MARKET ENTRY OPTIONS

Market Entry Options

Market Entry Options

Introduction

A foreign market provides a new array of entry options for the business. The options available fall into two distinct categories. The first are alliance options, which range from the tactical to strategic. The second are sales and marketing, which are based on the longevity of the relationship. These options can be further broken down by geography, demographics or vertical industry segmentation (Arnold 2005 411). This report explores different marketing options available for business that are going global. The second part of this report explores the best fit from these options for Beijing Yanjing Beer Group Company. In choosing the best option for this company, a review of the situation of international beer markets is presented in light of company's current situation and strategic direction.

Strategic Alliances

Strategic alliances are collaborations between companies, sometimes competitors, to exchange or share some value activities. Examples include joint R&D, shared manufacturing, and distribution alliance.. Strategic alliances in the form or joint ventures also involve capital investments and the creation of a new corporate unit jointly with a foreign partner (Engel 2003 45). Such joint ventures have long been common especially in countries such as India where government mandates participation by locals and in countries such as Japan where market access is difficult for outsiders (Blattberg 2003 553).

Joint ventures are a type of strategic alliance in which partners create an equity-based new unit. In recent years, non-equity-based strategic alliances have become very common (Arrow & Hahn 2000 47). An international strategic alliance is typically a cooperative collaboration between companies, even between potential competitors, across borders. The alliance could encompass any part or the value chain-although the focus is often limited to manufacturing, R&D. or distribution. In distribution alliances, the partners agree contractually to use an existing distribution network jointly. A typical example is the linkup between Lufthansa and United Airlines to pool route information and passengers.

Exporting

Companies usually use exporting entry modes in their initial forays to international markets. Although exporting provides the least control for a company, it is preferred because of the minimal risk associated with it. Exporting provides a company with the opportunity to test an international market without making a major investment. In exporting, a company produces a product in one country and then transfers it for sale to another nation. Traditionally exporting had been associated with the production of physical goods and services were considered very difficult to export. However, recent technological developments have made the exportation of services a viable option and trade in services has increased dramatically in recent years (Kotler et al 2010 17).

Indirect exporting refers to the use of home country agencies (trading companies, export management firms) to get the product to the foreign market. Piggybacking” is the use of already exported products' transportation and distribution facilities. Consortia are used by some smaller exporters banding together to sell related or unrelated products abroad (McKenna 1991 65). Direct exporting, by contrast, means the firm itself contacts the buyers abroad, be ...