Setting up a wholly-owned local subsidiary provides the parent company with complete control over sales. It requires a significant amount of investment — in both time and money — and is a riskier proposition. Greenfield investment is a long game with many challenges including recruitment, meeting regulations, understanding the nuances of the market and gaining local knowledge. However, it is also a method which provides for complete control of the brand and the highest potential returns. For a successful market entry strategy, there is a whole range of questions to be answered around the product, the marketing, the location and timing.
These questions include:.
Effective Strategies for International Market Entry Strategies | Definition | Concepts | Meaning
Does the product need to be localised? In other words, must it be changed to meet local tastes and conditions? Are entirely new products needed? Or is it simply a case of selling the exact same product in new markets? Where will the gateway into the country be?
Entry Strategies in Global Markets
Do major cities offer the best starting point? Or would one region work best? Or is a nationwide strategy more workable? Should there be a test phase in a few locations?
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Or a blanket entry? First-mover advantage allows the company to set the rules of the market and build brand loyalty. Yet it can be a high cost, high-risk strategy. Entering the market later can allow the company to imitate and improve on incumbents, gain a better understanding of the market and find a niche. Market entry requires a thorough analysis of the market, the goals of the company and its attitude to risk. Any strategy has to be clear and well-thought out, with partners chosen wisely. Once in the market, this research needs to be continuously renewed.
Realities on the ground change quickly and for an international business to stay ahead of the local and global competition, knowledge is power.
Choose a market entry strategy
Euromonitor International provides insights and analysis on more than 80 countries and 27 industries globally. We provide the strategic insights needed to enter a developed or emerging market.
To learn more about how we can help you grow, contact us. Market selection: First and foremost Market selection is the first and most important step to successfully launch a product or service overseas. Franchising works well for firms that have a repeatable business model eg. Two caveats are required when considering using the franchise model. The first is that your business model should either be very unique or have strong brand recognition that can be utilized internationally and secondly you may be creating your future competition in your franchisee.
Partnering is almost a necessity when entering foreign markets and in some parts of the world e. Asia it may be required. Partnering can take a variety of forms from a simple co-marketing arrangement to a sophisticated strategic alliance for manufacturing. Partnering is a particularly useful strategy in those markets where the culture, both business and social, is substantively different than your own as local partners bring local market knowledge, contacts and if chosen wisely customers.
Joint ventures are a particular form of partnership that involves the creation of a third independently managed company.
Two companies agree to work together in a particular market, either geographic or product, and create a third company to undertake this. Risks and profits are normally shared equally. In some markets buying an existing local company may be the most appropriate entry strategy. This may be because the company has substantial market share, are a direct competitor to you or due to government regulations this is the only option for your firm to enter the market.
It is certainly the most costly and determining the true value of a firm in a foreign market will require substantial due diligence. On the plus side this entry strategy will immediately provide you the status of being a local company and you will receive the benefits of local market knowledge, an established customer base and be treated by the local government as a local firm. Piggybacking is a particularly unique way of entering the international arena.
Market entry strategy - Wikipedia
There's always the possibility of conflict between partners, and potential loss of control by one of the parties. Can allow you to access the international distribution network of the entities you've partnered with.
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Strategic alliances A strategic alliance is when two or more entities cooperate to achieve a strategic goal. Pros Cons You can share costs and utilise member strengths. There's risk of conflict between partners, not to mention the creation of a future local or international competitor. Wholly owned subsidiaries A wholly owned subsidiary is a company that is completely owned and controlled by a single parent company. Pros Cons You have complete control over the day-to-day operations in markets overseas, while at the same time acquiring valuable processes and technologies.
It requires substantial resources, so the exposure to risk is high.
Useful resources Our Access Program provides assistance for Victorian businesses planning to establish new export markets in key countries and regions. Asialink Business has developed a series of Country Starter Packs for Australian businesses looking to establish or expand their operations in Asia. They have also put together a series of case studies profiling how Australian businesses are successfully engaging with Asia Business Victoria provide a range of helpful resources such as; funded assistance to help businesses strategically identify, plan and meet their business goals mentoring through the Small Business Mentoring Program.
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