International Bussiness

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Case Studies on

Market Entry Strategies – Vol. I

Edited by

Souvik Dhar
ICFAI Business School Case Development Centre

ICFAI Books
# 71, Nagarjuna Hills, Punjagutta, Hyderabad – 500082

ICFAI Books
# 71, Nagarjuna Hills, Punjagutta, Hyderabad – 500082 Andhra Pradesh, INDIA Phone : 91 - 40 - 23435387/91, Fax: 91 - 40 - 23435386 e-mail: icfaibooks@icfai.org, ibscdc@icfai.org Website: www.icfaipress.org/books, www.ibscdc.org

© 2006 The Institute of Chartered Financial Analysts of India. All rights reserved.

No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means - electronic, mechanical, photocopying or otherwise – without prior permission in writing from The Institute of Chartered Financial Analysts of India. While every care has been taken to avoid errors and omissions, this book is being sold on the condition and understanding that the information given in the book is merely for reference and must not be taken as having authority of or being binding in any way on the authors, editors, publisher or sellers. Product or corporate names may be registered trademarks. These are used in the book only for the purpose of identification and explanation, without intent to infringe. Case studies are intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. Copies of individual case studies are available for purchase from www.ibscdc.org

ISBN 81-314-0342-4

Editorial Team: Mercy Mathew and Subha Dharmapuri

Visualiser: Ch. Yugandhar Rao Designer: K. Sreehari Rao

Case Title Business in India – The LG Way Carrefour in China Carrefour in Japan China's Beauty Industry: L'Oreal's Foray GM in China H&M: The Swedish Fashion Discounter in USA Hang Seng Bank in China: The Growth Strategies Heineken in Russia: The Growth Strategies Indica's Foreign Foray KFC in China Market Entry Strategies of Gmail McDonald's in China Metro in India: Fighting Against Odds Microsoft's Entry into Antivirus Industry Samsung in India: The Growth Strategies UBS: The Swiss Bank in China Wal-Mart in Japan Whole Foods in UK: The Growth Challenges

Page No. 1 11 19 33 43 55 63 73 81 89 107 113 131 143 151 161 169 181

AN OVERVIEW

With saturation of domestic markets and intense competition, it is imperative for companies to internationalize their operations. In order to survive and grow, the companies are forced to seek and exploit opportunities in newer markets. But the process of penetrating and then developing an international market for the product is a laborious activity. With no sales and marketing infrastructure in place, and little or no knowledge of the market, the efforts required to enter a new market is similar to that of establishing a start-up venture. Companies enter international markets for varied reasons. But, the fundamental reason is the potential demand of the new market. Besides, internationalization can help the company achieve greater economies of scale. But in certain cases, a company may enter a new market as a reaction to a competitor’s move. This is driven by the belief that the competitor would gain a significant advantage if it were allowed to operate alone in that market. At times, some companies undertake foreign market entry with the objective of learning. Learning indirectly, via a local distributor or a partner, is less effective and does not contribute significantly to enable the company develop itself into a global player. Apart from the varied marketing objectives, government incentives to boost exports and global operations also encourage companies to enter markets it would otherwise not have ventured into. Companies often follow, what is sometimes referred to as the “increasing commitment” pattern of market penetration, in which it starts with exporting its products to the target countries, thereafter has a tie-up with a...
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