Every firm, at every point in its history, faces a broad range of strategy alternatives. In far too many cases, companies fail to appreciate the range of alternatives open to them and, therefore, employ only one strategy - often to their grave disadvantage. The same companies also fail to consider the strategy alternatives open to their competitors and leave themselves vulnerable to the dreaded ‘Titanic’ syndrome or the thud in the night that comes without warning and sinks the ship.
Entry into a new country-market is always a learning process during which a firm continually commits resources in smaller or larger steps to establish an intended position in the country-market. The intended position is determined through a strategic positioning process. In this process, management defines a company (product line or product) - specific set of benefits that is attractive to chosen target customers, which are at least acceptable to important stakeholders in the market, and at the same time positively differentiates the firm (its product line or product) from competitors. If and how the intended position is reached not only depends on the company’s actions but also on other stakeholders in the local operating environment, their interests, powers and actions. All this allows management to evaluate various ‘market entry modes’ concerning their potential contribution in reaching the intended position in the country market. A market entry mode is the general way the company plans to enter a new country market, for example through selling its goods to an importer or through direct investment in a production facility and a distribution system.
The development of market entry strategy not only depends on market factors but also on available production capacities personnel and financial resources. It is an organizational learning process.
Exporting is the most traditional and well-established form of operating internationally. A company may engage in direct exporting, that is, sales between the company and a second country distributor or customer that functions as the importer.
A company engaging in indirect exporting sells trough an intermediary located in a home country.
Companies doing business in foreign markets use exporting precisely because it is a low cost alternative as:
• It requires no investment in manufacturing operations abroad • Expenditure incurred (in most of the countries) to obtain an export license is minimal • It allows manufacturing operations to be concentrated in a single location, which generally leads to scale economies
Source Perrier adopts only ‘Exporting’ as its entry strategy in the international markets. However the reason for this is far from the ones mentioned above. The unique aspect of the product is that it is obtained from a spring in France hence the product has to be exported and cannot be manufactured anywhere else.
However, if it is done effectively and well, exporting requires significant investments in marketing. This investment begins with intensive marketing study leading to the development of a ‘country marketing strategy’. The hallmarks of this strategy maybe, products adapted to customer needs and preferences in the market (or left unchanged if appropriate) and price, distribution and communication policies that are an integrated part
of the country marketing strategy. Many companies in a variety of industries have concluded that concentrated manufacturing operations give them cost and quality advantages over the alternative of decentralized manufacturing. But this approach has a potential downside:
Managers at factories located far from export customers may not be responsive to customer’s needs and wants.
All Perrier products are exported from France. Indeed an important part of the positioning of the product is that the water is from the ‘Source.’
Positioning In the New Market
The attractiveness of target...