entry strategies of international marketing

8/7/2019 ENTRY STRATEGIES OF INTERNATIONAL MARKETING

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ENTRY STRATEGIES OFENTRY STRATEGIES OF

INTERNATIONAL MARKETINGINTERNATIONAL MARKETING


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WHAT IS ENTRY STRATEGYWHAT IS ENTRY STRATEGY

AA market entrymarket entry strategy is the plannedstrategy is the plannedmethod of deliveringmethod of delivering goodsgoods oror servicesservices toto

aa target markettarget marketand distributing themand distributing themthere.there.

WhenWhen importingimporting oror exportingexporting services, itservices, it

refers to establishing and managingrefers to establishing and managingcontracts in a foreign country.contracts in a foreign country.


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MODES OF ENTRY STRATEGIESMODES OF ENTRY STRATEGIES

ExportingExporting LicensingLicensing

FranchisingFranchising

Turnkey ProjectTurnkey Project Foreign direct investmentsForeign direct investments Mergers & AcquisitionsMergers & Acquisitions Contract manufacturingContract manufacturing Management contractsManagement contracts Joint VentureJoint Venture Acquisitions & MergersAcquisitions & Mergers Business process outsourcingBusiness process outsourcing


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EXPORTINGEXPORTING

Exporting is the marketing and direct sale ofExporting is the marketing and direct sale ofdomesticallydomestically--produced goods in another country.produced goods in another country.

Exporting is a traditional and wellExporting is a traditional and well--establishedestablishedmethod of reaching foreign markets.method of reaching foreign markets.Exporting commonly requires coordinationExporting commonly requires coordinationamong four players:among four players:

ExporterExporter

ImporterImporter Transport providerTransport provider GovernmentGovernment


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Advantages Of ExportingAdvantages Of Exporting

Need for limited financeNeed for limited finance

Exporting does not require that goods be produce in target countryExporting does not require that goods be produce in target countryno investment in foreign production facility is required.no investment in foreign production facility is required.

Less RisksLess Risks

Exporting involves less risk as the company understand the culture ,Exporting involves less risk as the company understand the culture ,customer and the market of the host country gradually.customer and the market of the host country gradually.

Motivation for exportingMotivation for exporting

Motivation for exporting are proactive and reactive. ProactiveMotivation for exporting are proactive and reactive. Proactivemotivations are opportunities available in the host country. Reactivemotivations are opportunities available in the host country. Reactivemotivators are those efforts taken by the company to export themotivators are those efforts taken by the company to export theproduct to a foreign country due to the decline in demand for itsproduct to a foreign country due to the decline in demand for itsproduct in the home country.product in the home country.


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Indirect exportingIndirect exporting

It is exporting the products either in theirIt is exporting the products either in theiroriginal form or in the modified form to a foreignoriginal form or in the modified form to a foreign

country through another domestic company.country through another domestic company. Various publishers including Himalya PublishingVarious publishers including Himalya PublishingHouse, sell their products i.e. books variousHouse, sell their products i.e. books variousexporters in India, which in turn export theseexporters in India, which in turn export these

books to various foreign countries.books to various foreign countries.


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Direct exportingDirect exporting

It is selling the products in a foreign countryIt is selling the products in a foreign countrydirectly through its distribution arrangements ordirectly through its distribution arrangements or

through a host countys company.through a host countys company. Baskin Robbins initially exported its iceBaskin Robbins initially exported its ice--cream tocream to

Russia in 1990 and later open 74 outlets withRussia in 1990 and later open 74 outlets withRussian partners. Finally, in 1995 it establishedRussian partners. Finally, in 1995 it established

its iceits ice--cream plant in Moscow.cream plant in Moscow.


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FACTORS TO BE CONSEDEREDFACTORS TO BE CONSEDERED

WHILE EXPORTINGWHILE EXPORTING Government policies.Government policies. Marketing factors.Marketing factors. Logistical considerations.Logistical considerations. Distribution issues.Distribution issues.


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LICENSINGLICENSING

In this mode of entry ,the domesticIn this mode of entry ,the domesticmanufacturer leases the right to use itsmanufacturer leases the right to use its

intellectual property (ie) technology , copy rightsintellectual property (ie) technology , copy rights,brand name etc to a manufacturer in a foreign,brand name etc to a manufacturer in a foreigncountry for a fee.country for a fee.

It is based on a contractual agreement betweenIt is based on a contractual agreement between

the owner of the property (or its agent) knownthe owner of the property (or its agent) knownas the licensor; and a licenseeas the licensor; and a licensee normally anormally amanufacturer or retailer.manufacturer or retailer.


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AdvantagesAdvantages

Low investment on the part of licensor.Low investment on the part of licensor. Low financial risk to the licensor.Low financial risk to the licensor.

Licensor can investigate the foreignLicensor can investigate the foreignmarket without much efforts on his part.market without much efforts on his part.

Licensee gets the benefits with lessLicensee gets the benefits with less

investment on research and development.investment on research and development. Licensee escapes himself from the risk ofLicensee escapes himself from the risk ofproduct failure.product failure.


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DisadvantagesDisadvantages

Both parties have to maintain the product quality andBoth parties have to maintain the product quality andpromote the product .Therefore one party can affect thepromote the product .Therefore one party can affect theother through their improper acts.other through their improper acts.

Chance for misunderstanding between the parties.Chance for misunderstanding between the parties. Chance for leakages of the trade secrets of the licensor.Chance for leakages of the trade secrets of the licensor. Licensee may develop his reputation.Licensee may develop his reputation. Licensee may sell the product outside the agreedLicensee may sell the product outside the agreed

territory and after the expiry of the contract.territory and after the expiry of the contract.

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