Entry Mode Strategies Essay

917 words - 4 pages

Advantages and disadvantages of Exporting.

The advantages from exporting is that the organisation will have a quicker entry into the market and the levels of risk are subsequently lower. Exporting can be implemented via sales representative (direct) or an agent (indirect) that acts on behalf of the company and sells their products. The direct method of exporting, as opposed to indirect exporting, will benefit the company by gaining control over how they sell their products and the costs of the operations, i.e. overheads, commissions given, salaries. They will have ultimately achieved disintermediation.

This will however mean that the company will be more susceptible to risks that may affect the sales and the image of their company.

ComCorp will likely favour the direct export strategy as it is a relatively new competitor in the international market and only choose one target market: South Africa. The preliminary research shows that there is a steady increase in demand for computer peripherals within that market. “ Large number of buyers from Kenya, Uganda, Tanzania, Eritrea, Senegal, Congo and South Africa are seen buying large quantities of computer hardware and accessories…” (Africa-Business.com, 2013) ComCorp will


Overview of Strategic Alliance.

This takes place when two or more companies gather their respective resources, which is generally specialised, to form a new entity. The intention for this is to break into a new market where they may have identified a gap: potentially driving out competition due to strength in resources available at their disposal. It can also lead to market monopoly as there are no other competitors to exploit that particular market
Advantages and disadvantages of Strategic Alliance.

The benefits reaped from this mode of entry is that the operational costs are subsidised by the parties involved, decreasing the risks, which will lead to a swifter return on investment. It can also benefit the parties by exposing their products into a new market. The development of a new product can be achieved more efficiently with the specialized resources from each parties in a collaborative manner. An example of this is the strategic alliance can be seen between Siemens and Boeing for the development of cyber-secure, energy-savings technology.

That being said the disadvantages of this strategy is that the parties involved will most likely have different visions and interests in the market. This may cause one party to retain contractual terms and conditions which would force the other party to restrict the sale of their product(s), affecting the relationship between them. . A journal research (Parkhe, 1993) suggests the affiliation of strategic alliance strategy to game theory in order to “...maximise his own gains at the expense of the venture”. A good example of this is the relationship between Apple© and Samsung© where copyright infringement was involved, deteriorating the business relationship and...

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