ch6-market entry strategies

8/3/2019 Ch6-Market Entry Strategies

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Ch 6: Market Entry

StrategiesLearning Objectives:

different theories of internationalization and their

effect on market entry strategiesfactors to be considered in the choice of market

entry strategies

different types of market entry modes

critical strategic considerations in market entry



International Market Entry

Decisions: Environment

(1/2)Marketing

EnvironmentDescription

Socio-economic

State of market development | Demographic

& Geo-demographic factors | Geographical

dispersion of consumers | Distribution

system development & structure | Climate |

Ethics

Political

Terms of entry and doing business | Political

leaning of Government | Climate for

investment | Stability of Govt. | Attitudes to

international investment



International Market Entry

Decisions: Environment

(2/2)Marketing

EnvironmentDescription

LegalLocal business laws | Intending entrants¶

domestic laws | International laws

Competition

Leader or Follower | Level and type of

domestic and international investment |Transaction costs and margins

CurrencyExchange fluctuations and conversion rates

| Exchange transfers | Exchangeability of

currency |Inflation and deflation



Theories of

Internationalization Approach Description

Incremental Approach

Organizations develop their activities in

an incremental fashion as their knowledge

develops.

First, expansion into markets which arephysically close and then into more

distant markets as their knowledge

(³Experiential´) grows.

German, US and Japanese organizations



Theories of

Internationalization Approach Description

Transactional

Cost Analysis

Firm will internationalize if it can perform

at a lower transaction cost than if it

exported or entered into a contractual

agreement with a local partner.

The underlying assumption is that

markets are competitive

Entry methods giving higher control are

favored

Japan¶s culture: Collectivism, Group

Identification, Loyalty, Harmony &

Reciprocal obligation help reduce cost



ore gn ar e n ry

Strategy: 3 Approaches

Home Market

ProductionForeign Production

Agent

Distributor

Government

Overseas

Subsidiary

Direct ExportIn-Direct

Export

Trading

Company

Export

Mgmt

Company

Licensing

Joint venture

Contract

Manufacturing

Ownership

Export

Processing

Zones



Market Entry ModesMarketing

OrientatedContractual

Shared

Owned &

Controlled

Wholly Owned

& Fully

ControlledDirect Exporting

Agents

Distributors

E-commerce

Licensing

Franchising

Contract

Manufacture

Alliance

Joint Ventures

Partial Mergers

and acquisitions

Subsidiaries

Representatives

Assembly

InDirect Exporting

Via domestic

organizations

Trading

Companies

Export Houses

Low HighLevel of Risk & Control

Level of Involvement



Factors Influencing Choice

of Market Entry Mode

Market

Entry

Mode

Corporate

Objectives &

Resources

Level of

Involvement

Level of Risk &

Control

Flexibility

Speed of EntryInvestment &

Market Costs

Administrative

Requirements

Payback

Nature of Market,

Competition, etc.



24th Jul, 2011 Global MArketing | RIMS, Bangalore

AssignmentsDirector General of Foreign Trade (DGFT)

Export Promotion Councils

Agricultural & Processed Foods Exports Dev Authority

Apparel Export Promotion Council

Federation of Indian Export Organization

Export Promotion Council for Handicrafts

Marine Products Export Dev Authority

Carpet Export Promotion Council



24th Jul, 2011 Global MArketing | RIMS, Bangalore

Assignments

Export Credit Guarantee Corporation

Indian Trade Promotion Organization

Export-Import Bank

State Trading Corporation of India

ch6-market entry strategies

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