Set up a domestic export department. Set up an overseas branch that deals with sales, distribution and perhaps promotion. Send a home-based sales representative abroad to find business. Work with overseas sales agents. Joint venturing This involves joining with an overseas company to set up a new independent company (joint venture) jointly owned by the two businesses. Joint venturing is a particularly attractive way of entering new markets where political and commercial connections need to be made, and language and cultural differences may require expertise on the ground. Varieties of joint ventures include: Licencing arrangements whereby a company enters into an arrangement with a licensee in a foreign market. For a fee or royalty the licensee earns the right to produce the company’s product or use their manufacturing processes. A company can use licencing to enter a foreign market with little risk...
- Hong Liu(Author)
- 2018(Publication Date)
- Routledge(Publisher)
...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. Entry mode choice is contingent upon variables such as size, industry and ownership on one hand, but is also shaped by perceptions of the market the firm wants to enter, its dependence upon that market, and the firm’s international experience. Indeed, Calof and Beamish (1995) argue that choice of Market Entry Strategy is a complex phenomenon that can only be explained by examining various factors simultaneously. This paper attempts to explain choice of market entry strategies in terms of strategic as well as contextual considerations, while comparing four different market entry modes: wholly-owned sales subsidiaries (WOS), international joint ventures (IJV), international strategic alliances (ISA) and export. The four market entry strategies are situated on a continuum that can be perceived in terms of control; the higher the degree of foreign direct investment (FDI), the higher the firm’s control over it’s foreign markets. Various researchers have discussed the importance of control over resources in order to succeed in a foreign market (Anderson and Gatignon, 1986; Kim and Hwang, 1992; Kogut and Zander, 1993). Comparison of the four market entry strategies in relation to contextual and strategic variables will enable us to understand what makes firms relinquish control and under which conditions. The contextual factor is comprised of three variables and includes type of industry, type of ownership and size...
eBook - ePub- Robert H. Scarlett, Lawrence E. Koslow, J.D., Ph.D.(Authors)
- 2009(Publication Date)
- Routledge(Publisher)
...Market Entry Strategies—Global Business without Leaving Home DOI: 10.4324/9780080507415-15 Going international can be accomplished by several methods, one of which is being an importer of goods, services, or capital. A company that only imports is also an international company that must be concerned about cultural differences. They need to be savvy in negotiating across borders and, like exporters, may be involved in adapting products and services for local markets. Finally, importers need also to develop the personnel and management tools necessary to under-take international trade and finance. In this section, we will explore the following concepts: Sourcing foreign components and labor Representing a foreign business or selling foreign products into the domestic market, agents and distributors, and licensing foreign technologies, including franchising Exporting from the home country using catalogs or traveling salespersons 191 International Sourcing In order to remain competitive in both home and foreign markets, many companies are now choosing to acquire some of their products, parts, and/or components from abroad. Additionally, even companies that produce a large portion of their products through their own facilities are now finding, for a number of reasons, that it is better to begin to move to suppliers, both domestic and foreign, in order to reduce costs and labor commitments and to protect the interests of their shareholders...
