field : global marketing strategy
ab143225
Decision3-group10.docx
Global Market Strategy – MGMT - 6065
Group 10
Decision 3
Market Entry Mode Strategy
Team members - Radhika Lotankar
- Akhil Chapala
Date - December 21st, 2017
Professor's Name - Dr. G. Chopra
Market Entry Mode Strategy
Step one
Reference link -http://slideplayer.com/slide/10846422/39/images/32/Entry+Mode+Decision+Framework.jpg
The criteria to go into the selected country.
When entering into market for a country that has good record when it comes to market performance, it requires thorough preparations for couple of some discouraging factors. There are some criteria that one might use to enter such a market. The criteria will include;
Educating yourself on the customs and business etiquette of the international market.
With these criteria, you have to first understand the country’s history. Like in this case, it is good to understand what has been happening with the Germany market and the trends. This will include the approach to customers, business people also. You should be able to communicate with them in a way that they expect within their society like with the appropriate salutation. If opposite happens, this might be a negative and will affect the business from the first approach (Andreu, 2017). These criteria is a (+).
Gathering historical data on the currency of that country and value, fluctuation and import/export timelines.
The information about the market trends and the history is very crucial when it comes to entering the selected country. With Germany, it has had a stable currency value and has maximized on the imports and exports. These criteria will help you determine and evaluate the value you might get from joining the country in near future since the positive results might be after some years (Laufs, 2016). Therefore, these criteria equip you with the relevant knowledge that you need to have before joining the country. These criteria are a (+).
Become an expert on the country’s laws governing business.
Where there is business, there must be laws. A mess with the business laws, might lead to a huge or even permanent negative impact on the business being undertaken. Therefore, this means that, before entering in Germany, you should have someone who will help you navigate any unforeseen obstacles and explain all the contracts provisions and terminology. Knowing and understanding the laws and legalese of the jurisdiction that governs the contract before it is legally binding (Blackburne, 2017). Actually, these criteria determine the future of the business that will be carried out in that country. The criteria are (+).
Conduct focus groups to test the waters in the prospective international market
Being clear with a country’s culture means that one has to get ways to achieve what would otherwise be the same demographic but in different location. This will make you to have the knowledge on what should be taken to the market and what should not. In fact, it gives hint on what is on demand in the market. Therefore, these criteria makes your product or the service to be suitable to the needs and expectations of the potential foreign market and its culture. These criteria is a (+).
Finding out what your competition has done in the same territory
These criteria are one of the best that should actually guide one through to know how he should get prepared. You should ask yourself some questions regarding the previous competitors entering the same market (Game, 2016). This will give a clear picture of what is in the same market. The question that you should be asking yourself are like; has any competitor joined the same market? What obstacles did they face? How did they approach the new market? Then what will you do differently from the competitors? These criteria is a (+).
Step two
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Identifying the level, highly externalized, intermediate or highly internationalized.
Marketing or branching to an international market calls for thorough research and evaluations. It is good to undergo the various stages in order to reach the desired level of business. It is also good to understand the level of entering the market on the country chosen. The following are the levels to be achieved in joining Germany
Domestic market establishment.
It is good before entering a country to have business there, you try fist at the local markets. This will give a green light of the perception of the customers with the product or the service. This will actually help you to know whether to enter into the selected country or not. It also ensures a strong foundation even if the international market fails, then the domestic will not fail. This actually is a level that should be the first one to be undertaken (Laufs, 2016). The level is intermediate.
Export research and planning
This actually targets a new market where one does not have full information on that country. The research carried out will make the person to be familiar with what goes on there and prepare himself appropriately for the outcome. This export research helps one to identify the problems and weaknesses that will be faced easily. The also to see the potential challenges that they might face after joining the market. Therefore, this level is actually externalized in its own nature.
Initial export sales
This level is very important when joining the country since you will use the export to make the products or the services available to that country. It will actually familiarize you with exporting market and you will become familiar with mechanics of exporting. This level also makes the exporter to develop markets in phases that enables him to monitor their progress and make any necessary change as they progress along the path to export success (Holtgrave, 2017). This level also helps the exporter to acquire relevant practical skills in such a country without incurring unnecessary or unmanageable risks. This level is highly externalized.
Expansion of international sales
This level calls for planning for a larger orders and expanded activity that should follow. The level is usually followed by thorough market research, more aggressive participation in the international trade shows and other marketing activities and greater emphasis on strengthening networks and contacts in the target country. It helps one in making appropriate adjustments o their strategy as they proceed with strengthening their position in the market. The person may enter into negotiations with potential local partners to strengthen its position in the market in win-win business relationships. This level is highly internationalized (Andreu, 2017).
Investment abroad.
This is the last level of entering into a selected country. If after having thorough research and analysis, you find the country is favorable with the kind of the business to be carried out, then this level gives a green light on entering and starting to invest in the country. The level carries additional ramifications and responsibilities, beyond those of a company that is based elsewhere simply operating remotely in a foreign market (Blackburne, 2017). New issues come into play because the scope of a company’s presence broadens when it takes on a permanent physical presence in the market. This level is internationalized.
Step three
Ref link- http://slideplayer.com/slide/6352858/22/images/20/Factors+in+the+Entry+Mode+Decision.jpg
Analyzing the case and other data learned then selecting the best entry mode
In this case, there are certain factors that need to be considered before entering the selected country. These factors will highlight the important issues that need to be addressed before entering into that particular country. The factor involves the internal factors, desired mode characteristics, transaction specific factors, product and external factors.
Internal factors
These are factors that will involve the firm that you want to introduce to the selected country. They will include the firm size and the international experience. It is good to have a reasonable size of the firm before entering the selected country in order to know the amount of pressure and competition that will be offered to the existing firms. Also one has to have the international experience when entering the selected country (Game, 2016). The experience will make it possible to carry out the activities intended.
Product
The product will involve the things or what will be offered to the market. The product can also be a good or a service done to the market. The product will involve the product complexity and the product differentiation advantage. The product complexity will refer to the nature of that particular product so as to be well understood at the market. The product differentiation advantage will be the unique feature in that product that makes it to be on demand.
Desired mode of characteristics
This factor will refer to nature of the mode through that one will use in entering the selected country. This will be the mode that will be the most favorable and easy to make it to enter the selected country. The factor will involve the risk averse, control and flexibility. The mode that will be able to pose less risk will be the appropriate one (Kruesi, 2017). The mode that will be easily controlled when entering the selected country will be the one to be preferred. Then the mode should be flexible to suit different needs under different times.
Transaction specific factors
This factor will be used to enlighten one on what happens in the selected country when it comes to transactions. Different countries have different transactions behaviors. This factor involves the tactic nature of know-how and the opportunistic behavior. Therefore, one should be conversant with what happens when it comes to transactions.
External factors.
The external factors are very many and need thorough scrutiny in order to evaluate each well. These external factors will involve the sociocultural distance between home and country and host country, country risk/demand uncertainty, market size and growth, direct and indirect trade barriers, intensity of competition and small number of relevant export intermediaries available. Actually, the externa factors, if not well checked, do affect the mode greatly. They need to be analyzed keenly (Laufs, 2016).
From the analysis, the best mode of entry into the selected country will be exporting. With exporting, it will be easy to get established in the market and also easy to dominate it. With exporting, one will be able to internalize since he will have high control, high risk and low flexibility.
Step four
Strong rationale for my strategy
Ref link- https://image.slidesharecdn.com/6-internationalmarketingmarketselectionmodesofentryininternationalmarkets
There are very many reasons for joining the foreign market. These reasons include;
Forming economies of sale
It is through the foreign markets where there are economies of scale. This is initiated by the fact that most companies do come together and do business together. Therefore, through the economies of scale, companies and firms from different foreign countries can be able to get new skills to do their businesses (Kruesi, 2017). Companies with complementary skills can rely on each other’s proven expertise instead of spending time and resources to independently develop what has already been achieved.
Enhancing competitiveness
In the foreign trade, there are expertise from different fields. Companies try and come with different new ideas that may be copied by other companies to do their businesses. The competition from different foreign companies do encourage the other companies to work more to be at par with others. The most competitive corporations are adopting a strategy of maintain their core competencies only.
Dividing global business risks
Partnerships from different foreign countries does help the companies to share the probable risks that might arise in the process of conducting business. Therefore, from my strategy of joining the foreign market, it is due to the positive results that will be realized by the participating foreign companies. The sharing of the risk can be through sharing of the transportation and distribution systems that do save money and enables faster delivery of the product. Joint market is another way of spreading risk and increasing returns
Setting new standards
Since most foreign companies do come up with different technologies, there are high chances that other companies will try their best to cope up with the new technologies that will be being used by other foreign companies. This actually raises the standards of doing business to another level. Each company puts effort to ensure that they also be at the same level with the other companies. However, several competitors might develop similar technologies at about the same time. It is very difficult to tell the technology that will set the highest standards for the industry so trying to be the first into market with a new technology can be very risk. So it is upon the company entering the foreign company to make the wise decisions (Game, 2016).
Entering new foreign markets
Strategic global business alliances are effective ways of entering new foreign markets. Partners can provide established and distribution systems, as well as knowledge of the markets they serve, ensuring that products get to market faster and are more likely to be purchased. This entering into foreign market, can help with such issues as translation of documentation, conversion from metric to imperial measures, conversation of power requirements and compliance with packaging regulations.
Overcoming competition
Companies often so-operate in marketing or distribution to overcome competition. Coming or entering into a foreign country with an established, major company can reduce the influence of other companies. However, companies should be careful that alliances do not form a cartel breach anti-competition laws in the target market. These strategies will be help any company that needs to join the foreign market or country an opportunity to make wise decisions (Holtgrave, 2017).
Step five
Four factors that weighed heavily in my decision
Ref link - https://www.fanshaweonline.ca/d2l/le/content/823717/viewContent/5526170/View
There are main factors that are to priorities in joining the foreign markets. These factors that I have stressed in my decisions includes the competition, new standards, and risk sharing and enhancing economies of scale.
The factor of competition is very helpful to companies entering the foreign markets. The competition that is created due to companies joining foreign markets is positive on its own. Most of the companies will be able to copy some techniques that are used by other companies to dominate in the market. Actually, through competition, companies are able to come up with innovations that work even well than the existing methods used (Blackburne, 2017). This factor has really influenced a lot of businesses and some have grown big to become internationally recognized. Therefore, this factor actually weighs a lot in my decision. The competition will also determine who will dominate the market since he will have beaten the competitors.
The other factor that has really had a lot of weight in my decision is the new standards set. There are new standards that are set due to companies joining the foreign companies. Due to different application of technology by different companies that do join the foreign markets, you find that, others work hard to raise the standards. This leads to kind of competition to see who will be the best in the market. This actually helps in determining who will rule in the market or will emerge with the best technology of high standards (Andreu, 2017).
The other factor is the risk sharing. When different companies come together, they try and join to assist one another in making the business environment favorable. This is usually as a result of facilitating the transportation costs. You find that, since most of the companies have joined the foreign market, they cut cost like sharing the transportation cost and other risks that they have occurred in the period of doing business. The fourth facto is the enhancing the economies of scale. Through partnering with other foreign companies, the economies of scale enable the participating companies to marshal abroad set of resources and achieve the critical mass needed for international success.
Reference
Andreu, R., Claver, E., & Quer, D. (2017). Foreign market entry mode choice of hotel companies: Determining factors. International Journal of Hospitality Management, 62, 111-119.
Blackburne, G. D., & Buckley, P. J. (2017). The international business incubator as a foreign market entry mode. Long Range Planning.
Blackburne, G. D., & Buckley, P. J. (2017). The international business incubator as a foreign market entry mode. Long Range Planning.
Game, R., & Apfelthaler, G. (2016). Attitude and its role in SME internationalisation: why do firms commit to advanced foreign market entry modes? European Journal of International Management, 10(2), 221-248.
Holtgrave, M., & Onay, M. (2017). Success through Trust, Control, and Learning? Contrasting the Drivers of SME Performance between Different Modes of Foreign Market Entry. Administrative Sciences, 7(2), 9.
Kruesi, M., Kim, P. B., & Hemmington, N. (2017). Evaluating foreign market entry mode theories from a hotel industry perspective. International Journal of Hospitality Management, 62, 88-100.
Laufs, K., Bembom, M., & Schwens, C. (2016). CEO characteristics and SME foreign market entry mode choice: The moderating effect of firm’s geographic experience and host-country political risk. International Marketing Review, 33(2), 246-275.
