FOREIGN MARKET ENTRY

Foreign Market Entry and Diversification



Foreign Market Entry and Diversification

Introduction

The strategy of setting aside a portion of their production to the domestic market and one for the foreign market allows the company to expand its base / customer base, which means less risk, because the greater the number of markets it reaches less it is dependent. The market diversification also allows the seasonality of the product is eliminated, i.e., a company that manufactures products for the cold weather, you can produce them year round because different markets where it will sell them, and do not depend only the national stations.

Discussion & Analyses

The occupation of strong commercial positions, or even dominant, in key global markets, lets maximize sales volume and benefit from economies of scale and experience. Making the product is equal in their country of origin and any other international market allows leverage the benefits resulting from the experience (Kumar, Gaur & Pattnaik, 2012). A company that internationalize their activity can locate the various elements of the value chain - research and development, manufacturing, final assembly and distribution - which is more advantageous for you and where you have a greater number of resources essential to their operation.

Increased number of synergies, particularly in the establishment of international partnerships, licensing, use of international distribution channels, among others, achieved through great interdependence and greater cooperation between the various worldwide locations. Require, for example, companies adapt their products and services with local regulations (Ghauri & Santangelo, 2012). The location itself is conditional on the granting of licenses by the government. Tax regimes differ from country to country, depending on the type of business and occupation.

Despite numerous attempts globalization of professional practices, the culture of each country reflected deeply in the culture of the organization and working methods of the people. Consumers in different countries have different needs and behaviors, which limits the supply of companies and increases their costs of adapting products and services to the new environment. The large-scale distribution sectors are most affected because they fail the means of distribution of its products, its entire business can run serious risks (Hwy-Chang & Min-Young, 2008). Perishable nature of the products can not travel long distances, which force certain industries to build productive infrastructure base near the areas of international marketing, greatly increasing the cost of market entry.

It is noteworthy that the international strategic process depends not only on the specific market, or firm-specific advantages of an array of factors that manifest according to objective criteria of decision and choice of input modes implemented unilaterally by incoming foreign market. It also includes the selection of relationships that need to keep the entrant with different international partners - for example, customers, suppliers, distributors and government agencies. It is recognized that the prospects discussed above are closely related (Fisch & Zschoche, 2012). For instance, it is assumed that, through a process of decision making planned or unplanned, the firm formulates strategies and chooses to enter the foreign market, develop and maintain relationships ...