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Intl mkt entry

Intl mkt entry



Describes different modes of entries

Describes different modes of entries



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    Intl mkt entry Intl mkt entry Presentation Transcript

    • Foreign market portfolios: technique and analysis
      international market entry
      Rajesh Narang
    • SWOT Analysis
      a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues.
      SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.
      A SWOT analysis process generates information that is helpful in matching an organization or group’s goals, programs, and capacities to the social environment in which it operates. 
      international market entry
      Rajesh Narang
    • SWOT
      Strengths:Positive tangible and intangible attributes, internal to an organization. They are within the organization’s control.
      Weakness:Factors that are within an organization’s control that detract from its ability to attain the desired goal. Which areas might the organization improve?
      Opportunities :External attractive factors that represent the reason for an organization to exist and develop. What opportunities exist in the environment, which will propel the organization?Identify them by their “time frames”
      Threats :External factors, beyond an organization’s control, which could place the organization mission or operation at risk. contingency plans that May address them .
      • Classify them by their “seriousness” and “probability of occurrence”.
      international market entry
      Rajesh Narang
    • international market entry
      Rajesh Narang
    • SW :PRIMO-FPeople II Resources III Innovation & Ideas II MarketingII Operations II Finance
      strength could be:What do you do well? Is there anything you do better than most? Better than anyone else?
      Your specialist marketing expertise.
      A new, innovative product or service.
      Location ,Quality processes that adds value to your product or service.
      A weakness could be:What should be improved? What do you do poorly? What should you avoid, based on mistakes in the past?
      Lack of marketing expertise.
      Undifferentiated products ,Poor quality
      Damaged reputation.
      international market entry
      Rajesh Narang
    • OT Profile
      • Opportunities :Where can you find, or create, a competitive advantage? What are some major trends in your business? - Consolidation / Diversification? Specialization / Generalization?- Changes in technology. Such as computer software .- Changes in the types of businesses in your market.- Changes in social patterns, population profiles, lifestyle. - trends. Changes in demand
      • Threats :What obstacles do you face?
      • What are your competitors doing that may result in a loss of clients, customers, market share? Are the required specifications for your job, products or services changing?
      Is changing technology threatening your position? Do you have cash-flow problems?
      international market entry
      Rajesh Narang
    • SWOT Analysis Examples
      Example 1 - Wal-Mart SWOT Analysis. Strengths - Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store.Weaknesses - Wal-Mart is the World's largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control.Opportunities - To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region. Threats - Being number one means that you are the target of competition, locally and globally.
      international market entry
      Rajesh Narang
    • Example 2 - Starbucks SWOT Analysis. Strengths - Starbucks Corporation is a very profitable organisation, earning in excess of $600 million in 2004.Weaknesses - Starbucks has a reputation for new product development and creativity. Opportunities - New products and services that can be retailed in their cafes, such as Fair Trade products. Threats - Starbucks are exposed to rises in the cost of coffee and dairy products.
      Example 3 - Nike SWOT Analysis.Strengths - Nike is a very competitive organisation. Phil Knight (Founder and CEO) is often quoted as saying that 'Business is war without bullets.'Weaknesses - The organisation does have a diversified range of sports products. Opportunities - Product development offers Nike many opportunities. Threats - Nike is exposed to the international nature of trade.
      international market entry
      Rajesh Narang
    • international market entry
      Rajesh Narang
      • International market entry concept & modes
      • Factors affecting the selection of entry mode
    • Concept of international market entry
      • mode of entry: an institutional mechanism by which a
      firm makes its products or services available
      consumers in international markets.
      • mode of entry determined by:
      - the ability and willingness of the firm to commit
      - the firms’ desire to have a level of control over
      international operations
      - the level of risk the firm is willing to take
      international market entry
      Rajesh Narang
    • Market entry strategies
      international market entry
      Rajesh Narang
    • Market entry strategiesExporting
      Domestic base
      Overseas sales branch
      Traveling sales representative
      Foreign-based distributors/agent
      Indirect-occasional, or active exporting
      Domestic-based export merchant
      Domestic-based export agent
      Cooperative organizations
      Export-management company
      international market entry
      Rajesh Narang
    • Franchising: A contractual arrangement where a wholesaler or retailer (the Franchisee) agrees to make some payment and to meet the operating requirements of a manufacturer or other franchiser in exchange for the right to use the firm’s name and to market its goods or services
      Foreign Licensing:an agreement that grants foreign marketers the right to distribute a firm’s merchandise or to use its trademark, patent, or process in a specified geographic area.
      Subcontracting: a contractual agreement where a firm hires a local company to produce goods or services in a specific geographic area.
      Market entry strategiesContractual Agreements
      international market entry
      Rajesh Narang
    • Market entry strategiesInternational Direct Investment
      An additional strategy for entering global markets
      Requires direct investment in foreign firms, production, and/or marketing facilities
      cheaper labor cost in some countries
      government incentives
      creates better image
      deeper relationships with government, customers, suppliers and distributors
      full control of operations and marketing
      Risks involved:
      economic difficulties of the host country
      political instability and negative perception
      international market entry
      Rajesh Narang
    • Modes of international market entry
      Production in home country
      exports:production is carried out in home country and finished goods are shipped to the overseas markets for sale
      indirect exports:process of selling products to an export intermediary in the company’s home country who in turn sells the products in the overseas markets
      direct exports:process of selling the firm’s products directly to an importer in the overseas market
      international market entry
      Rajesh Narang
    • Modes (contd)
      complementary exporting:use of distribution channels of an overseas firm to make the product available in the overseas market
      provide offshore services:to overseas clients with the help of information and communication technology
      international market entry
      Rajesh Narang
    • Modes (contd)
      Production in a foreign country
      • contractual entry modes
      international licensing: process by which a domestic company allows a foreign company to use its intellectual property and specific business skills for a compensation (royalty)
      international franchising: transfer of intellectual property and other assistance over an extended period of time with greater control compared to licensing
      international market entry
      Rajesh Narang
    • Selecting the International Entry Mode, continued
      • Licensor offers know-how, shares technology, and shares brand name with licensee
      • Licensee pays royalties
      • Lower-risk entry mode; limits exposure to economic, financial, and political instability
      • Permits the company access to markets that may be closed or that may have high entry barriers
      DOWNSIDE: Can produce competitor in the licensee
      international market entry
      Rajesh Narang
    • Selecting the International Entry Mode, continued
      • Franchisor gives franchisee right to use brand name, trademarks and business know-how
      Less risk, higher level of control
      Very rapid market penetration
      DOWNSIDE: Can create future competitors who understand the operations of the franchise
      international market entry
      Rajesh Narang
    • Modes (contd)
      overseas turnkey projects: conceptualize, design, install, construct, and carry out primary testing of manufacturing facilities or engineering structures for an overseas client organisation
      types : built and transfer (BT), built, operate, and transfer (BOT), built, operate, own (BOO)
      international management contracts: a company provides its technical and managerial expertise for a specific duration to an overseas firm
      international market entry
      Rajesh Narang
    • Modes (contd)
      international strategic alliance: the relationship between two or more firms that cooperate with each other to achieve common strategic goals but do not form a separate company
      international contract manufacturing: a contractual arrangement under which a firm’s manufacturing operations are carried out in a foreign countries
      international market entry
      Rajesh Narang
    • International Strategic Alliances
      Typically, the term refers to nonequity alliances; for example:
      • Contract manufacturing, engineering, technological, and research and development alliances
      • One firm handles marketing for another, or some aspect of the marketing process
      • One firm handles the distribution for another, or some aspect of the distribution process
      international market entry
      Rajesh Narang
    • Modes (contd)
      Investment entry modes
      assembly in overseas markets: refers to exporting various components of the product in completely knocked down (CKD) condition and assembles them overseas
      international joint ventures: equity participation of two or more firms resulting into formation of a new entity
      international market entry
      Rajesh Narang
    • Selecting the International Entry Mode, continued
      Joint Venture
      • Preferred entry mode of governments of developing countries
      • Help develop local expertise
      • If production is exported, helps with country’s balance of trade
      • Foreign company and local company establish a jointly-owned new company
      • Parties share capital, equity, labor
      • 70% of all joint ventures break up within 3.5 years
      DOWNSIDE: Joint-venture partners can turn into viable competitors; and 70% of all joint ventures break up within 3.5 years.
      international market entry
      Rajesh Narang
    • Selecting the International Entry Mode, continued
      • Involve three or more companies
      • Monopoly effect
      • Allowed
      • where expensive R&D is involved
      • in underserved markets
      • in markets where the government and/or the marketplace can control its activity
      international market entry
      Rajesh Narang
    • Factors for selecting partners for cooperation
      • the alliance partner should have some strength which
      can be translated into business values for the alliance
      • the alliance partners should be committed to
      cooperative goals
      • it is preferable that the alliance partner should have
      multi-cultural business environment
      international market entry
      Rajesh Narang
    • Investment mode(contd)
      Wholly owned foreign subsidiaries
      • to have complete control and ownership of
      international operations a firm opts for foreign
      direct investment through:
      1. acquiring a foreign company and all its resources in
      a foreign market (acquistion)
      2. the establishment of production and marketing
      facilities by a firm on its own from scratch (green field)
      international market entry
      Rajesh Narang
    • Selecting the InternationalEntry Mode, continued
      Wholly Owned Subsidiaries
      • Can be developed by the company –greenfielding – or can be purchased (acquisition or merger)
      • Involve long-term market commitment
      • High cost
      • High control of operations
      • Greatest level of risk
      international market entry
      Rajesh Narang
    • Selecting the InternationalEntry Mode, continued
      Branch Offices
      • Entities are part of the international company, rather than a new company (as in the case of the subsidiary)
      • Involves substantial investment
      sales office
      • Engages in a full spectrum of marketing activity
      • High level of control
      international market entry
      Rajesh Narang
    • Comparison of Market Entry Strategies
      Form Control Risk Advantage
      Export Very limited Low Low cost
      Licensing Limited Moderate Low cost
      Joint Ventures Shared Moderate Local expertise
      Ownership Total High Control
      Internet Total High No physical
      presence required
      international market entry
      Rajesh Narang
    • Factors affecting the selection of entry mode
      External factors
      • Market size
      • Market growth
      • Government regulations
      • Level of competition
      • Level of risk
      • political
      • economic
      • operational
      • Production and shipping costs
      international market entry
      Rajesh Narang
    • Factors affecting the selection of entry mode (contd)
      Internal factors
      • Company objectives
      • availability of company resources
      • level of commitment
      • international experience
      • flexibility
      international market entry
      Rajesh Narang
    • Foreign market portfolios: technique and analysis
      international market entry
      Rajesh Narang
    • Thank you