Discussion Thread: Entering Global Markets / Managing Global Operations Replies

Market Entry Motivation

Key Term and Why You Are Interested in It (100 words minimum)

            The key term I have selected from this week’s reading is Market Entry Motivation. As I was reading through this week’s chapters on world entry, I began asking myself the question “what makes global market entry so beneficial if it involves a lot more planning as opposed to just sticking to a domestic market” and “what are the factors involved in making the decision to take a product or service to the global market”. As I was asking myself these questions, I came across the motivations and wanted to further my application knowledge of companies actually putting this information and motivation to practice.

2. Explanation of the Key Term (100 words minimum)

            Market Entry Motivation is all about the motivation a company sees in entering a market. It involves the physical act of sizing up a market and product and assessing whether or not their global entry motivations are proactive or reactive. A company with proactive motivations for going global is doing it to grow and because they see great value in it. A company approaching global entry with a reactive approach is doing so because they are reacting to a situation outside of their control and have no other option. These are the two greatest motivators of global market entry, and each breaks down into individual focuses to determine the greatest influence to going global. For a proactive company, it may involve making more money, being more competitive, opportunities in the market, benefits to the taxes of the company, or other economies. A reactive motivation might reveal competitive pressure for a company to perform, extra capacity that must be filled, overproduction, or an over-saturated home market.

3. Major Article Summary (200 words minimum)

            The article I have chosen for my major article is, “Foreign market entry and expansion – Directions for strategic organizational growth based on a global system perspective” (Kumar & Waheed, 2007). In this article, Sameer Kumar and Usman Waheed study the true motivations for global expansion and the pitfalls that may come with it. They begin their study with a substantial literature review portion, where they look at the general motivators for global expansion, and then narrow those down to some different industries. The general motivators being an imperfection in a given market or the factor/given market, preserving a customer base, entering a growing/high growth market, economies of the operation, or a desire to control a given raw material recourse. The motivators by industries identified commoditized industries are driven by client searching and client gap locations.

            After the literature review, they discussed the process of global market entry and the things to do in order to prepare a company. The first was a geographic SWOT analysis to identify all the strengths, weaknesses, opportunities, and threats in a given geographic location. After the SWOT, a company then would apply a multi-linear regression model to establish further macroeconomic variables. Lastly, they use game theory to identify the optimal way to gain market share in the countries of choice.

4. Discussion.

a. This article places a heavy focus on the motivators for specific industries to look to go global with their business. Motivators, as mentioned above, are the specific reasons a company will enter a new market in a global context. Whether a proactive company, or a reactive company, the motivators will vary depending on the company, industry, and competitors located in the area. This relates to a lot of what the book was talking about in terms of motivators for a given company going global. This article goes a step further and takes those motivators in application settings of seeking new investment/expansion opportunities for companies looking to grow.

b. After seeing a lot of the motivations in this article and the textbook for global market entry, I decided to focus the expounding research on different strategies involved in global market entry and the motivation for some of those strategies. The first two articles I found on this, both discussed different aspects of group global market entry. The first was an article about how Chinese companies have started to used “group entry” as a new model for global market entry as it helps them enter with an established presence through collaboration (Masiero et al., 2017). The next article was about partnerships in going global and how each company should identify the right partners when going global in order to maximize their success (Negoro & Matsubayashi, 2021). The next article was about global branding and using a model to identify the best branding techniques to keep company reputation when entering a global market (Omar et al., 2009). Lastly, I read an interesting article talking about the motivators of going global and how those motivators often cause competition amongst competitors for a new market in a country. It looked at the impacts of bribery on the process of global market entry and how countries fail to prevent bribery in such a profitable expedition for many companies (Weismann et al., 2014).

Reference

Kumar, S., & Waheed, U. (2007). Foreign market entry and expansion – Directions for strategic organizational growth based on a global system perspective. Information Knowledge Systems Management, 6(3), 177–196.

Masiero, G., Ogasavara, M. H., & Risso, M. L. (2017). Going global in groups: A relevant market entry strategy? Review of International Business & Strategy, 27(1), 93–111. https://doi.org/10.1108/RIBS-11-2016-0067

Negoro, K., & Matsubayashi, N. (2021). Game-theoretic analysis of partner selection strategies for market entry in global supply chains. Transportation Research: Part E, 151, N.PAG-N.PAG. https://doi.org/10.1016/j.tre.2021.102362

Omar, M., Williams Jr., R. L., & Lingelbach, D. (2009). Global brand market-entry strategy to manage corporate reputation. Journal of Product & Brand Management, 18(3), 177–187. https://doi.org/10.1108/10610420910957807

Weismann, M., Buscaglia, C., & Peterson, J. (2014). The Foreign Corrupt Practices Act: Why It Fails to Deter Bribery as a Global Market Entry Strategy. Journal of Business Ethics, 123(4), 591–619. https://doi.org/10.1007/s10551-013-2012-8