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Types of Market entry strategies (Direct Exporting (Summary: Direct…
Types of Market entry strategies
Direct Exporting
Summary: Direct exporting is selling directly into the market you have chosen using in the first instance you own resources. (TradeStart.CA)
Advantages: Direct exporting, in general, avoids all the costs and confusion of a "middleman." It also allows you to have greater control over sales and to interact directly with your clients (SmallBusiness).
Disadvantages: requires more time, energy and money then you may be able to afford, requires more "people power" to cultivate a customer base, You are held accountable for whatever happens. There is no buffer zone (SmallBusiness)
Licensing
Summary: Licensing is a relatively sophisticated arrangement where a firm transfers the rights to the use of a product or service to another firm. (TradeStart.CA)
Advantages: Useful for when the purchaser of the license has a large market share in the market you want to enter. (TradeStart.CA)
Disadvantages: increases opportunities for IP theft, creates a dependency upon the licensor, creates added competition in the marketplace (Brandon Gaille)
Franchising
Advantages: lower failure rate, help with start up and beyond, buying power, profits (SmallBusiness)
Disadvantages: Their way or highway, ongoing costs, ongoing support, cost (SmallBusiness)
Summary: Typical North American process of rapid market expansion that works best with a repeatable business model (TradeStart.CA)
Partnering
Advantages: Useful when the other markets have a different culture than your own which can bring in local knowledge and contacts. (TradeStart.CA)
Disadvantages: each partner is ‘jointly and severally’ liable for the partnership’s debts; that is, each partner is liable for their share of the partnership debts as well as being liable for all the debts, if partners join or leave, you will probably have to value all the partnership assets and this can be costly. (business.tas.gov)
Summary: Partnering can take a variety of forms from a simple co-marketing arrangement to a sophisticated strategic alliance for manufacturing. (TradeStart.CA)
Joint Ventures
Advantages: New insights and expertise, better resources, can be flexible (businesstown)
Disadvantage: Vague objectives, there is no such thing as an equal involvement, clash of cultures, limited outside opportunities (businesstown)
Summary: Joint ventures are a particular form of partnership that involves the creation of a third independently managed company. (TradeStart.CA)
Buying a company
Advantages: 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. (TradeStart.CA)
Disadvantages: most costly and determining the true value of a firm in a foreign market will require substantial due diligence. (TradeStart.CA)
Summary: 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. (TradeStart.CA)
Piggybacking
Advantages: reduces your risk and costs because you are essentially selling domestically and the larger firm is marketing your product or service for you internationally. (TradeStart.CA)
Disadvantages: Finding the right partner and opportunity, constant mind on target audience, (mbaskool)
Summary: Piggybacking is a particularly unique way of entering the international arena. If you have a particularly interesting and unique product or service that you sell to large domestic firms that are currently involved in foreign markets you may want to approach them to see if your product or service can be included in their inventory for international markets. (TradeStart.CA)
Turnkey projects
Advantage: This is a very good way to enter foreign markets as the client is normally a government and often the project is being financed by an international financial agency such as the World Bank so the risk of not being paid is eliminated. (TradeStart.CA)
Disadvantage: Limited client involvement, Budgets may be higher than necessary (LindaShess)
Summary: A turnkey project is where the facility is built from the ground up and turned over to the client ready to go – turn the key and the plant is operational. (TradeStart.CA)
Greenfield Investments
Advantages: The primary advantages of greenfield investments stem from having a high level of direct control over the investment enterprise, Greenfield investments enable easier and more effective adaptation to the foreign market, The company’s on-site presence can also make it more adept at crafting advertising and marketing efforts with maximum effectiveness within a specific market environment (Investopedia)
Disadvantages: costly and holds the highest risk but some markets may require you to undertake the cost and risk due to government regulations, transportation costs, and the ability to access technology or skilled labour (TradeStart.CA)
Summary: A greenfield investment is where you buy the land, build the facility and operate the business on an ongoing basis in a foreign market (TradeStart.CA)
Sources
http://www.tradestart.ca/market-entry-strategies
https://www.thebalancesmb.com/direct-exporting-advantages-and-disadvantages-1953310
https://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/12085-piggyback-marketing.html
https://www.business.tas.gov.au/starting-a-business/choosing-a-business-structure-intro/partnership-advantages-and-disadvantages
https://businesstown.com/12-advantages-and-disadvantages-of-a-joint-venture/
https://www.investopedia.com/ask/answers/071315/what-are-benefits-company-investing-greenfield-investment.asp
https://www.thebalancesmb.com/should-you-buy-a-franchise-2948127
https://brandongaille.com/14-licensing-advantages-and-disadvantages/
http://lindashess.com/2017/08/21/the-pros-and-cons-of-turnkey-construction-projects/