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DIRECT MARKET ENTRY STRATEGIES - Coggle Diagram
DIRECT MARKET ENTRY STRATEGIES
ACQUISITION
Taking over existing local firms
Takes over the assets of the existing company
May redesign if necessary "purchase of stock in an already existing company in an amount sufficient to confer control"
Advantage
Less time consume
Less risky
Immediate grab of market share
Disadvantage
Not always successful
Cultural clash
Overpay
GREENFIELD
In greenfield investment, the parent company seeks to create a new business, usually with the parent company's branding.
Purchase of local property & hire of local manpower
Advantage
High level of control over business operation
High level of quality control over the manufacturing and sale of products
Diadvantage
Government regulation may hamper foreign direct investment
Extremely high investment risk
MANUFACTURING
Organization invest in plant, machinery and labor in the overseas market
Process begins with acquiring raw materials and transform it into finish product
ASSEMBLY
Manufacturer exports all or most of its products in a “knocked-down” condition. These parts are put together to form the complete product.
SOLE VENTURE
A sole venture is a 100% affiliate of the company. It may be realized either through the acquisition of an existing entity or the establishment of a new place
JOINT VENTURE
Collaboration of two or more organization
Share assets, risks and profits
Equality of partners is not necessary
Advantage
Access to partner's local knowledge
Reduction of concern about overpayment
Disadvantage
Potential of loss of proprietary knowledge - Potential conflicts between partners