Market Entry Modes
Introduction:
One of the most significant decisions to be taken in business is how to enter a new overseas market because of commitments to be made; commitment in terms of dollars to be invested, personnel for managing the international organization, and determination to stay in the market long enough to realize a return on these investments, therefore selecting the most appropriate market entry mode is vital.
A mode of entry into an international market is the channel which the organization employs to gain entry to a new international market. In this report I will go through different alternatives of Market entry divided into two main methods; direct and indirect each sub-categorized into several options. Here I will be considering modes of entry into international markets such as the Exporting, Contract manufacturing, Franchising, Strategic International Alliances, International Joint Ventures and Foreign Direct Investment. In this section examples of companies and their strategy and my own experience will be presented. Finally stages and strategy of international marketing strategy using SOSTAC plan (Situation, Objectives, Strategy, Tactics, Actions and Control) will be covered.
International market entry methods:
Exporting:
Exporting accounts for some 10 percent of global economic activity. [1] Exporting can be either direct or indirect. Direct exports represent the most basic mode of exporting, capitalizing on economies of scale in production concentrated in the home country and affording better control over distribution.
With direct exporting, the company sells to a customer in another country. This method is the most common approach employed by companies taking their first international step because the risks of financial loss can be minimized. However more information will be needed to choose the market and more costs than indirect method the company will get more feedback from targeted countries and have Control over selection of foreign markets.
One of the most significant decisions to be taken in business is how to enter a new overseas market because of commitments to be made; commitment in terms of dollars to be invested, personnel for managing the international organization, and determination to stay in the market long enough to realize a return on these investments, therefore selecting the most appropriate market entry mode is vital.
A mode of entry into an international market is the channel which the organization employs to gain entry to a new international market. In this report I will go through different alternatives of Market entry divided into two main methods; direct and indirect each sub-categorized into several options. Here I will be considering modes of entry into international markets such as the Exporting, Contract manufacturing, Franchising, Strategic International Alliances, International Joint Ventures and Foreign Direct Investment. In this section examples of companies and their strategy and my own experience will be presented. Finally stages and strategy of international marketing strategy using SOSTAC plan (Situation, Objectives, Strategy, Tactics, Actions and Control) will be covered.
International market entry methods:
Exporting:
Exporting accounts for some 10 percent of global economic activity. [1] Exporting can be either direct or indirect. Direct exports represent the most basic mode of exporting, capitalizing on economies of scale in production concentrated in the home country and affording better control over distribution.
With direct exporting, the company sells to a customer in another country. This method is the most common approach employed by companies taking their first international step because the risks of financial loss can be minimized. However more information will be needed to choose the market and more costs than indirect method the company will get more feedback from targeted countries and have Control over selection of foreign markets.