Strategies for Market Entries in Emerging Countries

Only available on StudyMode
  • Topic: Transaction cost, Theory of the firm, Ronald Coase
  • Pages : 119 (42801 words )
  • Download(s) : 551
  • Published : May 14, 2013
Open Document
Text Preview
STRATEGIES FOR MARKET ENTRY: Fast Moving Consumer Goods Companies in Emerging Markets Mark Sorgenfrey Lasse Munch
M.Sc. Strategy, Organisation and Leadership Academic advisor: Mai Skjøtt Linneberg Aarhus School of Business 2009

Abstract
Multinational enterprises (MNEs) are increasing their presence in the lives of more and more consumers as companies seek to expand and promote their products to a still wider range of markets globally. As markets change and develop, so does the strategy used to enter them, and companies must be able to choose the correct way to enter markets in order to remain competitive. This thesis takes a look at how MNEs in the FMCG industry enters new markets, more specifically emerging markets. In order to gain an understanding of this we look at three specific markets, namely Russia, India and China. We attempt to answer if the way MNEs enter emerging markets is in keeping with what would be expected from the OLI framework (Dunning 2000) as well as the work done by Buckley and Casson (1998). Additionally we try to gain an understanding of why any discrepancies exist and whether they can be explained by the nature of emerging markets as well as the characteristics of the FMCG industry. An ability to adapt and tailor specific strategies to individual markets gains more importance, especially with regard to emerging markets, as the difficulties and obstacles presented when entering these markets often proves both new and unique. In many cases there are difficulties in underdeveloped markets, specifically concerning consumer spending power and brand awareness, as well as logistics and infrastructural inadequacies compared to western markets which serves to make the correct approach to entering emerging markets of high importance. The methods first employed when entering emerging markets are often unsuccessful and needs to be modified as market knowledge is gathered and opportunities present themselves. In the three markets analysed in the thesis to illustrate emerging markets, Carlsberg is used as an example of a company present on all three markets. Examples of entry strategies followed by Carlsberg in the three markets are analysed and the reasons for their success or failure as well as the lessons learned are discussed in relation to the individual markets. In importance, this thesis contributes to the understanding of how MNEs enter emerging markets as well as to which challenges they face.

I

Contents
1 Introduction ............................................................................................................... 1 2 Problem statement .................................................................................................... 2 3 Objectives and research method ................................................................................ 2 3.1 Selection of cases for analysis .............................................................................. 3 4 Market entry modes for FMCG firms .......................................................................... 6 5 Reasons for conducting foreign direct investment ..................................................... 7 6 Internalization level and form of market entry ........................................................... 8 6.1 Transaction cost theory ....................................................................................... 8 6.2 The Resource Based View and internalization .................................................... 10 6.2.1 The Resource Based View and mergers and acquisitions ............................. 12 6.3 The OLI framework ............................................................................................ 13 6.4 Model of foreign market entry........................................................................... 21 7 Fast moving consumer goods ................................................................................... 24 7.1 Choice of the supplier side of the...
tracking img