International entry options for Global Strategic Management Mcom sem 3 Delhi University
International entry options for Global Strategic Management MCOM sem 3 Delhi University:- we will provide complete details of International entry options for Global Strategic Management MCOM sem 3 Delhi University in this article.
International entry options for Global Strategic Management Mcom sem 3 Delhi University:-MARKET ENTRY STRATEGIES
There are a variety of ways in which a company can enter a foreign market. No one market entry strategy works for all international markets. Direct exporting may be the most appropriate strategy in one market while in another you may need to set up a joint venture and in another you may well license your manufacturing. There will be a number of factors that will influence your choice of strategy, including, but not limited to, tariff rates, the degree of adaptation of your product required, marketing and transportation costs. While these factors may well increase your costs it is expected the increase in sales will offset these costs. The following strategies are the main entry options open to you.
International entry options for Global Strategic Management Mcom sem 3 Delhi University:-Direct Exporting
Direct exporting is selling directly into the market you have chosen using in the first instance you own resources. Many companies, once they have established a sales program turn to agents and/or distributors to represent them further in that market. Agents and distributors work closely with you in representing your interests. They become the face of your company and thus it is important that your choice of agents and distributors is handled in much the same way you would hire a key staff person.
International entry options for Global Strategic Management Mcom sem 3 Delhi University:-Licensing
Licensing is a relatively sophisticated arrangement where a firm transfers the rights to the use of a product or service to another firm. It is a particularly useful strategy if the purchaser of the license has a relatively large market share in the market you want to enter. Licenses can be for marketing or production. licensing).
International entry options for Global Strategic Management Mcom sem 3 Delhi University:-Franchising
Franchising is a typical North American process for rapid market expansion but it is gaining traction in other parts of the world. Franchising works well for firms that have a repeatable business model (eg. food outlets) that can be easily transferred into other markets. Two caveats are required when considering using the franchise model. The first is that your business model should either be very unique or have strong brand recognition that can be utilized internationally and secondly you may be creating your future competition in your franchisee.
International entry options for Global Strategic Management Mcom sem 3 Delhi University:-Partnering
Partnering is almost a necessity when entering foreign markets and in some parts of the world (e.g. Asia) it may be required. Partnering can take a variety of forms from a simple co-marketing arrangement to a sophisticated strategic alliance for manufacturing. Partnering is a particularly useful strategy in those markets where the culture, both business and social, is substantively different than your own as local partners bring local market knowledge, contacts and if chosen wisely customers.
International entry options for Global Strategic Management Mcom sem 3 Delhi University:-Joint Ventures
Joint ventures are a particular form of partnership that involves the creation of a third independently managed company. It is the 1+1=3 process. Two companies agree to work together in a particular market, either geographic or product, and create a third company to undertake this. Risks and profits are normally shared equally. The best example of a joint venture is Sony/Ericsson Cell Phone.
International entry options for Global Strategic Management Mcom sem 3 Delhi University:-Buying a Company
In some markets buying an existing local company may be the most appropriate entry strategy. This may be because the company has substantial market share, are a direct competitor to you or due to government regulations this is the only option for your firm to enter the market. It is certainly the most costly and determining the true value of a firm in a foreign market will require substantial due diligence. On the plus side this entry strategy will immediately provide you the status of being a local company and you will receive the benefits of local market knowledge, an established customer base and be treated by the local government as a local firm.
International entry options for Global Strategic Management Mcom sem 3 Delhi University:-Piggybacking
Piggybacking is a particularly unique way of entering the international arena. If you have a particularly interesting and unique product or service that you sell to large domestic firms that are currently involved in foreign markets you may want to approach them to see if your product or service can be included in their inventory for international markets. This reduces your risk and costs because you are essentially selling domestically and the larger firm is marketing your product or service for you internationally.
International entry options for Global Strategic Management Mcom sem 3 Delhi University:-Turnkey Projects
Turnkey projects are particular to companies that provide services such as environmental consulting, architecture, construction and engineering. A turnkey project is where the facility is built from the ground up and turned over to the client ready to go – turn the key and the plant is operational. This is a very good way to enter foreign markets as the client is normally a government and often the project is being financed by an international financial agency such as the World Bank so the risk of not being paid is eliminated.
International entry options for Global Strategic Management Mcom sem 3 Delhi University:-Greenfield Investments
Greenfield investments require the greatest involvement in international business. A greenfield investment is where you buy the land, build the facility and operate the business on an ongoing basis in a foreign market. It is certainly the most costly and holds the highest risk but some markets may require you to undertake the cost and risk due to government regulations, transportation costs, and the ability to access technology or skilled labour.
International entry options for Global Strategic Management Mcom sem 3 Delhi University:-Wholly Owned
Setting up a wholly owned operation in a new international market offers less of the ‘quick’ advantages of other market entry modes as it involves setting up a presence from scratch.
It takes some time and effort to build a new market presence, especially in mature markets and where your business may have little knowledge of the local market. However, it does offer more in the way of control and management of the business.
When selecting the right market entry mode for your business, there are many factors that need to be taken into consideration including:
What are you marketing objectives? Examine the volumes you wish to sell, timescales and coverage of key market segments. For example, if volumes are expected to be low initially, then setting up your own manufacturing facility would not be appropriate.
What resources do you have available in the business? Does your business possess sufficient resources to support the level of planned international business activity?
Suitability of a market entry strategy. Businesses may have to use different market entry methods for different countries i.e. some countries will only allow a restricted level of imports but may welcome the business in building manufacturing facilities to provide jobs and limit the outflow of foreign exchange. Additionally, some market entry methods are questionable on a practical basis i.e. a possible lack of suitable distributors or agents to sell and service the product.
To summarise, selection of market entry mode is of strategic importance and therefore it is vital to make an informed assessment before embarking upon any international business dealings.
ISS is a leading international business consultancy and research firm providing a comprehensive range of international business strategy support services. The company has experience in a wide range of industries including but not limited to; Government & Public Sector, Digital, Telecommunications, Energy, Healthcare, Financial and Professional Services, Retail & Consumer, Food & Beverage, Hospitality & Leisure, Engineering & Construction, Manufacturing and Environment.
International entry options for Global Strategic Management Mcom sem 3 Delhi University
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