Entry into global market

1. Entry Into Foreign Market – Approaches and Strategies
Presented By : Anshul Jain
16PMM561

2. Flow Of Presentation
Introduction
Reasons to enter into foreign market
Determinants of market selection
Issues in entry
Marketing approaches
Global market entry strategies
Conclusion

3.  Market Entry includes activities associated with bringing a product or service to a
targeted market. During the planning stage, a company will consider the barriers to
entry, the costs of marketing, sales and delivery, and the expected outcome of entering
the market
 Market entry strategy is the planned method of delivering goods or services to
a target market and distributing them there
 When an organisation has made a decision to enter an overseas market, there are a
variety of options open to it, these options may vary with cost, risk and the degree of
control which can be exercised over them
 One of the most important strategic decisions in international business is the mode of
entering the foreign market
Introduction

4.  Company want to expand a larger customer base
 Reduce dependence on domestic market
 To counter-attack global competitors
 Foreign market has higher profit opportunities
 To increase the size of potential markets
 Extend a product life cycle
Reasons For Entry Into Foreign Market

5.  Market size & Growth rate
 According to The Statistic Portal, United State's pharmaceutical market
was valued around 413 billion U.S. dollars with the growth rate of 12%
 Risk involved
 Regulations operating
 Every country has its own regulatory authority, which is responsible to
enforce the rules and regulations and issue the guidelines to regulate drug
development process, licensing, registration, manufacturing, marketing and
labelling of pharmaceutical products For Example :USFDA(USA), MHRA(UK),
TGA(Australia), CDSCO(India) etc.
 Competitive market
Determinants Of Market Selection

6. An organization willing to “go international” faces 3 major issues
• Marketing – Which countries, which segments, how to manage, how
to enter, with what information
• Sourcing – Whether to make or buy the products
• Investment & Control – Joint Venture, Global partner, Acquisition
Issues For Organisations In Market Entry

7.  Ethnocentric Approach : Under this approach, companies market their
products in various countries same way as they do it domestically
 Polycentric Approach : A company following this orientation gives an
equal importance to every country’s domestic market, as there is a
belief in uniqueness of every market and its need to be addressed in
an individual way
 Regiocentric Approach : In this approach segmentation of the markets
is fulfilled on the basis of similarities in terms of regions. A company
finds economic, cultural or political similarities among regions in order
to cover the similar needs of potential consumers
 Geocentric Approach : This orientation favours neither home country
nor foreign countries where the company operates. It is also called a
global approach the main idea of which is to target “global consumers”
who have similar tastes
Marketing Approaches

8. Global Market Entry Strategies
Global Market Entry
Manufacturing at
Home
Manufacturing
Abroad
Investment
Entry
Exporting
IndirectDirect
Contractual
Licensing
Contract
Manufacturing
Strategic
Alliance
Joint
Ventures
Merger &
Acquisition
Greenfield
Investment

9.  Direct exportation means that the organization takes charge of shipping
goods to the international market
 Sales to foreign:
Distributors
Retailers
End customers
 Firms set up their own exporting departments
 The tendency may be not to obtain as much detailed marketing
information as compared to manufacturing in marketing country
Exporting
Direct Indirect

10. Indirect exportation takes place when the organization uses a middleman or
intermediary to integrate the goods into the market
Sales to export company which handles sales to foreign buyers or
Firm’s exchange exporting services by distributing the other’s product
Exporting
Direct Indirect

11.  The granting of permission to use intellectual property rights, such as
trademarks, patents, or technology, under defined conditions
 When the company finds it difficult to export, and also not ready to invest
money in the foreign country, licensing could be the best option
Contractual
Contract
Manufacturing
Licensing
Advantages Disadvantages
I. Profitability with little investment
II. Appealing to small companies that
lack resources
III. Faster access to the global market
I. Lack of control
II. Licensee may become a future
competitor
Example : Pfizer has
inked a licensing
agreement with Aurobindo
Pharma to supply finished
dosage products.

12.  Contract manufacturing is the outsourcing of part of the
manufacturing process of a product to a third-party
 Production of goods by one firm, under the label or brand of another
firm
 Contract manufacturers may provide such service to several (even
competing) firms based on their own or the customers' designs,
formulas, and/or specifications
Contractual
Licensing
Contract
Manufacturing Some of European
contract
manufacturing
organisations :
Royal DSM
Fareva
Vetter Pharma

13.  A strategic alliance is an agreement between two or more parties to
pursue a set of agreed upon objectives needed while remaining
independent organizations
 In other words, two or more company jointly share resources & distinctive-
competency to achieve some business goal
 There is no ownership right of other’s firm
 Example : Indian company Claris Life Sciences has entered into marketing
tie up with one of the world’s top drug maker Pfizer to commercialize
sterile injectable medicines
The agreement helps the Indian company gain access to highly regulated
markets such as North America, Europe and Australia for it’s 15 medicines
Strategic Alliance

14.  A merger is a deal to unite two existing companies into one new
company
 Owners of each pre-merger firm continue as owners, and the resources
of the merging entities are pooled for the benefit of the new entity
 Example : In year 2000, Glaxo Wellcome and SmithKline Beecham has
done merger and formed a new entity GlaxoSmithKline
Merger And Acquisitions
Merger Acquisition

15. Types of Mergers
There are three main types of company mergers:
 Conglomerate : Nothing in common for united companies
o Example : Walt Disney and American broadcaster Company
 Horizontal : Both companies are in same industry, deal is part of
consolidation
o Market Extension
o Product Extension
 Vertical Merger : Two companies that make parts for a finished good
combine
Merger And Acquisitions
Merger Acquisition

16.  One company takes over the ownership of the other company & combine
its operation with its own operation
 It is an act of acquiring effective control over asset and management of
other company
 A new company does not emerge from an acquisition; rather, the smaller
company is often consumed and ceases to exist, and it’s assets become part
of the larger company
 Example : In June 2008, Daiichi-Sankyo acquired a 34.8% stake in Ranbaxy,
for a value $2.4 billion
Merger And Acquisitions
Merger Acquisition

17.  Two or more firms join their hand to form a separate independent
organization for the strategic purpose of executing particular business
 Example : Hero & Honda
 Each partner retain its own corporate identity
 The agreement for a fixed time period
 JV-entity is managed by a separate management team
 Active role of both the partner-firm in JV’s strategic decision
 Advantages :
 Risk sharing
 Access to distribution network
 Sharing of resources
 Global market access
Joint Venture

18. Pharmaceutical Examples :
 AstraZeneca and Bristol-Myers-Squibb agreed to co-develop and
commercialize two diabetic treatments
 Merck and Schering have already produced a successful joint venture.
They co-developed and generated revenues from cholesterol
treatment Vytorin, in the market since last decade
 Schering-Plough and Merck undergone joint-venture for the treatment
of nasal allergy symptoms. The new medicine, which the companies
had co-tested over the last year is Claritin & Singulair
Joint Venture

19.  Greenfield venture is a type of venture where finances are employed to
create a new physical facility for a business in a location where no
existing facilities are currently present
 Under this method, organizations obtain greater control over
operations and higher profits since there is no ownership split
agreement
 Requires large investments and faces higher risks
 Greenfield investment means using funds to build an entirely new
facility
 This approach entails full control and no risk of cultural conflicts
Greenfield Investment

20.  Despite of many challenges in entering the global market, it is the best
mean to expand the customer base & to extend the business
 In deciding to go abroad, a company needs to define its international
marketing objective and policies. The company must determine
whether to market in a few countries or many countries. It must decide
which mode to prefer for entering. In general, the candidate countries
should be rated on few criteria: market attractiveness, risk, and
competitive advantage
Conclusion

21. Thank You