Entry into Market

Amay Kothari

Growth Strategies

There are a number of strategies for

growth
th lik
like.
Intensive growth strategy
Integrative growth strategy
Diversification growth strategy

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Intensive growth strategy
Intensive growth strategies aim at
achieving further growth for existing
products.
There are three important intensive
growth strategies.
Market Penetration Strategy
gy
Market Development Strategy
Product Development Strategy

Market Penetration Strategy

It strives to increase the sale of the
current products in the current
markets.
There are the following three major
strategies to achieve this.
Increase sales to the current customers.
P ll customers
Pull t ffrom th tit ’
the competitors’
product.
Convert non – users into users

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Intensive growth strategy
Intensive growth strategies aim at achieving
further growth for existing products.
products
There are three important intensive growth
strategies.
Market Penetration Strategy
Market Development
p Strategy
gy
Product Development Strategy

Intensive growth strategy

It involves expansion the market for a

product.
d t
By adding new market segments
By entering new market segments
By entering new geographical markets.

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Intensive growth strategy

Intensive growth strategies aim at

achieving
hi i further
f th growth th for
f existing
i ti
products.
There are three important intensive
growth strategies.
Market Penetration Strategy
Market Development Strategy
Product Development Strategy

Product Development Strategies

A company may be able to increase

it currentt business
its b i b
by product
d t
improvement or introducing products
with new features.
E.g. Nokia, Vaio, Colgate, Lux, Pepsi

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Growth Strategies

There are a number of strategies for

growth like.
th lik
Intensive growth strategy
Integrative growth strategy
Diversification growth strategy

Integrative growth Strategies

Horizontal Integration
Integration at the same level or stage of
business in the same industry.
Vertical Integration
Integration of different levels/ stages of
business in the same industry
Forward Integration
It means entering the subsequent stage of the
industry
Backward Integration
Backward integration involves starting the preceding
stage of the current business.

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Growth Strategies

There are a number of strategies for

growth like.
th lik
Intensive growth strategy
Integrative growth strategy
Diversification growth strategy

Diversification
It means adding new lines of business.
Reasons for Diversification
Saturation or decline of the current business
Additional opportunities
Better opportunities
Risk minimisation
Better utilisation of resources and strength
Benefits of integration
Competitive strategy
Need related diversification
Consolidation
Inspiration

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Methods for Entry in Marketing

Different Modes of entry in international

Business.
Exports
International licensing
Franchising
Contract manufacturing
Contract marketing
Management contracts.
Joint venture
Foreign direct investment
Mergers and acquisitions
Take – over
Turnkey projects

Methods for Entry in Marketing

Exports
It means physical movements of goods and service from
one destination to another destination through a customs
port by following the rules of both the country of origin
and the country of destination.
Depending upon the involvement of exporter , it could be
classified as a direct export and indirect export.
In Direct exports goods and services is in their own
name. All proceeds are directly remitted from the buyer to
such exporters.
I di
Indirect exporter supplies
li to di
direct exporter wherein
h i the h
indirect exporter has to depend on direct exporter orders.
Lack of expertise, lack of international contracts and lack
of manpower make them to depend upon direct
exporters.

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Methods for Entry in Marketing

Exports contd.
epe d g upo
Depending upon thee ssize
eo e bus
of the ess,
business,
exporters are classified into
Small exporters,
Export houses
Trading houses
Star trading houses and
Super star trading House.
Exim policy of India provides incentives and
f iliti to
facilities t the
th category
t off exportt house
h and
d
above.
Depending upon the products, the exporters
could be classified as
Single product exporter
Multi – product exporter

Methods for Entry in Marketing

International licensing.
It is an agreement between the licensor
and licensee for over a period of time for
the use of brand name, marketing know
how, copyright, work methods, and
trademark by passing license fee.
Th licensor
The li iis h i minimum
having i i
involvement in day – to – day functions.
The return is also comparatively low.

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Methods for Entry in Marketing

Franchising.
It is a strong from of licensing wherein the
franchiser exercises more control over the
franchisee.
They also supply a main part of the product like
Trade marks
Operating system
Product brand reputations.
Advertising
Training of the employees
Quality assurance

Methods for Entry in Marketing

Contact Manufacturing.
Many of the companies outsource their
products and concentrate mainly on
marketing operations.
Contact manufacturing is a strategy of
identifying a manufacturing unit to
d
produce it
items att a competitive
titi produce
d
in any part of the world.

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Methods for Entry in Marketing

Contact marketing
All companies,
companies which
hich have
ha e strength of
production, need not have equal
marketing strength but they are
comfortable to deal with marketing
outlets around the world.
Such manufacturing unit, entering in
marketing agreement do concentrate
more on backward part of the core
marketing systems, production at a low
cost.

Methods for Entry in Marketing

Management Contracts.
Companies withith low
lo level
le el technology
technolog
and managerial expertise may seek the
assistance of foreign companies.
A management contract is an agreement
between two companies whereby one
company provides managerial and
technical assistance in which a proper
monetary compensation is given, either
as a flat lump sum fee or percentage
over sales or share in the profit.

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Methods for Entry in Marketing
Joint Venture.
It is like a marriage blinding between two venture partners to
set up a project either in the home country or host country or
third
thi d countryt with
ith a commitment
it t off joint
j i t risk
i k ttaking
ki and
d joint
j i t
profit sharing.
Many joint ventures has miserable failures in the past.
In the initial stages every venture promise excellent
opportunities to both the venture partners.
When operation starts, certain functional level grievances
and issues become inevitable.
Therefore the venture partners are required to understand all
Therefore,
the aspects of management, investment and regulations of
the countries where they operate.
The business unit should have a crystal clear guidelines and
operation manuals wherein the role of every one should be
well defined.

Methods for Entry in Marketing

Foreign direct Investment

Flow of fund from one destination to another
destination is called investment.
Companies, which are constantly involved in
international business, invest their money specially in
manufacturing and marketing bases through
ownership and control.
The most attractive part of operation is direct
investment, which contributes to optimisation of
resources in the host country
country, generating employment
opportunities and enhancing their standard of living.
Contribution through investment in the capital starving
economies and exposing the host countries to
advance technology and quality products.

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Methods for Entry in Marketing

Foreign direct Investment Contd.

The
Th mostt disadvantage
di d t are llack
k off
clarity of repatriation of profit,
imposition of restrictions by host
countries and elimination of small and
medium industries through financial
muscle by the investor.
Generally, the foreign investment is
taking place in all the developed
countries only in the green fields.
It take place in specific sector.

Methods for Entry in Marketing

Merger and Acquisitions

A company fromf home
h country
t selects
l t
foreign company and merges itself with a
foreign company and acquires its control of
ownership.
This mode of entering gives an outstanding
competitive edge over others.
Such companies are comfortable to
strengthen their international manufacturing
facilities and marketing network.

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Methods for Entry in Marketing

Take – Over
Take
T k – over isi a strategy
t t off a company to
t
identify a healthy unit and bring under the
management of another healthy unit in order
to reach the leadership and guaranteed
success.
Since many contestants focus on well –
known company for take over, the
competition becomes inevitable.
Out of those contestants only one will win and
the winner has to withstand hostiles.

Methods for Entry in Marketing

Take – Over Contd.

Therefore the process is also called ‘Hostile
Hostile
take - over’ and the winner is called take –
over tycoon.
The take – over is also in different levels like
Company take – over
Business take – over
Product take – over
Brand take over
Eg. Uniliver take over of Brook Bond and
Lipton enhanced its position as the leader in
tea industry in India.

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Methods for Entry in Marketing

Turnkey projects
A turnkey
t k project j t is
i a contract
t t underd which
hi h a
company would be fully involved from the
concept to completion.
Generally, supply of manpower, capital,
erection, installation, commissioning and trail
operation if a project would be the total deal.
For this, either the turnkey project contractors
get fixed price or cost plus profit are collected
over a long period of time.

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