MARKET ENTRY STRATEGIES

Market Entry Strategies



Market Entry Strategies

Introduction

Market entry strategies refer to planned methods that businesses or organizations use to deliver their products and goods in new markets. There are many marketing strategies that organizations can use when establishing their operations in international or foreign markets. The choice of a strategy depends on the market that one aspires to enter and the objectives of the organization. Every strategy has both positive and negative effects and therefore, choosing a strategy decisively is key to ensuring success. Examples of market entry strategies that can be utilized by an international business during implementation of a global strategy include; direct exporting, partnerships, indirect exporting via distributors, indirect exporting via agents and licensing, franchising and royalties.

Discussion

Methods of entry

A well planned market-entry strategy entails an operator greater management over its market initiation and launch expectations, thus providing assurance to meeting financial targets. Businesses nowadays attempt to accomphlish increment in sales, brand awareness and business sustainability by breaking into new markets. Formulation of a market entry strategy requires an in depth analysis of potential competitors and likely customers.

There are numerous options to enter a market. The list comprises of direct and indirect exporting, joint ventures, Merger & acquisitions or licensing of technology abroad. The risks & benefits associated with each method are attributed to several elements. This includes the nature of the product or service you produce, the requirements for product or service support, and the foreign economic, political, business and cultural environment that the firm is seeking to enter. The ideal strategy is highly reliant on the firm's level of resources and commitment, and the level of risk that the firm is willing to take.

Many businesses select exporting as their entry strategy. Start-up costs and risks are kept to its minimal, and it is less complicated in comparison to the other methods. Exporting can be performed directly or indirectly. Via the direct method, the business extends its business plan to include exporting as a new activity and gathers knowledge and workers to execute the plan, i.e., locating foreign buyers, labelling product, making transportation arrangements, and invoicing. If the avenue of direct exporting is unavailable, firms can can consider indirect exporting via a foreign distributor.

Barriers to trade, Depth of localized knowledge, price localization, competitors, and export subsidies are some of the relevant factors MNCs consider when deciding which entry strategy to pursue.

Joint ventures

A joint venture is a strategic alliance where 2 or more parties, usually businesses, form a alliance to share markets, assets, intellectual property, knowledge, and profits.

The distinct difference between a joint venture and a merger is there is no transfer of ownership in the partnership.

This partnership can happen between titans in an industry. Samsung siltronic (Singapore), for example, is a strategic alliance between Samsung and Siltronic. It can also materialise between two smaller businesses that believe coming together as one will allow for synegistic effect to ward off bigger competitors.

Companies with similar products and services in their portfolio can also come together to enter ...