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Market Entry Strategies with their Advantages & Disadvantages - Coggle…
Market Entry Strategies with their Advantages & Disadvantages
Direct Exporting- Selling directly into the market you have chosen to enter.
Least complex, most cost effective and commonly used method to enter an international market. Also requires less investment than other methods
Disadvantages Include
Lots of competition in this method
Advantages include
Partnering- consists of co-marketing arrangements, strategic manufacturing alliances, etc.
Advatages Include
Extra useful where cultural differences vary greatly
Disadvantages Include
Almost a necessity even if you want to avoid it
Franchising - a version of rapid market expansion. Selling your rights and model to private owners to franchise your business.
Advantages include
Rapid expansion and growth if you are the owner of the franchise. Easily transferrable in markets.
Disadvantages include
If your business isn't internationally appealing or friendly (crossing-culturally). Could be setting up yourself for future competition in the market share.
Licensing - transferring the rights to the use of a product or service to another firm.
Advantages include
Very useful if the purchaser has a large market share
Disadvantages Include
No guarantee of monetary payouts from success. If you license it out in a lump sum sale, and it is wildly successful, the license purchaser will make the profits well before you
Joint Ventures - A Partnership that involves a third independently managed company.
Advantages Include
Risk is shared with both companies
Disadvantages include
Profits are shared
Buying a Company - Purchasing an already active company in the international market you seek to penetrate
Advantages Include
Acquiring a company with a substantial market share, avoiding government regulations in your home country
Disadvatages include
One of the most expensive options. A ton of front end work determining value of the company
Piggybacking- approaching companies and suppliers to include your product or service in their inventory and supply chain
Advantages Include
Low risk option for unique products and services. Reduced cost
Disadvantages Include
No guarantee of being able to stay in market, price points may be costly if you're working out a deal with another supplier as well
Turnkey Projects - specific to services. Where a facility is built from the ground up and turned over to the client ready to go.
Advantages include
great for entering foreign markets because the client is typically the government and being paid is gauranteed
Disadvantages include
Not a strategy all can employ, specific to only services, especially in environmental consulting, architecture, construction and engineering.
Greenfield Investments - buying land, build the facility and operate the business on an ongoing basis in a foreign market.
Advantages include
Most control in management, structure. Largest profits when it because a money making business.
Disadvantages include
highest costs and risk while experiencing two governmental regulations, transportation costs, and ability to access tech or skilled labor