Global Market Entry Strategies
Chapter 9: Global Market Entry Strategies
The need for a solid market entry decision is an integral part of a global market entry strategy. Entry decisions will heavily influence the firm’s other marketing-mix decisions. Global marketers have to make a multitude of decisions regarding the entry mode, which may include:
(1) The target product/market
(2) The goals of the target markets
(3) The mode of entry
(4) The time of entry
(5) A marketing-mix plan
(6) A control system to check the performance in the entered markets
1. Target Market Selection
A crucial step in developing a global expansion strategy is the selection of potential target markets.
A four-step procedure for the initial screening process: 1. Select indicators and collect data 2. Determine importance of country indicators 3. Rate the countries in the pool on each indicator 4. Compute overall score for each country
2. Choosing the Mode of Entry
Decision Criteria for Mode of Entry:
Market Size and Growth
Risk
Government Regulations
Competitive Environment/Cultural Distance
Local Infrastructure
Classification of Markets:
Platform Countries (Singapore & Hong Kong)
Emerging Countries (Vietnam & the Philippines)
Growth Countries (China & India)
Maturing and established countries (examples: South Korea, Taiwan & Japan)
Key criteria for choosing entry modes:
Company Objectives
Need for Control
Internal Resources, Assets and Capabilities
Flexibility
Mode of Entry Choice: A Transaction Cost Explanation
Regarding entry modes, companies normally face a tradeoff between the benefits of increased control and the costs of resource commitment and risk.
Transaction Cost Analysis (TCA) perspective
Transaction-Specific Assets (assets valuable for a very narrow range of applications)
3. Exporting
Indirect Exporting
Export merchants
Export agents
Export management companies (EMC)
Cooperative Exporting
Piggyback Exporting
Direct Exporting
Firms set up their own
The need for a solid market entry decision is an integral part of a global market entry strategy. Entry decisions will heavily influence the firm’s other marketing-mix decisions. Global marketers have to make a multitude of decisions regarding the entry mode, which may include:
(1) The target product/market
(2) The goals of the target markets
(3) The mode of entry
(4) The time of entry
(5) A marketing-mix plan
(6) A control system to check the performance in the entered markets
1. Target Market Selection
A crucial step in developing a global expansion strategy is the selection of potential target markets.
A four-step procedure for the initial screening process: 1. Select indicators and collect data 2. Determine importance of country indicators 3. Rate the countries in the pool on each indicator 4. Compute overall score for each country
2. Choosing the Mode of Entry
Decision Criteria for Mode of Entry:
Market Size and Growth
Risk
Government Regulations
Competitive Environment/Cultural Distance
Local Infrastructure
Classification of Markets:
Platform Countries (Singapore & Hong Kong)
Emerging Countries (Vietnam & the Philippines)
Growth Countries (China & India)
Maturing and established countries (examples: South Korea, Taiwan & Japan)
Key criteria for choosing entry modes:
Company Objectives
Need for Control
Internal Resources, Assets and Capabilities
Flexibility
Mode of Entry Choice: A Transaction Cost Explanation
Regarding entry modes, companies normally face a tradeoff between the benefits of increased control and the costs of resource commitment and risk.
Transaction Cost Analysis (TCA) perspective
Transaction-Specific Assets (assets valuable for a very narrow range of applications)
3. Exporting
Indirect Exporting
Export merchants
Export agents
Export management companies (EMC)
Cooperative Exporting
Piggyback Exporting
Direct Exporting
Firms set up their own