The Market entry modes

Résumé du document

The decision to market overseas is highly complicated as it involves making a complete analysis of the company (its strengths and weaknesses) and of the global environment. After these steps are accomplished, the company which wants and which is able to market overseas has to research for the more profitable markets to export to and rank them according to their attractiveness. Nevertheless, the company should adapt its strategy to each market this is why the choice of the entry mode into a market could be different in the chosen country than in the domestic one.

Extraits

[...] This market entry mode permits to have a double control of process and to make higher profits. This last assumption supposes that the cultural differences and the country risk are well-managed by the company Virtual offices/E-businesses It reduces invests but entails efficient logistic processes and knowledge in computing. Nowadays, consumers still like to touch the products and are often hesitant for paying online because of data's security External assistance Better than indirect export for small companies. They will export subcontracting. [...]

[...] There are the other queries to be addressed such as the SPEED and precisely how quickly do you wish to enter the market. The reflection about COSTS is indispensable too as it could be necessary to invest for product's modifications or to answer to standards. To sum up, what are the technical issues? To go further, the choice of the market entry mode is also based on the RISKS; the exporting company should take in consideration the insurances, the political and payment issues and also the payback period (ROI). Finally, TIMEBOUND is taking part of the decision. [...]

[...] The distributor may be exclusive. You can combine distributors and agents. The main advantage to export by a distributor is that you're sure you'll be paid even if the distributor doesn't sell the products. If the company wonders about exporting through an agent or through a distributor, the answer mainly depends on the volume ratio and the value of the product Both the preview ways to export are direct and so include the advantages to keep the control on the sale price as the company has a direct commitment with the different actors. [...]

[...] Conclusion There isn't a unique or an ideal way to export. As we saw it, the chosen market depends on internal and external factors then on the strategy. Each mean presents advantages and limits too that's why the company must invest time to consider all the issues and establish monitoring indicators to measure the pertinence of its choice in function of the objectives it has fixed. Finally, the company could adapt the export way in the time. Indeed, the indirect export (as the piggy-back) may be used as a test period before implanting a commercial subsidiary. [...]

[...] Actually, the company will contract out its production in another country on her behalf. The producing company may potentially re-export to other countries. This way, the advantages mainly are the cheapest costs and the opportunity to make higher profits. Subcontracting also allows a flexible production. However, the exporting firm has no direct supervision and neither any control on the manufacturing; its process and the quality level. This market entry mode supposes to manage the currency issues too Joint-venture / merged To share the risks of the market entry companies (either 2 companies from the same area or your company and one company in the targeted area) may come together to form a company in the host country. [...]