Marketing management help on: International Market entry Models
International Market entry Models which a marketing manager need to while entering a foreign market
Firms who are interested in entering the foreign market face a lot of problem in regards to the choice of entering modes. Some of the options which are available with the marketers are exporting, joint venture, licensing & sole venture. There are various factors which would help to determine the type of entry mode to be selected while entering a foreign market. All the options mentioned above, involve high levels of commitment in relation to time, money & the amount of loss incurred. The factors which would help to determine the entry norms for a particular country would be either the ownership advantages, location of the market or integration of the transactions (McDonald, Burton & Dowling, 2002).
There are many studies or researches which have taken place in order to identify the choice of entry mode while entering into the new market. The major influence would be due to the selected target market applicable in a given country. The studies regarding the same have been contributing in an in depth understanding of the entry behaviors as well as make a proper inter relationship between the various entry determinants. To understand this particular aspect, an example has been attached. The example states that, if the organizations are low in the levels of ownership then they are not expected to enter the foreign market or take up a low risk oriented entry norm such as exporting. It has been seen that, organizations attached with high levels of ownership follow either joint venture or licensing option to enter the foreign markets.
The following portion of the essay takes into consideration the four main entry modes i.e. exports, joint ventures, licensing & sole ventures in a much detailed manner.
(Source: Wu & Zhao, 2007)
The first entry mode refers to exporting. Export refers to a market entry mode with which direct sale of the goods & services is practiced within one or more countries. Export has been referred to as one of the oldest ways to enter the foreign market. Exports have been referred to as an entry mode which requires less amount of investment to target the foreign market. There are mainly twp approaches in exporting. They are direct & indirect approach to export the goods & services in foreign markets (Wu & Zhao, 2007). Direct exporting refers to o one of eth most straight forward approach in exporting. In this type of entry mode, the level of commitment is on its own behalf. This helps in order to give better control over a particular brand as well as the operations in the overseas market. Direct export refers to an entry mode which would help the country in order to get involved with the marketing of the products within the various foreign markets. This would help in order to create a company which would take into consideration high levels of market share, in depth research of the market, documentation of the reports & high pricing. This type of an approach would also help in order to benefit the company by increased levels of sales, better control, and knowledge regarding the market as well as developing high levels of expertise within the foreign markets (McDonald, Burton & Dowling, 2002).
The second approach refers to indirect marketing. This refers to a type of an approach wherein an agency would be employed to handle the exports of goods & services on behalf of the company. This approach takes into consideration various methods such as domestic sales organization, international trading companies & export Management Company. The simplest method with which foreign sales could be managed with the help of export refers to domestic sales management. This refers to a technique which would take into consideration casual exporting. In this type of a method, the products are sold within the domestic market but the products are used or resold in the foreign markets. The second type of indirect exporting refers to international trading company. This is a type of method which would take into consideration exports from the various offices spread all across the globe. Mitsubishi refers to an organization which practices this type of an entry norm to enter the foreign markets. The main reason to follow this type a method is the market size & the available market coverage of the target audience. This method has helped Mitsubishi in order to attractive high levels of distributors along with an expansion of the network along with credit reliability.
The second entry mode refers to the licensing agreements which could be used by the companies in order to enter the foreign markets. Licensing refers to the type of an entry mode which would help in order to use the property of the licensor. The property which could be used by the licensor is intangible in nature. They are copy rights, patents, copy rights, etc (Wu & Zhao, 2007).
The third entry mode which could be practiced by marketers to enter the foreign market refers to joint venture. The main focus of joint venture is to partner the strategic goals which would help to converge the competitive goal of the organization. Joint ventures are successful if and only if the partner’s size, market share & power are less as compared to the market leaders in the industry. The main reason as to why to consider joint venture as one of the entry modes is due to ownership, length of the agreement, transfer of the technology, pricing & keep a check over the capabilities and the available resources (Porter & Sakakibara, 2004). Some of the issues which might arise while practicing joint ventures are mistrust, lack of support from the parent company, cultural clashes, ambiguity & conflicts over the new investments. Joint venture refers to an entry mode which would take into consideration setting up of the new business owing a portion out of it. Joint ventures have been considered one of the best options to enter the foreign market (McDonald, Burton & Dowling, 2002).
The last entry mode which could be used by any marketer to enter into the foreign country refers to sole venture or Foreign Direct Investment (FDI). FDI refers to a type of entry mode which would help in order to obtain direct ownership of the products services. FDI refers to the transfer of capital, investment, manpower & technology. Foreign direct investment could be practiced with the help of making an acquisition in well established enterprises. With the help of foreign direct investment, the levels of control, ownership would increase. This would also lead to better understanding of the customers in the existing competitive environment. The level of commitment & resources required for this type of an entry mode is quite high (Wu & Zhao, 2007).
Some of the examples in order to illustrate the different types of entry norms which have been used by the different companies to enter the foreign markets have been discussed in the following section of the essay. Huawei has been using different types of entry modes in order to enter the foreign markets. They have used almost all forms to enter the different markets based upon its geographical & the different type sof products offered by a particular market segment.
Huawei used joint venture as one of its entry modes in order to enter the Russian market. In the year 1996, Huawei thought to start its business in Russia. In order to enter the Russian market, Huawei entered into a joint venture with Beto-Huawei & a Russian telecom industry in order to establish the same in the Russian market. Being in the initial stages, Huawei thought it is quite a tough job to enter the Russian market. Huawei had spend almost four years in order ti study as well as wait so as to get their first order from the Russian market. In the starting stage, Huawei strategy was to select that target audience which was weak in the telecommunication infrastructure. They targeted the Russian market as they have high levels of potential to develop themselves in such a sector. Looking into the various characteristics of the telecommunication services, the social as well as the cultural aspects of the Russian market was considered (Uzama, 2009). Huawei took into consideration only those markets wherein the information security related to the telecommunication services & build good relationships with the home country. Therefore, based upon the various advantages attached with technological research, Huawei chose this method.
Huawei opted for export as one of its entry modes in Asia, Africa & South American markets. In the first stage, it has been seen that Huawei selected the following mentioned countries as its target market. The main factors which led to choose the export entry mode by Huawei were the geographical distance & the market conditions of the various countries. It was seen that, in the year 2000 Huawei entered in the North Africa, Mid East & the Asian market. During this year, export entry mode was being used by Huawei in the target markets. Huawei had sent many engineers from their home country to establish an entire branch in the above mentioned country. The selection of the entry mode i.e. exports was done on the basis of the following things such as high levels of flexibility, low on risk, low on investment & low commitment in terms of resource, etc.
The last example of Huawei in regards to enter a different country i.e. North America & other Western countries has been done with the help of Contractual Entry mode. In the year 2001, Huawei products were sold to the various countries of Western Europe. In such developed countries, Huawei had applied different types of contractual methods to enter in these countries. Some of the methods which were included in this type entry method were co-research, franchising, co-production, etc (Taylor, et al 2000). One example in this regards could be seen as follows, in the European market Huawei cooperated with Marconi in order to develop the products as well as the market the same. Marconi has been termed as an agency which helps to sell the products of Huawei in the European & Western countries. In the same manner, Huawei has been termed as an agency helps Marconi sell the products in the China & Asian markets. It has been seen that, in the year 2002 Huawei cooperated with Motorola in developing a fair mobile network by using the OEM method (Porter & Sakakibara, 2004). In order to develop the market in communication in North America, Huawei has practiced joint ventures in the same. With the help of joint venture, Huawei would be able to well establish the data communications in the different parts of the world. The joint venture of Huawei was termed as Huawei-3Com with 3com (which was one of the leading players in the North American markets). In this type of an entry mode, Huawei would take up all the advantages of research and development & maintain the international resources (Pehrsson, 2004).
Based upon the research done on the various Japanese MNC’s it is well stated that, the success of the Japanese firms within the entire globe has been done with the help the various international entry modes. With the use of the various market strategies, market orientation, new product development, market strategies have helped all the Japanese MNC’s to be successful in all the parts of the world. The entry modes have been chosen by the Japanese MNC’s in the most appropriate manner. The MNC’s have given the entry modes high importance & the entry mode which has been chosen by the company plays one of the most important roles in measuring impact of the levels of risk, ownership, etc (Neilson & Chadha, 2008). Based upon the research it could be seen that, most of the Japanese MNC’s have been using the theory of bargaining power. This theory has helped in order to depend upon the relative bargaining power of the organization. The theory of bargaining power states that the organization has a natural desire to have higher control mode of entry. This helps the majority of the Japanese MNC’s to make arrangements which would help in order to run the foreign market & dominate the same. The following criteria’s have been taken into consideration by the Japanese MNC’s (Agarwal & Ramaswami, 2001). They are stake in the firm, intensity of the competition, size of the enterprise, riskiness attached to the investment, restrictions from the host country, stake within the host country, etc. While selecting any of the entry modes to enter the foreign country the following hypothesis have been considered by the Japanese MNC’s. Some of the hypothesis are there exists a negative relationship within the stake of MNC & Japanese MNC’s (Kalyanaram & Gurumurthy, 2008). The second hypothesis refers that, there exists a positive relationship within the stake of the host country & attract high levels of investment within the Japanese MNC. The third hypothesis refers to the fact that, there is a positive relationship between the levels of risk amongst the host country as well as the Japanese MNC. The fourth hypothesis attached states that, there exists a negative relationship between the levels of competition existing within the global markets and the MNC. The questionnaire based research on the same states that, there are five main factors which would determine the choice of the entry modes in the Japanese MNC (Kalyanaram & Gurumurthy, 2008). The first factor states that, country has a significant stake in the country which helps to attract high levels of investments and negotiate over the ownership of the same. The second factor states that, Japanese MNC’s opt for high control modes when the risk associated is high. The third factor takes into consideration the level of commitment in terms of resource. The Japanese firms are unable to negotiate over the modes to entry. The intervention of government in case of Japanese MNC is the last factor & plays one of the most crucial roles while entering into the foreign markets (Agarwal & Ramaswami, 2001).
Hence, it could be concluded that there are mainly four ways with which a marketer can choose to enter into the foreign market. They are sole venture, joint venture, licensing agreements & exports. With the use of the various market strategies, market orientation & new product development have helped all the MNC’s or marketers to be successful in all the parts of the world.
If you want Marketing management Assignment Help study samples to help you write professional custom essay’s and essay writing help.
Receive assured help from our talented and expert writers! Did you buy assignment and assignment writing services from our experts in a very affordable price.
To get more information, please contact us or visit www.myassignmenthelp.Com
