There is no ideal market entry strategy, as different market entry methods might be adopted by various firms entering the same market or by the same firm in different markets. Fully explain why this is the case, using specific firm examples and theory.
Yes, rightly said that there is no ideal market strategy. The market strategy which should be adopted is entirely dependent on market scenarios. There are numerous market entry strategies available. Some are them are as following:-
One enterprise may use different strategies to enter different markets across the globe. For example:- Starbucks Inc., this corporation has a global footprint, and it has adopted many strategies to enter the different markets.
There are various strategies, and the businesses choose the best suit for them. The type of strategy adopted affects the profitability and future growth of the firm. Also, entering the market of a new country brings a lot of challenges for the firm. There are a lot of rules and regulations that are supposed to be followed (Yoboue et al., 2017). Though, the process of starting a business in a new country has smoothened after the introduction of globalization. But, in some countries, there are still restrictions. Many developing countries have initiated the process of globalization and have removed the trade entry barriers, due to which they are doing exponentially well—for example, India.
It refers to the selling of goods from one country, where they are produced to the other country. It is a low- risk strategy. Several reasons justify this statement. The products that are produced in the domestic market have potential growth opportunities in the foreign or international market. Developing a new product and then selling it in the foreign market might be risky, but selling the existing product would be a low-risk and highly profitable deal. Last but not least, the firms that face seasonal demand for their products in the domestic market they have the option of further selling their product in the international market, to balance out their revenue and generate much profit (Keegan, 2017).
Under the contract of franchising, the owner, also known as the franchisor, has the control over the brand and the licenses pertaining to the business, and he grants permission to the franchisee for carrying out the business. In lieu of a contract, the franchisee pays a specified amount to the franchisor, known as the license fee. Rather than this, he also puts up an initial capital required to carry out the business. The main nerve of the franchise contract is licensing intellectual property. Thence, the process of franchising comprises licensing. It covers the skill required, designs, logos, copyright of materials, patents, trademarks, and other confidential information.
Sometimes people confuse the licensing and franchising in such a way that they treat them the same. As there is a hairline difference between both the terms. It can also be said that for the completion of a franchising contract, licensing is essential. Licensing is the basis of franchising that tells about the proprietor holding responsibility for I.P. (intellectual property) while conceding others the option to utilize it. The example of licensing can be a software license of Microsoft office that we can use because it has provided us the license to use it.
It can be defined as the collaboration between two or more investors to portion or share the ownership, operations, and rights over the property. Here, the two businesses with a combination of different skill, seek to attain a common purpose. The joint venture can be for a specific period as well. It means the companies get separated after the fulfillment of the purpose of the contract (Otieno et al., 2019). The main advantage of the joint venture business is the diversification of the product line with the opportunity to enter into new markets or new geographical locations.
Examples of 10 companies which adopted different entry methods that turned out successful for them:-
Google and the pharmaceutical company Glaxo and smith are the companies in which a joint venture agreement was signed. They entered into this agreement to produce the bioelectric medicines. This venture lasted for seven years.
In the year 2001, sony and Ericsson entered into the agreement of a joint venture. They came together to do the operations and manufacturing of smartphones and gadgets. After several years of operation, in the year 2011, sony finally acquired Ericsson mobile manufacturing division.
Starbucks Corporation, which was founded in Seattle, has used several entry modes to enter in different markets. It operated around 23,775 locations worldwide.
· Through a licensing agreement, Starbucks has operated in the middle-east. They agreed with the licensee, MH Alshaya W.L.L.
· In year1998, Starbucks has acquired around 65 Seattle coffee company stores in U K and entered the European market.
· A joint venture agreement between Starbucks coffee international and Saza by league took place. This was done to enter in Japan. Eventually, in the year 2015, this outlet became the wholly-owned subsidiary of Starbucks and delisted from the Tokyo stock exchange (Business Intelligence, 2020).
IKEA is a Swedish founded multinational group. Its main business is to design and sell kitchen appliances and home decors. Established in the year 1943, it has over 300 stores across the world and has used different market entry strategies to enter different markets across the globe. It entered the market of India via foreign direct investment. (FDI) .It opened many outlets in china, via a joint venture in the year 1998.
Holiday Inn and The Hertz Car Rental, these have entered in the international markets via the franchising model.
Starting in 2012, McDonald’s possesses 1258 outlets worldwide; more than twofold the 542, it had only fifteen years before in 1997 after adopting the franchising model.
Another market giant Walmart used several strategies to enter different markets. Walmart entered into the partnership contract with lojasamericans .lojasamericans is the leading discount store chain in Brazil. According to this agreement, Walmart held around 60% share and lojasamericans over 40% share, and this is how Walmart successfully entered the Brazilian market. It entered some markets via FDI and mergers and acquisitions as well.
Redbull is an Austrian energy drink (Jefjournal.org.za., 2020). It entered the market in Australia. It used direct export as the strategy to enter its market. Red bull possesses over 36% market share in the Australian market.
Microsoft Corp and Walt Disney are the two giants that have success in the international markets. They used the entry mode of licensing.
Philips and Toyota entered the market of various countries via using Turnkey key solutions and projects.
Contract manufacturing means the manufacturing of some parts of the products. This case is especially found for products with mechanical Nature. The I-Pad and iPhone that are the products of Apple Inc. are manufactured by one of the companies of china known as Foxconn.
There is no limit to the entry strategy which a firm can adopt to enter the different market or same firm entering different markets. And the impact of globalization has resulted in fewer entry and exit barriers that have made the process easy for the development of the business at the global level. The companies decide their market entry strategy based upon the several important criteria.
· Framing of clear goals
· Market research
· Competition study
· Nature and resources available with the firm
· The Nature of the products offered
· Size of the company
After deciding upon these important factors, one can adopt the relevant strategy for their business.
For a company to sustain its competitive advantage in a changing global marketplace, it needs to develop a good understanding of its MACRO and MESO environment. Discuss this statement, using appropriate global marketing theory and concepts and company examples.
As the company steps in the global world, for increasing its customer base, expanding its businesses, they come across many factors that they should consider during the decision making of product development, segmentation, targeting, and many other aspects of marketing. Global marketing refers to marketing planning, implementing, producing, and promoting or advertising products/services across the globe. Previously, worldwide global marketing was fundamentally the space of global companies. Since the rise of the Internet and web-based business, even small businesses are able to reach the customers globally.
The macro-environment simply means the external environment of the firm. The firm does not possess any control over this environment. Microenvironment which are under the control of the business like suppliers, employees, financial resources, and assets, these are the controllable factors. But, the macro environment comprises all those factors that the uncontrollable for any business (Strategic Planet, 2020). They are out of reach. So, it is required that companies remain adaptable and updated about the changes that can take place in the market. The success and failure of the company depends on this fact they how does it react to its environment and how does it adapts the change. Factors of macro environment:-
Political environment: - The world of politics restricts businesses. This environment consists of the administration of the country. The administration designs business policies, and that is why it affects the business environment of the organizations.
As individuals are the main reason behind the survival of the businesses. Age, gender, population, birth rate, etc. are the essential factors that are required to be studied to embed a good strategy for the business. These are factors that help in determining the tastes and preferences of the population
The Meso environment means some of the factors that can influence a business environment. These factors mainly come between the interface of micro and macro environments. This forms the structure of a business or association. Some examples could be the infrastructure, the policies, rules, guidelines, and standard operating procedures. Quality systems and staff handbooks can be a viable example of the meso environment. As said earlier that the meso environment ranges somewhere amongst the micro and macro environment. It means the industry in which the company operated and the market about that industry (Linkedin.com, 2020) The performance of the firm is affected by its competitors as well those are working in the similar industry, such environment can be called as meso environment. The factors of meso environment are:-
The importance of global marketing theory is that knowing the needs and wants of all the people across the world and designing the product accordingly. Global marketing helps in increasingly centered around the products and services that the company offers (Businesstoday.in, 2020). Making an extensive worldwide global marketing likewise permits the organization to adjust rapidly according to the wants and needs of clients.
Examples of various companies:-
Airbnb It has postings in more than 189 nations, yet when they previously began, individuals were not very enthused about remaining in a more interesting home. The C.M.O. of the company is the significant reason behind its worldwide accomplishment by building up a fruitful worldwide system (Steenkamp, 2017). Their methodology of localization, with a localization office, is the explanation they’re available around the globe.
Domino’s was incorporated in the year 1960, and since then, it is leading the market of pizza delivery. Their business strategy is that they guarantee to make to order available to its customers within 30 minutes of delivery. And, this is the U.S.P. of the company. They possess many stores across the globe. (Market Business News, 2020).
Nike has been able to develop its respect and honor worldwide via the focused determination of universal sponsorships. Even though these sponsorships are unusual spending. It means that putting a lot of cost on the advertisement is risky, but this company is able to grab the attention of its fans via this strategy only. Nike has created many customized products for its customers due to which they were able to get the attention and love of people. And, now this brand is known worldwide with over 600 shops in around 45 countries across the globe.
Spotify Initiating the business in the year 2018, Spotify has become a good business leader, and it has developed its business worldwide. .the main reason behind the growth and development of their business it their strategy of portraying the content. Spotify makes its clients tune in to music that goes past their preferred types, and rather fulfills propensities and also the ways of life that individuals share everywhere all around the world. This permits universal craftsmen to get to audience members from different nations essentially in light of the fact that their item is being sorted an alternate way. Spotify now has workplaces in 17 nations around the globe (Levins, 2020).
On the off chance that you have worldwide goals for your business, you have to discover what clients in various networks share for all intents and purpose - and how to confine your item for these various markets.
The main reason for the success of these firms is adaptability and time. Adaptability is essential to move ahead with all challenges in the business environment. And the understanding of the business environment helps in scanning and doing market research that is important to frame the strategies. Every country has got different macro-environmental factors, like G.D.P., inflation, climate, etc. after knowing the proper knowledge about all these factors, the product should be introduced in a different country.
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