CHAPTER 4MARKET ENTRY STRATEGIES

Determine the factors to be considered in the choice of market entry strategies

a) Corporate objectives and resourcesb) Level of involvementc) Level risk of control

Introduction

Organizations that operate in international markets need to make the most important decisions in order to select a best mode of entry choice into foreign markets .

A firm must assess before entering a particular market the potential factors that play a significant role during the process of decision making for the potential market selection .

Factors to be considered in the choice of market entry strategies

Corporate objective and resources Level of involvement and control Level of risk Nature of market , competition ,product ,

consumer and market coverage Speed of entry Investment and market cost Administrative requirements Flexibility Payback

Corporate Objective and Resources

Corporate objectives are key influence in choosing entry modes

Firms that have limited aspirations will typically prefer entry options that entail a minimum amount of commitment – E.g – licensing

Proactive companies with ambitious strategic objectives , usually will pick entry modes that give them flexibility and control they need .

Contd …

Resources and capabalities Company with tight resources (human or

financial )or limited assets are constrained to low commitment entry modes such as exporting and licensing that are not too demanding on resources.

Companies should carefully consider how to allocate their resources between their different markets,including home market.

Level of Involvement

Most MNCs would like to posses a certain amount of control/level of involvement over their foreign operation.

Control may be desirable for any element of marketing mix plan,positioning,pricing,advertising the way the product is distributed and so on.

Level of Risk Control

Risks relates to the instability in the marketing envionment such as political and economics that may impact the company’s business prospects.

The greater the risk factor the less eager companies are to make major resources commitments to the country/ region concerned.