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International Marketing

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International Marketing ­ MKT630
VU
Lesson # 28
MODES OF ENTRY INTO INTERNATIONAL MARKETS
Entry Strategies
Choosing a mode of entry in international markets:
Choice for an appropriate mode of entry into international markets would depend on a host of factors.
The key factors are given as follows:
·
Nature of business
·
Size of the company
·
Resource availability to the firm
·
Firm's international strategy
·
Need for control over business and brands
·
Ownership advantages
­ A firm holds unique competitive advantage that overcomes problems of competing in foreign
countries i.e. brand names, technology, economies of scale etc.
· Location advantages for the firm
· Internationalization advantages for the firm
­ a firm must benefit more from controlling the foreign business activity than hiring another
company to conduct the business
· Market size & growth
6.  Risk of operating in the foreign market
7.  Government regulation
8.  Competitive environment in the country
9.  Local infrastructure
All these factors combined determine the overall market attractiveness of the countries being considered
Classification of countries for entry mode selection:
· Markets can be classifies in five types of countries based on their respective attractiveness
­ Platform
Countries that can be used to gather intelligence and establish a network- i.e Dubai
·
­ Emerging
i.e Vietnam, Philippines ­ companies should build up an initial presence, i.e. via a liaison
·
office
­ Growth
Early mover advantages often allows companies to build up a significant presence in order to
·
capitalize on future market opportunities
­ Mature & Established
These countries have far fewer growth prospects than other types of markets ­ often times,
·
local competitors are well entrenched
Entry modes and foreign market development:
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International Marketing ­ MKT630
VU
Depending on the nature of foreign markets the suggested modes for entry are as follows;
Platform countries
­ Establish a base to learn, collect information and set up contacts ­ an office perhaps
Emerging markets
­ Agents ­ representative office
Growth markets
­ Joint venture ­ local subsidiary
Maturing markets
­ Joint venture ­ local operations
Established markets
­ Joint venture ­ acquisition
Entry strategies into international markets:
Selecting and changing entry modes
­ in a specific country, market attractiveness and the pressure to produce locally are often the most
important criteria for selecting entry modes
­ by and large governments of developing countries prefer foreign firms to manufacture locally, or
at least to assemble imported parts and components within the country
­ due to lack of information decisions on entry modes are therefore have to be made under great
uncertainty even though they may affect the well-being of the firm for many years to come
Distribution agreements
presently there is an increasing trend towards more direct involvement in world markets,
­
especially among larger and more experienced firms - especially in larger markets
distribution agreements, however remain crucial for smaller, less experienced firms and for
­
markets or market segments which are presently of secondary importance
in many countries there are also restrictions on foreign firms regarding certain activities - where
­
they need to join with local partners
traditional Chinese distributors, dominating most of the South & East Asian markets, tend to look
­
at distribution as a cash management business
successful partnerships require a fit in strategies, resources, culture and organization
­
some Western distributors have been in Asia since colonial times - Diethelm, East Asiatic,
­
Hagemeyer, Liebermann, Inchcape, Jardine and Swire
Japanese sogo shosha, with dominant role in Japan have often failed to come up to the
­
expectations of foreign firms with limited sales
Choice of location
the choice of location for the firm within a country / region has to be made at a very early stage of
­
market entry and carries far-reaching consequences
­ the choice of location is influenced by location of joint venture partner, location of customer/s,
close to supplier/s, costs, availability of operational infrastructure / supporting industries
77
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International Marketing ­ MKT630
VU
Critical mass & optimism traps
any entry decision is connected with the question of how many resources should be deployed in
­
the country
­ the theoretical answer is easy: enough to make an impact on the market, but not so much as to
waste capital or human resources which could be used more efficiently elsewhere
­ in practice the problem lies in the identification of the critical mass threshold where any
additional input of resources results in a disproportionately high growth in output
­ this can normally be found by taking the most successful (often the largest) competitor in the
market as the benchmark
Competitive moves for entry into international markets:
· First mover advantage
Unilever still dominates Indonesian and Pakistani markets, P&G those of Philippines - neither of
­
them have been able to make large inroads into the other's territory
­ more recently, Japanese firms have opened up new markets for themselves ahead of Western
firms and shaped them to their standards - in Vietnam motorcycles are already called Hondas -
and repair shops Hon-Da service station
· Late entry strategies
the things that work in favor of the first mover represent entry barriers to firms which enter a
­
market later than competitors
­ a frontal attack requires superior resources
­ a late entry is advisable when competition is in turmoil because of technological change in the
industry or changes in the marketplace - or due to changes in distribution systems
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Table of Contents:
  1. OVERVIEW OF INTERNATIONAL MARKETING:Domestic marketing, Multinational marketing, Globalization of markets
  2. INETRNATIONAL MARKETING PROCESS:Situation Analysis, Implementation and Control, Relationship
  3. INETRNATIONAL MARKETING PROCESS:The Product Concept, The Societal Marketing Concept
  4. INETRNATIONAL MARKETING PROCESS
  5. ENGAGING IN INETRNATIONAL MARKETS:Expansion of technology, Merchandize export and import
  6. INTERNATIONAL TRADE & INVESTMENT THEORIES:Theory of Comparative Advantage, Country Similarity Theory
  7. INTERNATIONAL TRADE & INVESTMENT THEORIES:Global Strategic Rivalry Theory,
  8. INTERNATIONAL MARKETING INFORMATION REQUIREMENTS:Foreign exchange info
  9. INTERNATIONAL MARKETING INFORMATION REQUIREMENTS:The Product
  10. FOREIGN NATIONAL ENVIRONMENTS:Political systems in the world, Political risks in international markets
  11. FOREIGN NATIONAL ENVIRONMENTS:Types of legal systems,
  12. FOREIGN NATIONAL ENVIRONMENTS:Conciliation, Mediation, Global relevance
  13. ROLE OF GOVERNMENTS IN INTERNATIONAL MARKETS:Industry-level needs, Promotion of exports by governments
  14. INTERNATIONAL CULTURAL AND SOCIAL ENVIRONMENTS:The concept of culture, Attitudes & beliefs,
  15. INTERNATIONAL CULTURAL AND SOCIAL ENVIRONMENTS:Culture is a human medium
  16. DETERMINING EXPORT POTENTIAL IN INTERNATIONAL MARKETS:Political Environment
  17. DETERMINING EXPORT POTENTIAL IN INTERNATIONAL MARKETS:Product Potential
  18. INTERNATIONAL MARKETING RESEARCH PROCESS:market structure, Implementing the research plan
  19. INTERNATIONAL MARKETING RESEARCH PROCESS:Identify alternative information sources
  20. INTERNATIONAL MARKETING RESEARCH PROCESS:Issues with primary global research:
  21. INTERNATIONAL MARKETING RESEARCH PROCESS:Problems with data, Comparative Analysis
  22. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Export intermediaries, Export and import management
  23. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Licensing contract, Licensing risks
  24. MODES OF ENTRY INTO INTERNATIONAL MARKETS:The franchiser’s balance,
  25. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Forms of countertrade, Specialized entry modes
  26. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Demand factors, Political factors
  27. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Drivers behind successful joint ventures
  28. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Distribution agreements, Critical mass & optimism traps
  29. INTERNATIONAL STRATEGIC ALLIANCES:Impetus for international alliances, Management of strategic alliances
  30. INTERNATIONAL CONSUMER MARKETS:Model of Consumer BehaviorThe Buyer Decision Process
  31. INTERNATIONAL BUSINESS MARKETS:Nature of buying unit, Major influences on international business buyers
  32. INTERNATIONAL TARGET MARKETING:Market segmentation, Market positioning
  33. INTERNATIONAL MARKET SEGMENTATION:Geographic, Behavioral, Situational factors
  34. INTERNATIONAL MARKET SEGMENTATION:Basis for country segmentation, Stages of economics development
  35. INTERNATIONAL MARKET SEGMENTATION:Cultural Variables,
  36. INTERNATIONAL MARKET SEGMENTATION:Market coverage strategy, Socio-economic variables
  37. INTERNATIONAL MARKETING MIX - PRODUCT POLICY:Individual product decisions, Branding
  38. INTERNATIONAL MARKETING MIX – PRODUCT POLICY:
  39. INTERNATIONAL MARKETING MIX - PRODUCT POLICY:Modular Approach
  40. INTERNATIONAL MARKETING MIX – PRODUCT POLICY:Issues in labeling, Pricing, Distribution
  41. INTRODUCING NEW PRODUCTS IN INTERNATIONAL MARKETS:The new product development process
  42. PRICING IN INTERNATIONAL MARKETS:Factors influencing international pricing,
  43. ITERNATIONAL MARKETING CHANNELS:Channel membership, Vertical marketing, Control over distribution
  44. PROMOTING IN INTERNATIONAL MARKETS:Advertising, Direct marketing, Public Relationing
  45. REVISION