On the other hand, if you have a good reputation and your key competitor is struggling, the regulations might present the opportunity to push aggressively for new customers.
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 Strategy entering a market offset these costs. The following strategies are the main entry options open to you.
Direct Exporting Direct exporting is selling directly into the market you have chosen using in the first instance you own resources.
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.
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. 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. 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.
Partnering Partnering is almost a necessity when entering foreign markets and in some parts of the world e. 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. Joint Ventures Joint ventures are a particular form of partnership that involves the creation of a third independently managed company.
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. 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.
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. 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.Still, this strategy is likely to result in reduced margins for the new entrant compared with other players in the market, unless the new entrant's cost of production is relatively cheaper.
This can be adopted by both the incumbents and pioneers. In this article, we look at, 1) steps to take when entering a new market, 2) tips for entering a new market, and 3) case studies of companies that have entered new markets successfully. HOW TO ENTER A NEW MARKET 1.
Commit. It is of foremost importance to clearly identify who you will be selling to. Sep 22, · It is essential, before entering a foreign market to clearly identify the motivations behind your decision to explore entering the international marketplace.
Chapter 7: Market Entry Strategies. Chapter Objectives Structure Of The Chapter In building a market entry strategy, time is a crucial factor. The building of an intelligence system and creating an image through promotion takes time, effort and money. These are two main ways of foreign market entryeither by entering from a home market.
If your business is considering entering a new international market, then your choice of market entry strategy is of crucial strategic importance as this will affect your .
The key element of successfully entering a new region is choosing the best market entry benjaminpohle.com are many different opportunities for doing so, from foreign direct investment to indirect methods like using a distributor or licensing.