Market Entry Methods Essay

707 words - 3 pages

IntroductionOrganisations have a choice of a wide range of market entry strategies in order to expand their operations internationally. The mode of entry into an international market is a reflection of the relative importance assigned to the following criteria:The level of control the organisation wishes to exercise over its interests/concepts overseasThe amount of resources it is willing to commit to international expansionThe flexibility it wishes to retain to allow its interests internationally to change their activities or operations quickly and at low costThe extent of payback required to meet overall sales/growth targetsMarket Entry MethodsCunningham1 (1986) identified five strategies used by firms for entry into new foreign markets:i) Technical innovation strategy - perceived and demonstrable superior productsii) Product adaptation strategy - modifications to existing productsiii) Availability and security strategy - overcome transport risks by countering perceived risksiv) Low price strategy - penetration price and,v) Total adaptation and conformity strategy - foreign producer gives a straight copy.There are a variety of ways in which organisations can enter foreign markets.ExportingExporting is the most traditional and well established form of operating in foreign markets. Exporting can be defined as the marketing of goods produced in one country into another. Whilst no direct manufacturing is required in an overseas country, significant investments in marketing are required. 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 advantages of exporting are:manufacturing is home based thus, it is less risky than overseas basedgives an opportunity to "learn" overseas markets before investing in bricks and mortarreduces the potential risks of operating overseasThe disadvantage is mainly that one can be at the "mercy" of overseas agents and so the lack of control has to be weighed against the advantagesAccording to Collett4 (1991)) exporting requires a partnership between exporter, importer, government and transport. Without these four coordinating activities the risk of failure is increased. Contracts between buyer and seller are a must. Forwarders and agents can play a vital role in the logistics procedures such as booking air space...

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