Market Entry Strategy
A. No Single Strategy for Entry Market
Introduction
The launching of the new venture in the current corporate base and launching a new product is a tough task and much harder is to insert the strategically approach. This signifies that the market had have attempt rapidly in the market position or entering quietly and slowly. The presented words simply mean that the there is definitely no single strategy which is fitted to all markets, products, firms and the environmental factors (Block and MacMillan, n.d.)
The strategy for the entry market is the most crucial for the each international business’ success because if it does not succeed then it is difficult to get back in the market position. This is also undergoing from the particular market unto the other. The manufacturing popularity is still strong but the cost may be shared by the sequences of the interested parties due to the high cost involved (Coade, 1996).
As the particular market is chosen, then the decision of the market entry strategy should also be done. Additionally, the company should have a feasibility of the operations in the international business to the free trade zone due top the fact that this can complement in the market penetration options. Therefore, every market entry had its own unique weaknesses and strengths. Most of the time then, the strategies are not sharing the same exclusiveness. In addition, the manufacturer can use different markets inside the same market. This is also agreed to the statement that there is no single market is ideal in the as appropriate to all of the markets and this sis simply depends on the market conditions, to the corporate objectives, and to the political realities (Onkvisit and Shaw, 2004).
The Aspect of Strategy
The marketing strategy universal component is in the details of the contents including the marketing mix, the pricing, packaging, the distribution channel, and the target markets. These strategies can therefore affect the characteristics of the product, the competitive situation, the costs, and the growth rate, the market size, and the industry characteristics. Another example of the marketing entry strategy is the mechanism that will be using for the execution. Part of the mechanism is the joint venture, the project team, business unit, or any of the mechanism which is being designed or even selected for the strategy delivery. The other aspect from emerges culture that should give emphasize is the strategic posture. This is simply the conversation in the entrepreneur orientation in the firm whereas the willingness of taking into the risk of the top management, for the favorable innovation for changing the competitive advantages, and for the aggressive competition (Block and MacMillan, n.d., page 217).
There are other features for the entry strategy which should be discussed including the entry aggressiveness of the entry or the force applied in the business as the strength, the power, amount of the resources committed and the velocity of the effort and the other one is the entry effort focus which is definitely focused on the broad front. These two factors are important because they are can employ the largest amount of the resources than to the other alternatives added to their risky and costly that had been accompanied to the money and to the reputation (Ibid, page 218).
Options on Market Entry Strategy
There are many options that the company can use in order to enter in the business world. But, these options therefore must fit or must suit to the different types of the firms. The size of the firm is not an ample predictor if it works, the McDonalds for examples wherein it operates to the mix of franchise and for the wholly owned operations. The other one is the Dupont which operates for the joint ventures for the wholly owned. The entry choice of strategy is considered to be a long term decision that is why it is important to understand and determine the objectives of the firm as well as the success and the commitment for the overseas opportunities. The options that the enterprise can use for its entry market are the direct construction, the franchising and the strategic alliance. But, same as to the other factors, there they are also accompanied by the disadvantages as well as to their advantages. In the franchising there is the commitment of the owner-manager, the spread risk of the investment, and the speed of the market entry. But, it has also disadvantages which includes the dilution control, the training and the ensuring the uniformity. In the direct construction, it can experience the control to the quality of the management including the products and the services as well as the employee management though can have sort of disadvantages including the high level of the cost, the long term commitment and the time of course. On the other hand, the strategic alliance has to share to the risk, needs the political support and the matching expertise. If that had the pros then it also has the cons which are the secret sharing, the loyalty and the less income potential (Coade, 1996).
The Alternative Strategies for Market Entry
The options or the strategic market advantage in entering to the business world are like the military weapon in going into the war. These can then be the sword of the business managers for the success of their business that knows which of the weapon need to use. Same in the market entry strategy, the move can be successful upon choosing the right weapon that can be match to the entire strategy of the business. These are the alternative strategies that the one can use in order to succeed in their respective businesses (Ibid, page 31).
Exporting
This method is considered to be the first thing or the first method which came in their mind especially of the manufacturing concerns and for the small businesses. This is the most common due to its provision of the speed in the access and to the benefits to have an agent which can understand the product distribution to the market and its enthusiasm. The agent selection should be more detailed as well as the selection procedure (Agriculture and Consumer Protection, 2008).
Manufacturing
Choosing the manufacturing is the open to many of the companies though it requires the initial investment which is high level to the manufacturing facilities. The concern of the senior management team also when entering to the new market is the level of commitment. This means that choosing to manufacture the product to the target market cannot easily leave having no aguish and great deal of pain. The advantage of the manufacturing then looks clear as enjoy the benefits of the location of the customers’ responsiveness and the becoming the part of the target market infrastructure.
Direct Investment
To gain influence in the market, one of the method to use is the share ownership in the particular sector. One of the examples here is the move of the America of the Japanese which had been invested heavily in the UK and US business. The American movie industry is the great example which made a mixed success whereas the Japanese had made a big mistake due of having no experience in the said field. The other example is the French water companies in the utility sector of UK. This made a bang due to the level of understand of the French in the business world as the industry, the problems, and the opportunities as it was damaged.
Strategic Alliances
This method had been increasingly as the start of the contract out the specialist function companies. One of the keys to consider in the strategic alliance success is the development of the sense of the mutual respect as well as the trust that can underpin in the mutual series benefits and the success of the new strategy expectation. Aside from that, the other key aspect is the commitment in the new venture from the entire parties that are involved to the alliance. This means that the compatibility and the flexibility are important therefore needs to assessed prior entering the alliance. There is a large probability as well that the chance of the different cultures is going to exist in the companies and form an alliance that is why it should be managed effectively. This strategic alliance can therefore be base on the clear understanding of the effective distribution network need that can be established in the supply chain. The strategic alliance will provide then an opportunity to exploit the partnership of the company for the purpose of profit.
Joint Venture
The joint venture is attractive to most of the companies. This is the only choice open to the international manager due to the government’s target market had been legislated for the prevention of entering the market when completed the joint venture agreement together with the home-based company. The joint venture has also some of the advantages which can increase the credibility in the market and the awareness of the marketplace. Other reason that most of the analysts had been cited is that they can share the risk in their partners. This sharing of the risks can run the discussion of the of the market entry strategies (Buckley, 1998).
Licensing
The licensing is one of the method of the market entry that can tends to be recognized fast moving consumer goods sector and to the companies who wish to gain access to the past difficult markets. This will allows the companies as well to have a percentage of profit and it came from the product though there is no direct responsibility for the production. It can also face the company to the disclosure of the knowledge as well as the information which talks about the product being produce.
Consortia
This is the use of allowing the large engineering projects to effectively manage and to take place. Every consortium then can be led by the recognized group or the company for providing the potential investors and having the focal point that can understand the nature and the use of the investment opportunity.
These are then the options of the companies in diversification. These are also the living proof that there is no single and only marketing strategy in entering to the business world.
B. Franchising
Introduction
Starting at the early 1980s the franchising is one the approaches in the market entry strategy and in the business development and had been growing its importance not only in the huge companies but to the well-established retailing groups. Including in the companies which uses the franchising technique are the Dunkin Donuts, the Hertz Car Rental, the McDonalds and the Marks and Spencer. This is also normally associated in the high levels of the growth which used by the companies so that it can gain rapidly and to have a better and comprehensive entry in the market. This is commonly used as well in the local companies which has lacks of knowledge and prevalent as well in the sector economy of consumers (Coade, 1996).
The international franchising had made to become the important form of the direct form of investment in the foreign in terms of the services (Business Dictionary, 2008). It control system structure as well as the mix of the contractual and corporate arrangement can create a more complex relationship which are central in the foreign direct efforts of the investment. This is typically the agreement between the franchisor and the franchise (Yair, 2000).
Since the franchising is the simplest term of the licensing system, then it is connected in the marketing and distribution system for providing the services of goods and supply and it should be according to the standards and practices of the trademark that had been established including the expertise, the brand image, training, marketing, and the stability. To get back, the owner of the trademark or the franchisor can have to obtain a new source of the capital expansion, self-motivated vendors and new distribution markets for the quick penetration of the new market. Then, the key for the success of the franchisor proper implementation of the marketing plan and the business format is therefore important and essential (Asbill and Goldman, 2001).
The franchising therefore can play a significant reasons and behavior in the development and in the diversification of the business (Elango, 2007).
Importance of International Franchising
There is importance of the International franchising in the entire operation of the business. First, is the foreign franchisees are frequently major multinational firms and not a small and independent entrepreneurs. This only means that there is a greater awareness to the larger host country firms to the business concept of the franchisor. This can be attractive franchisees because of their longevity and their financial position in the business making and to make them less risky to the business which is unfamiliar. Example of this one is Burger King Franchise in Japan and its partner is Japan Tobacco. This only reflects the effort of JT for their business diversifications though consider it as one of the largest firms in Japan. Majority of these international agreements also involved strategic alliance and the joint venture. The second importance of the foreign franchise is its increase due to the number of units for its can hold rights and development. The international franchising also makes the different types of agreements which are multi unit. In general, these multi-units franchising also talk about the arrangement of the master franchise and or the area of the development agreements. Part of these agreements, the franchisees are being assigned to the larger block of units which covers the specific geographic area. In addition, the agreement of the master franchise will allow the franchisee to the recruitment and therefore can enter to the contracts of the sub-franchisees. The importance of the international multi-unit franchising had made an important method for the franchisor so that in can able to expand in their operations even without the need to evaluate and to monitor numerous distant franchisees (Yair, 2000).
The other importance of the international franchising is through allowing the easier growth as to the less saturated. The example of this one are the franchisors of the McDonald’s that can continue growing which they already done in the past years and only by the moving of the market which are untapped. This also signifies of taking the roots of the emerging markets. This is also allows an effective and efficient transfer of the business and the knowledge practices form the well developed nations and to the emerging markets with the aide of franchisee. In this regard, many of the emerging economies are making vigorous franchising through the encouragement of the local government. In general, the whole document of this paper only signifies that the franchisor in the international franchising should not see the one-way street wherein the transferring of the ideas should not only to move to the various countries and came from the home country. Majority of the success of the industry exist when the franchisor have made an innovations to the domestic market and came form the international market. As an example is what the KFC made an international operations in Japan and found out the format in franchising is unviable for the many reasons which made to come in the smaller format and more suitable in the market locally (Elango, 2007).
Another example of the advantages of international franchising is trough the example of franchising the international restaurant. The franchisor should not have to bear the risks and the development costs of opening up a foreign market in its own and the franchisee only assumes this risks and costs. The franchising therefore can help the company of the brand to gain an international presence fast and with a low cost (Morrison, 2000).
Conclusion and Recommendation
The franchising is also enhancing the collective advantages of the franchise agreements. It has also key aspects in the network as well as in the theory and which can be as the collective learning, the sense of the identity, the role of the franchise partners and the culture of the franchise network and can also facilitate to the access in the resource and can also be difficult to gain (Aharoni, Y and Nachum, L, 2000).
Finally, there is no specific way and strategy of diversifying the business whether locally or internationally (Morgan 1999). The strategies that the company needs to choose therefore should have be suitable for the culture of the business where in has to invest and there is a sense of acceptance for the consumer to support the new product and or business.
Bibliography
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Credit:ivythesis.typepad.com
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