International Market Entry
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Advancement of modern technology and communication modes has made it easier for businesses across diverse industries to market their brands in new international markets. Before a company decides to enter a foreign market, a thorough cross-cultural research is needed to compare key similarities and variations between the different countries the company is planning to enter (Dyer, 2012). This paper will analyze a five countries’ plan. The results of this research help a company to understand the locations issues, the appropriate international strategy that it will use and the type of product it will offer in each of the five foreign markets.
Market Entry Strategy
The strategy that a company will use to enter a foreign market directly impacts the outcome of the business venture. To enter the new market, the company can choose from the following possibilities:
* Franchising strategy
* Multi-country strategy
* Strategic alliances or joint ventures
* Global strategy based on
- Low cost
- Integrated low cost-differentiation (Czinkota & Ronkainen, 2010).
The selected locations should be potential strategic market locations because the company’s product should be competitive in those countries. These locations ought to be favorable because it would portray signs of a growing economy and potential demand for the products. Some of the features to consider in the locations include the following:
* Consumer preferences and tastes
* Buying habits of the consumers
* Market growth potential and market size
* Channels of distribution
* Market driving forces
* Competitive pressures
* Manufacturing costs variations based on
- Wage rates
- Availability of natural resources
- Productivity of workers
- Energy costs
- Inflation rates
- Tax rates (Czinkota & Ronkainen, 2010).
* Quality of the location’s business environment
* Suppliers’ clustering, rade associations, and complementary products makers
* Host location trade policies by the local and national governments including
- Import tariffs
- Restrictions on imports and exports
- Technical standards
- Product certifications
- Approval procedures of capital spending projects
- Withdrawal of finances from the country
- Minority and majority ownership by the citizens.
Multi-country Strategy versus Global Strategy
Thompson, Strickland and Gamble (2005) differentiated between a multi-country strategy and a global strategy based on the type of competition (Thompson et al., 2005). They disused the appropriateness of each strategy as indicated below.
A multi-domestic, or multi-country, marketing strategy assumes that consumers in the different foreign markets or geographic locations drastically differ from each other. The company, therefore, customizes its products or services to suit each market based on consumer needs. Multi-country competition and local responsiveness are the essential elements of this strategy. The decision-making process under this strategy is decentralized because the corporate management makes decisions on a local level (Thompson et al., 2005). Other characteristics of a multi-country market strategy include:
- Market in each country is self-contained
- Competition is independent in each country. This means that competition in one country does not rely on competition in the other country
- Rivals in each country differ from the set of rivals in the other foreign markets
- Competition between rivals defines leadership or domination on a national market level
- It is portrayed by a set of country markets with no international markets.
i. Transferring competenciesin cross-borders is a challenge.
ii. It does not work towards a unifiedcompetitive market advantage.
A multi-country marketing strategy is ideal for greatly differentiated products such as software products, laundry detergent and fast food products such as MacDonald’s hamburgers.
A global marketing strategy, on the other hand, assumes that consumers in the different foreign markets or geoographic locations are similar to each other. A global marketing strategy has an advantage in that it allows for centralized coordination and management of business functions such as human resources, product development and finance. A global market strategy works best in globally competitive markets or markets that are beginning to globalize. Some of the characteristics of this strategy include:
- Strongly linked together competitive conditions across each country market
- Many similar rivals compete in similar country markets
- Rivals compete for global market leadership
- Competitive position of a company in one country is affected by its position other countries (Thompson et al., 2005)
- The overall competitive advantage of a company is based on its global market operations.
A global marketing strategy is ideal for standardized products and services such as banking services, copy machines and soft drinks merchandize like Coca-Cola.
Products in new markets can be promoted through the following strategies.
Commercials transmitted via TV would be an effective global strategy to market the company’s products because consumers are able to have both visual and audio impression of the product. Advertisements in newspapers and on the radio can also help in reaching the target consumers as they also provide visual and audio transmission (Dyer, 2012). Through these traditional forms of media, the company can reach the primary market rather effectively. To reach the secondary market, the company should utilize other social media.
This strategy involves a marketing team visiting physical locations and carrying out promotional activities in the street, near schools and at sports events so as to have face-to-face interaction with the targeted consumers. This technique is effective since it creates a lasting image of the brand.
This strategy involves using the Internet, specifically the company’s website, to market the products globally (Dyer, 2012). In addition, the company can utilize social media channels such as Facebook. Thus, the primary and secondary targeted customers will be able to access information about the company’s products and leave comments. They can also learn about the upcoming events such as planned competitions. People can then register online and buy products directly from the company’s website.
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