“A firm that already has sustained competitive advantage in its domestic market may not have the same advantage in an overseas market. Discuss the issues that this creates for a firm, and how it might exploit its resource advantages to secure successful market entry and create competitive advantage in a new overseas market.”
With the global trade network more integrated, according to Pearce and Robinson (2009), firms tend to enter foreign market to gain more profit due to the maturity of domestic market, excess capability, and potential purchasing power in foreign market. Therefore, as a firm has already achieved success in its domestic country it might consider enter a new market. Before it operates in a new market, it has to consider the barrier of market entry, such as the barrier of political, social, economic or technology in a new market. And as foreign entry decision (Peng, 2009) model presents three aspects: where, when and how should be considered before enter in a new market. In addition, as a manager of a company should adjust its competitive advantage to adapt different market. Based on the study of Hill (2013), changes in the forces which include macroeconomics, social, technological, global, political and legal, and demographic may give great influence in competitive force model. Therefore, the ability of a firm to solve problems by the impact of different forces then build new competitive advantage by its resource advantage and competences significant as it enters a new overseas market. This essay will present some specific example of the firms which may enter a new overseas market and face different issues during the process of entering a new market and offer solutions to each issue. Price wars are common in any industry which is a common issue to be considered before enter a new overseas market, moreover, base on five force framework, in order to increase the ability of competing with rivals in industry, the ability of rivalry among competitors is one of the forces. Primark is one of the most successful fashion retailers in British. Its competitive advantage is from its low price. In another word, it gains profit from the cost leader strategy. (Hooley & Piercy ,2008). India is one of the biggest developing countries in the world. It has large population which means India has a huge potential market for Primark. As reported by BBC (2013) Recently, India government has opened up its retail market to foreign companies to stimulate its economic. Assume Primark enter the market of India, it may face competitive rivals, such as H&M and Gap. It has to maintain its competitive advantage and improves the ability of efficiency of cost .However, as a company which relies on low cost supplier, first of all, it has to decrease the barging power of supplier, thanks to the large population in India, it is not only providing a huge market for Primark but also offering a powerful labor resource to it. It offer an exactly social force to exploit its resource advantage and strategic fit in market of India.(Grant,2007) According to value chain study, reducing the cost of individual cost driver and reemployment could offer cost advantage to a firm. (Thompson & Martin, 2010) Primark could outsource to different local manufactures and create competition among them. In order to reduce the bargaining power of local supplier, Primark should deduce the dependence of a certain supplier. A good experience of Wal-Mart (Peng, 2009) could be used to Primark, it set up a policy within company which prevents any supplier offer more than 3% of its purchase. Furthermore, Primark should constrain those factories by contracts to prevent them copy the product and become both supplier and rivals. Primark might gain profit from controlling the cost and matching the opportunities in the external environment eventually enter a new overseas market. Before enter a new overseas market, the culture is always a considerable problem for a firm....
References: BBC (2013). H&M wins final approval to invest in India. [Online] Available at < http://www.bbc.co.uk/news/business-25196418> Accessed 4th January 2014.
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