NAME-APARNA TIWARI

SUB-INTERNATIONAL BUSINESS

TOPIC-MARKET ENTRY STRATEGY

What Is Market Entry Strategy?

A market entry strategy is the planned method of delivering goods or services to

a target market and distributing them there. When importing or exporting
services, it refers to establishing and managing contracts in a foreign country.
A market entry strategy is the method in which an organization enters a new
market.

Strategies for Market Entry

Let's take a look these strategies and how each one can be implemented.

1) Exporting
An item produced in a domestic market can be sold abroad. Storing and
processing is mainly done in the supplying firm’s home country. Export
can increase the sales volume.  Exporting is used for international
expansion and it is the process of sending goods to an international
market. There are two methods of exporting.

1. Direct exportation means that the organization takes charge of shipping

goods to the international market.
2. Indirect exportation takes place when the organization uses a middleman
or intermediary to integrate the goods into the market.

In general, exporting is a good strategy

2)Licensing
Licensing is the process of giving another company the rights to produce or sell
the organization's products or services. Licensing is a method in which a firm
gives permission to a person to use its legally protected product or technology
(trademarked or copyrighted) and to do business in a particular manner, for an
agreed period of time and within an agreed territory. It is a very easy method to
enter foreign market as less control and communication is involved. The
financial risk is transferred to the licensee and there is better utilization of
resources.
Eg-Coca Cola
• In Zimbabwe, United Bottlers have the license to make Coke.

3)Franchising
Franchising is, in essence, copying and pasting a concept into a new market.
This is good option when there is a relatively small need for product and service
adaptation. This entry method is most common among food chains because they
make only minimal changes when operating in a new market.. It is a system in
which semi-independent business owners (franchisees) pay fees and royalty to a
parent company (franchiser) in return for the right to be identified by its
trademark, to sell its product or services, and often to use its business format or
system.
Eg-Mc Donald’s and Starbucks

4) Partnering
Partnering means that two or more people will work together to enter a new
market. The partner may be from the desired market. Partnering can occur in
any expansion but is most beneficial in the international market. In some cases,
it may be required for international expansion and is especially valuable when
there are large cultural differences.

5) PIGGYBANKING:
In piggybanking marketing two companies form an alliance. Thus, they
Both help each other to promote certain products which are
Complementary to each other but not competitive in nature.
For example, a car company can promote another tire company. In
Such a situation, the products are complementary because cars need
wheels, but they are not competitive in anyway. It is not likely that
Someone will buy tires and start making a car of his own.
6)Outsourcing

It is a cost effective strategy used by companies to reduce costs by transferring

portions of work to outside suppliers rather than completing it internally.  It
includes both domestic and foreign contracting and also off shoring (relocating
a business function to another country).

7) Mergers & Acquisitions

In Mergers & Acquisitions, a home company may merge itself with a foreign
company to enter an international business. Alternatively, the home company
may buy a foreign company and acquire the foreign company’s ownership and
control. M&A offers quick access to international manufacturing facilities and
marketing networks.
Eg- Automobiles, Pharmacy, banking, telecom etc

8) Joint Venture
When two or more firms join together to create a new business entity, it is
called a joint venture. The uniqueness in a joint venture is its shared
ownership. Environmental factors like social, technological, economic and
political environments may encourage joint ventures.
Eg-Sony Ericsson

9) Foreign Direct Investment – It is a mode of entering foreign market through

investment.  Investment may be direct or indirectly through Financial
Institutions. FDI influences the investment pattern of the economy and helps to
increase overall development. The extent to which FDI is allowed in a country
is subjected to the government regulations of that country. It can be done by
purchasing shares of a company, property and assets.

10) Contract manufacturing – When a foreign firm hires a local manufacturer

to produce their product or a part of their product it is known as contract
manufacturing. This method utilizes the skills of a local manufacturer and helps
in reducing cost of production. The marketing and selling of the product is the
responsibility of the international firm.
• Eg- Park Davis Hindustan Lever, Ponds.