Modes of Market Entry

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GLOBAL MARKETING PROJECT
Different modes of Market Entry
BY
TIARNAGH COSTELLO 00103501
AIDAN DALY 99636166
MEAGHAN DALY 03117871
EVELYN DALY 00300136
Date due: 22nd March 2004
Submitted to: Aidan Daly,
Marketing Department, NUIG
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CONTENTS
Introduction……………………………………………………3 Methodology…………………………………….……………..3 Limitations……………………………………………………..3 Market entry strategic decisions……………….…………….4 Types of global market entry…………………..……………..4 Exporting………………………………...………………4 Franchising……………………………...……………….7 Joint Ventures………………………….………………12 Strategic alliances…………………….………………..15 Conclusion………………………………………………...….18 References………………………………………………….…20 3

Introduction
“An international market entry mode is an institutional arrangement necessary for the entry of a company‟s products, technology and human capital into a foreign country/market” (Hollenson, 1998, p. 202) According to Gillespie, Jeannet and Hennessy (2004), any enterprise, whether a for profit company or not for profit organisation, that follows a global market strategy must determine the type of presence and maintain this presence in every market where it competes. A company may choose either to export to a new market, or to produce locally or it may favour full ownership of a local operation, or choose to seek partners. Once a commitment has been made, changes can be both difficult and costly. Gillespie, Jeannet and Hennessy (2004) state it is essential to approach market entry decisions with the utmost care. Not only is the financial return to the company at stake, but to the extent to which the company can implement its global marketing strategy also depends on these decisions. Therefore, in this paper the group distinguished four main market entry strategies. Many authors agree these include exporting, franchising, joint ventures, and strategic alliances (Cateora and Graham, 2001; Gillespie, Jeannet and Hennessy 2004; Hollensan, 2004 and Keegan, 2001). Hence, the group presented these models. Methodology

The majority of the information retrieved was in the form of educational text. They provided the group with a traditionally-accepted perspective of the topic however contributed little in the form of debate. Therefore the group consulted contemporary articles and thesis. A combination of these texts and articles constituted the body of the paper. The group examined the four main market entry strategies individually. Limitations

This is a student paper; therefore the group do not yet possess a complete understanding of the entire topic and have limited experience of it. Accordingly, the 4
authors found it necessary to rely heavily on the use of published articles and textbooks surrounding the subject area. Market Entry Strategic Decision
The group found it essential to discuss the market entry decisions. These decisions on which mode to adopt into a specific market is influenced by three key issues: 1. How many resources and what investment are necessary to enter the market?. 2. To what extent can the manufacturer control corporate activities in the foreign market? 3. How much knowledge can the manufacturer gain about the foreign market by this market entry alternative? (Keegan, 2001). Similar to this Cateora and Graham (2002) argue that the amount of equity required by the company to use different modes effects the risk, return, and control that it will have in each mode. For example, indirect exporting requires no equity investment and thus has a low risk, low rate of return and little control. Types of Global Market Entry

Exporting
Exporting is the marketing and direct sales of a domestically made product in a foreign country. Exporting is a well-established form of market entry because it does not require foreign investment in production facilities. The product is produced in the domestic market (Johansson, 1997). If a company decides to manufacture at home and serve in foreign markets with these products, it has the options of either direct or...
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