In Methods of market entry strategy latter the attempt is made to "globalise" the offering and the organisation to match it. Transaction costs also are a critical factor in building up a market entry strategy and can become a high barrier to international trade.
In countries like Tanzania and Zambia, which have embarked on structural adjustment programmes, organisations are being encouraged to export, motivated by foreign exchange earnings potential, saturated domestic markets, growth and expansion objectives, and the need to repay debts incurred by the borrowings to finance the programmes.
Countertrade By far the largest indirect method of exporting is countertrade. On the supply side the most critical factor has been the generous financial and other incentives, on the Methods of market entry strategy side, access to the EU, France, India and Hong Kong was very tempting to investors.
The tendency may be not to obtain as much detailed marketing information as compared to manufacturing in marketing country; however, this does not negate the need for a detailed marketing strategy. The following strategies are the main entry options open to you.
Growing trading blocks like the EU or EFTA means that the establishment of subsidiaries may be one of the only ways forward in future. This list of key steps in creating your market entry strategy is high level, but it shows that to make the best decision for your business, you need to do your homework and consider all of your options around cost, risk and predictability.
Success of any market entry strategy is driven partially by factors outside of your control--but investment in these upfront steps should help you to mitigate the risk. Khoury6 categorises countertrade as follows see figure 7.
Define the Market Clearly defining your market may seem like a simple step, but before you identify who you want to sell your product to, it is difficult to understand their needs.
However it is being now hampered by a number of important "exogenous" factors. 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.
These options require target identification, prioritization, due diligence, deal negotiation and close. They then result in giving reduced production incentives and cease to be demand or market orientated, which is detrimental to producers. In direct exporting the major problem is that of market information.
Joint Ventures A joint venture is an arrangement between two or more often competing companies to join forces for the purposes of investment with each having a share in both the financial running and management of the business.
Limited export or import surpluses may be accumulated by either party for short periods. A disciplined process will help you accurately assess the potential of each growth opportunity.
Direct Exporting Direct exporting is selling directly into the market you have chosen using in the first instance you own resources. Whilst no direct manufacturing is required in an overseas country, significant investments in marketing are required.
Physical distance, language barriers, logistics costs and risk limit the direct monitoring of trade partners. Two companies agree to work together in a particular market, either geographic or product, and create a third company to undertake this. Joint ventures give the following advantages: Large investments in promotion campaigns are needed.
Shadow prices are approximated for products flowing in either direction. There are a variety of ways in which organisations can enter foreign markets. In the early days knowledge of the market was scanty and thus the company was obtaining ridiculously low prices.
It has been forced, at the moment, to accept sub optional volume product materials just in order to keep the plant ticking over.
The basic philosophy behind stage one is extension of programmes and products, behind stage two is decentralisation as far as possible to local operators and behind stage three is an integration which seeks to synthesize inputs from world and regional headquarters and the country organisation.
What value do we deliver to this market and how much are they willing to pay for it?A market entry strategy is the method in which an organization enters a new market.
Busy Tech quickly realizes that they have several options, each. A market entry strategy is the planned method of delivering goods or services to a target market and distributing them there.
When importing or exporting services, it refers to establishing and managing contracts in a foreign country.’’. 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.
Five Key Market Entry Methods. 1. Export. For a successful market entry strategy, there is a whole range of questions to be answered around the product, the marketing, the location and timing. These questions include: Localisation; Does the product need to be localised?
In other words, must it be changed to meet local tastes and conditions? Market Entry Strategies in Eastern Europe in the Context of the European Union: An Empirical Research into German Firms Entering the Polish Market Oct 1, by Michael Klug and Prof.
Dr. Joanna Pietrzak. A study by Gurumurthy Kalyanaram and others in Marketing Science suggests that the new entrant's forecasted market share divided by the first entrant's market share equals, very roughly, one divided by the square root of order of entry of the new entrant.Download