INTERNATIONAL MARKETING

MANAGEMENT

Foreign Market Entry Strategies

Date: 05th June 2015

Prepared and presented by Vrujesh Salunkhe

OVERVIEW
1.

Target Market Selection

2.

Choosing the Mode of

Entry

3.

Exporting

4.

Licensing

7. Joint Ventures
8. Wholly Owned SubsidiariesMergers and Acquisition
9. Strategic Alliances
10. Timing of Entry

5.

Franchising
11. Exit Strategies

6.

Contract Manufacturing
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Date: 05th June 2015

Prepared by Vrujesh Salunkhe

Introduction

The need for a solid market entry decision is an integral part of a global
market entry strategy.

Entry decisions will heavily influence the firms other marketing-mix

decisions.

Global marketers have to make a multitude of decisions regarding the

entry mode which may include:
(1) the target product/market
(2) the goals of the target markets
(3) the mode of entry
(4) The time of entry
(5) A marketing-mix plan
(6) A control system to check the performance in the entered
markets

Date: 05th June 2015

Prepared by Vrujesh Salunkhe

1. SELECTING THE TARGET

MARKET

A crucial step in developing a global expansion strategy is the

selection of potential target markets (see Exhibit 9-1 for the
entry decision process).

A four-step procedure for the initial screening process:

1. Select indicators and collect data
2. Determine importance of country indicators
3. Rate the countries in the pool on each
indicator
4. Compute overall score for each country

Date: 05th June 2015

Prepared by Vrujesh Salunkhe

1.SELECTING THE TARGET

MARKET

Chapter 9
Copyright (c) 2007 John Wiley & Sons, Inc.

2.CHOOSING THE MODE

OF ENTRY

Decision Criteria for Mode of Entry

.

Market Size and Growth

Risk

Government Regulations

Competitive Environment/Cultural Distance

Local Infrastructure
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Date: 05th June 2015

Prepared by Vrujesh Salunkhe

2.CHOOSING THE MODE OF

ENTRY

Date: 05th June 2015

Prepared by Vrujesh Salunkhe

2. CHOOSING THE MODE OF ENTRY

Date: 05th June 2015

Prepared by Vrujesh Salunkhe

2.CHOOSING THE MODE OF ENTRY

Classification of Markets:
Platform Countries (Singapore & Hong Kong)
Emerging Countries (Vietnam & the Philippines)
Growth Countries (China & India)
Maturing and established countries (examples: South
Korea, Taiwan & Japan)

Company Objectives
Need for Control
Internal Resources, Assets and Capabilities
Flexibility

3.EXPORTING

Indirect Exporting
Export merchants
Export agents
Export management companies (EMC)

Cooperative Exporting

Piggyback Exporting

Direct Exporting

Firms set up their own exporting departments

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4.LICENSING

Licensor and the licensee

Benefits:
Appealing to small companies that lack resources
Faster access to the market
Rapid penetration of the global markets

Caveats:
Other entry mode choices may be affected
Licensee may not be committed
Licensee may become a future competitor
Licensors
1. Disney Consumer Products - Across film, TV, digital, publishing and
consumer products.
2. Iconix brand group - women's, men's, athletic, home, consumer electronics
3. Procter & Gamble - FMCG
4. Eastman Kodak -SD & MicroSD memory cards,inkjet photo-specialty paper
5. Warner Bros. Consumer Products & Entertainment
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5. FRANCHISING

Franchisor and the franchisee

Caveats:
Master franchising
Revenues may not be adequate
Benefits:
Availability of a master franchisee
Overseas expansion with a
Limited franchising opportunities
minimum investment
overseas
Franchisees profits tied to
Lack of control over the franchisees
their efforts
operations
Availability of local
Problem in performance standards
franchisees knowledge
Cultural problems
Franchisor

1.Domino's Pizza
2.McDonald's
3.Pizza Hut
4.Sherwin Williams
5.Bata
6.Baskin-Robbins

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6. CONTRACT MANUFACTURING
(OUTSOURCING)

Benefits:
Labor cost advantages
Savings via taxation, lower energy costs, raw materials, and
overheads
Lower political and economic risk
Quicker access to markets

Caveats:
Contract manufacturer may become a future competitor
Lower productivity standards
Backlash from the companys home-market employees regarding
HR and labor issues
Issues of quality and production standards
BOT or Turnkey Project

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7. EXPANDING THROUGH JOINT VENTURES

Cooperative joint venture

Benefits:
Higher rate of return and more control over the operations
Creation of synergy
Sharing of resources
Access to distribution network
Contact with local suppliers and government officials
Caveats:
Lack of control
Lack of trust
Conflicts arising over matters such as strategies, resource allocation,
transfer pricing, ownership of critical assets like technologies and
brand names.
Joint Venture
Asian PPG
Berger Paints Ltd and ICI Ltd - to manufacture auto and industrial
coatings
NPCIL-IOCL-Operation and development of nuclear power plant,
developing nuclear energy, generating electricity

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7. EXPANDING THROUGH JOINT VENTURES

Drivers Behind Successful International Joint Ventures :

Pick the right partner
Establish clear objectives from the beginning
Bridge cultural gaps
Gain top managerial commitment and respect
Use incremental approach
Create a launch team during the launch phase:
(1) Build and maintain strategic alignment
(2) Create a governance system
(3) Manage the economic interdependencies
(4) Build the organization for the joint venture

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8. ENTERING NEW MARKETS THROUGH

WHOLLY OWNED SUBSIDIARIES

Merger & Acquisitions

Greenfield Operations
Benefits:
Greater control and higher profits
Strong commitment to the local market on the part of
companies
Allows the investor to manage and control marketing,
production, and sourcing decisions

Caveats:
Risks of full ownership
Developing a foreign presence without the support of a third
party
Risk of nationalization
Issues of cultural and economic sovereignty of the host
country

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8. ENTERING NEW MARKETS THROUGH

WHOLLY OWNED SUBSIDIARIES
Mergers and Acquisitions
Quick access to the local market
Good way to get access to the local brands
M& A 2014.
1. Flipkart- Myntra
2.Asian Paints- Ess Ess Bathroom Products
3. RIL- Network 18 Media and Investments
4.Ranbaxy- Sun Pharmaceuticals
5. Berger Paint SW Deco
6.Asian Paint Kadisco- Ethiopia Deco , Industrial, Auto

Greenfield Operations
Offer the company more flexibility than acquisitions in the areas of human
resources, suppliers, logistics, plant layout, and manufacturing technology
Kansai-Nerolac - 1983 Technical Collaboration Agreement and in 2006 it
became wholly owned subsidiary of Kansai Paint Company Ltd

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9. CREATING STRATEGIC
ALLIANCES

Types of Strategic Alliances

Simple licensing agreements between two partners
Market-based alliances
Operations and logistics alliances
Operations-based alliances
The Logic Behind Strategic Alliances
Defend
Catch-Up
Remain
Restructure

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10. TIMING OF ENTRY

International market entry decisions should also cover the

following timing-of-entry issues:
When should the firm enter a foreign market?
Other important factors include: level of international
experience, firm size
Also, the broader the scope of products and services
Mode of entry issues, market knowledge, various economic
attractiveness variables, etc.

Reasonsforexit:
Sustained losses
Volatility
Premature entry
Ethical reasons
Intense competition
Resource reallocation

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11. EXIT STRATEGIES

Risks of exit:
Fixed costs of exit
Disposition of assets
Signal to other markets
Long-term opportunities
Guidelines:
Contemplate and assess all options to salvage the foreign
business
Incremental exit
Migrate customers

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