When an organisation has made a decision to enter an overseas market, there are a variety of options open to it. These options vary with cost, risk and the degree of control which can be exercised over them. The simplest form of entry strategy is exporting using either a direct or indirect method such as an agent, in the case of the former, or countertrade, in the case of the latter. More complex forms include truly global operations which may involve joint ventures, or export processing zones. Having decided on the form of export strategy, decisions have to be made on the specific channels. Many agricultural products of a raw or commodity nature use agents, distributors or involve Government, whereas processed materials, whilst not excluding these, rely more heavily on more sophisticated forms of access. These will be expanded on later. Structure Of The Chapter
The chapter begins by looking at the concept of market entry strategies within the control of a chosen marketing mix. It then goes on to describe the different forms of entry strategy, both direct and indirect exporting and foreign production, and the advantages and disadvantages connected with each method. The chapter gives specific details on "countertrade", which is very prevalent in global marketing, and then concludes by looking at the special features of commodity trading with its "close coupling" between production and marketing.
A sound market-entry strategy gives an operator greater control over its market introduction and launch expectations, thereby ensuring financial targets are met * A well-founded market-entry strategy minimises the uncertainties faced by new entrants * Analysys Mason has developed a systematic approach to market-entry strategies, allowing us to create well-supported and objective plans that extract maximum value from internal assets and investment, and ultimately increased competitiveness and secured revenue * We have used this approach to:
* decrease the financial uncertainty that derives from lack of comprehensive market analysis and a structured strategic plan * enable business plan collaboration and financial planning * initial business case assumptions need to be revisited to better correspond with market conditions and chosen market position * create launch efficiency by delivering a framework for subsequent planning of tactical launch activities, coordinating and prioritising tasks for launch team * enable risk management and market perception control through contingency planning * Launch organisations face immense pressures on market entry, created by internal and external expectations: * some of these pressures can be eased by developing a clear and structured market-entry strategy and effective functional plans
Pressures faced by new entrants
Internal constraints and expectations
* rapid deployment is crucial to avoid rise in market share cost and to deliver predicted financial results Resource limitations:
* core launch teams are often rapidly assembled, and specialist expansion is done gradually, creating a large resource gap during the implementation phase Financial pressure:
* as financial targets and expectations have been set prior to launch, any unpredicted market activity and launch delays will disturb initial customer take-up and revenue generation
External constraints and expectations
* in many instances organisations lack in-depth understanding of market drivers or have limited access to market data Competition:
* competitors will plan pre-emptive, disruptive action to improve their own positions and secure their customer base prior to new entry Analysys Mason’s structured approach to developing an entry strategy begins with a comprehensive analysis of the market, based on market data or tailored research * Our approach to developing a market-entry strategy...