Develop MPI
First, in today’s global economy, many companies are vying for a presence in the global markets. There are several ways to gain entry into a foreign market but many questions must be answered first to make sure there is a return on investment or an exit strategy. In the Foley Company case, Joanne has to determine what are her Company strategies advantages and disadvantages of entering Brazilian market for soybeans harvesters:
First, she has to determine whether the Company is considering a standalone entry or entry through alliances. This could be a pivotal point in their decision because on one hand the lack of experience with foreign manufacturing operations could prove to be costly in a standalone entry for example. But as Mr. Osborne point it out this is also a “too good to lose” market, so an equity-base method of entry through alliances seemed to be a none-starter for Foley Company. But eventually, Ms. Poe has other options to consider for entry strategies: Contract Manufacturing, Licensing, Franchising or Exporting.
Contract Manufacturing
Contract manufacturing has a flexibility element to it as an entry method as it can be used as an added value to other method of entry. This is a major advantage. Ms. Poe could recommend this option in conjunction with franchising for example. Contract Manufacturing would also give the Foley Company a new look at the market in Brazil because the company has not seen this aspect of business in Brazil. Here, the company could focus on R&D and other improvement to its machinery to gain competitive advantage. The advantages of this method of entry could be: low capital required, low risk, manageable exit strategy, easy to structure and direct the process.
The disadvantages of this method could be: the Company could lose some control due to lack of international experience, difficult to account for the cultural and differences in quality of work and standards, locally accepted practices can be hard to gauge when
First, she has to determine whether the Company is considering a standalone entry or entry through alliances. This could be a pivotal point in their decision because on one hand the lack of experience with foreign manufacturing operations could prove to be costly in a standalone entry for example. But as Mr. Osborne point it out this is also a “too good to lose” market, so an equity-base method of entry through alliances seemed to be a none-starter for Foley Company. But eventually, Ms. Poe has other options to consider for entry strategies: Contract Manufacturing, Licensing, Franchising or Exporting.
Contract Manufacturing
Contract manufacturing has a flexibility element to it as an entry method as it can be used as an added value to other method of entry. This is a major advantage. Ms. Poe could recommend this option in conjunction with franchising for example. Contract Manufacturing would also give the Foley Company a new look at the market in Brazil because the company has not seen this aspect of business in Brazil. Here, the company could focus on R&D and other improvement to its machinery to gain competitive advantage. The advantages of this method of entry could be: low capital required, low risk, manageable exit strategy, easy to structure and direct the process.
The disadvantages of this method could be: the Company could lose some control due to lack of international experience, difficult to account for the cultural and differences in quality of work and standards, locally accepted practices can be hard to gauge when
References: http://www.coursesmart.com/SR/7071808/0077496191/331?__hdv=6.8 https://blackboard.neu.edu/webapps/portal/frameset.jsp?url=%2Fwebapps%2Fblackboard%2Fexecute%2Flauncher%3Ftype%3DCourse%26id%3D_2239043_1%26url%3D Buckley, P.J., and Casson, M.C. 1998. Analyzing Foreign Market Entry Strategies: Extending the Internationalization Approach. Journal of International Business Studies: 539-561.