E commerce as a market entry strategy

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E-commerce as an Alternative
Market Entry Method
versus Exporting

Huseynli Gulchin

Dissertation submitted to International Business School for the
partial fulfilment of the requirement for the degree of MASTER OF
SCIENCE IN INTERNATIONAL BUSINESS.
September 2015

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DECLARATION
This dissertation is a product of my own work and is the result of nothing
done in collaboration.
I consent to the International Business School’s free use including* online
reproduction, including* electronically, and including adaptation for teaching and
education activities of any whole or part item of this dissertation.
_____________
(Gulchin Huseynli)
Word length: 15, 879 words

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Table of Contents

Abstract .....................................................................................................................7
1. Introduction ...........................................................................................................7
1.1 Background......................................................................................................7
1.2 Research Problem.............................................................................................8
1.3 Research Objectives .........................................................................................9
1.4. Thesis outline ................................................................................................10
2. Literature Review.................................................................................................11
2.1 Internationalization.........................................................................................11
2.2 Influencing factors..........................................................................................12
2.3 Entry mode classification................................................................................13
2.4 Export ............................................................................................................15
2.5 E-commerce ...................................................................................................17
2.6 How does this research relate to existing literature?........................................18
3. Research Process..................................................................................................19
3.1 Research Philosophy.......................................................................................19
3.2 Research Strategy...........................................................................................20
3.3 Population and sampling.................................................................................20
3.4 Data Collection Methods. ...............................................................................21
3.5 Secondary data ...............................................................................................22
3.6 Questionnaire .................................................................................................22
3.7 Interviews.......................................................................................................23
3.8 Analysis of Results.........................................................................................24
3.9 Research Credibility .......................................................................................25
3.10 Research Ethics ............................................................................................26
3.10.1 Confidentiality and Anonymity..................................................................26
Limitations and Self-critisim....................................................................................27
4. Data Analysis.......................................................................................................27
4.1 Secondary Recearch .......................................................................................27
4.1.1 Impact of e-commerce on the consumer behaviour ......................................27

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4.1.2 Victoria's Secret...........................................................................................29
4.1.3 Intimissimi...................................................................................................30
4.2 Primary Research Findings.............................................................................30
4.2.1 Questionaire ................................................................................................30
4.2.2 Interviews....................................................................................................31
4.2.2.1 Interview with Intimissimi........................................................................31
4.2.2.2 Interview with Victoria’s Secret................................................................32
4.2.2.3 Interview with the specialist on international business. .............................32
4.2.2.4 Interview with the specialist on e-commerce.............................................33
5. Discussions. Key Findings ...................................................................................34
6. Conclusion...........................................................................................................36
6.1 Summary of Results........................................................................................36
6.2 Recommendations ..........................................................................................38
References: ..............................................................................................................40
Appendices:.............................................................................................................45

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List of the Appendices

Appendix 1 ..............................................................................................................25
Appendix 2 ..............................................................................................................25
Appendix 3 ..............................................................................................................47
Appendix 4 ..............................................................................................................48
Appendix 5 ............................................................................................................250
Appendix 5 ............................................................................................................251

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Abstract
A considerable amount of research has been conducted in the field of
internationalization of firms or in electron commerce, whereas only a few have
suggested e-commerce in the context of a foreign market entry mode. The purpose of
this thesis is to present e-commerce as an alternative market entry method that can
replace the primary stages of internationalization process, especially exporting which
is also known as the first step of going to international. The advantages and
shortcomings of e-commerce has been examined and compared to the existing market
entrance strategies mainly consisting of exporting, licensing, franchising and wholly
owned subsidiaries. Conducted research has also analyzed the factors influencing
firm’s choice of foreign market entrance method in order to support the idea that,
main of those factors –control, market knowledge are an existing advantages of e-
commerce as a market entry mode. I have used a realist approach to an existing
“problem” and gave explanations from various perspectives. A qualitative research
has been performed where primary and secondary data was collected and respectively
analyzed. As a result, main benefits of using e-commerce as a market entry strategy
which may contribute to a firm’s low-risky strategy has been reveled as this strategy
provides firm with more information about the market, increases speed of
transactions, control and therefore considered less risky. Furthermore, the relevant
limitations and suggestions for further researches regarding to a proposed idea has
also been presented in the thesis.
Keywords: e-commerce (EC); foreign market entrance; internationalization; market entry
modes.
1. Introduction
1.1 Background
New possibilities have led companies to expand overseas and to target new customer
segments with common needs across national boundaries. While there are new
opportunities for businesses to grow and increase its profit, there are also many
significant decisions needed be made. One of the most critical issues for companies
considering conducting business overseas is the selection of a relevant method of
foreign market entrance (Chung et.al, 2011). This decision needs to reflect not only
business but also consumer needs in the current market circumstances. As in a
globalizied world, internet has integrated to many perspectives of social life,therefore,
companies also need to adapt themselves into a modern possibilities in order to keep
their ability to survive in the competitive marketplace.
The preferred way of internet utilization in the business usually happens either in a
form of e-commerce or e-marketing and both have the significant impact on the
company performance.

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E-commerce can be considered as a new business way expanding annually (Chong
2008). The explanation of “e- commerce” was introduced by Chaffey (2009) as a sum
of transactions made electronically between the firm and an involved another
company in a form of consumer or business. E- commerce does not only increase the
transactions' speed or decrease costs, but it also provides a firm with the significant
amount of information that can contribute to a firm's marketing communication and to
an implimentation of further strategic business decisions (Dou and Chou, 2002). The
reason for executing e-business strategy may differentiate from company to a
company. In this thesis, the idea of adopting e-commerce as a market entrance mode
will be supported via help of presented facts explored as a result of conducted data
analysis.
1.2 Research Problem
This research examines a number of factors including international business
experience, time, cost, control and involved risk which are the most significant
determinants of market entry mode choice by the companies considering to
internationalize. This examination has been executed in order to dissertate the new
idea of that, e-commerce should be a preferred method of foreign market entrance
compared to the «traditional ways» of entering into foreign markets, because the new
suggested idea is a more effective and efficient method of internationalization. As
also described in a research hypothesis, e-commerce is a new method of
internationalization for firms, that is less risky and costly strategy compared to the
«traditional methods» of foreign market entrance, especially exporting. That model of
business can be utilized for the purposes of building awareness, generating initial
insights into the demand and serving as a significant channel to obtain key insights
into price sensitivity and consumer preferences in a short period. A specialized
regional e-commerce channel might also be utilized as a low-risk platform to test a
market and provide the physical expansion strategy with the information.
During the research process strategies of entering into a new market have been
analyzed from different perspectives, advantages and disadvantages of traditional
market entry modes, especially of the export have been summarized, whereas an e-
commerce approach has also been comprehensively evaluated and compared and
contrasted against the advantages and shortcomings of mentioned “common”
(traditional) market entry strategies.
Several ways of going to international have comprehensively been studied in order to
determine their charasteristics whereas exporting has been much more emphasized as
the first stage of internationalization process. Those strategies have been indirectly
compared to e-commerce- new form of low-cost business which might possibly have
an opportunity to replace the first stage of new market entrance. Furthermore, it is
suggested that by me that, after the utilization of e-commerce as the first stage of
internationalization process, the next stages can also be replaced and firm might make
a quicker decision of foreign direct investment via avoiding the common traditional
process where companies are following indirect and direct exporting, licensing,
franchising before doing direct investment to a country in order to regain a market
knowledge (See: Appendix 1). Using e-commerce as the first step of

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internationalization will allow companies to gain market knowledge quicker and to
build a customer loyalty.
One of the key reasons for choosing that research topic is digital revolution and an
increasing development and expansion of electronic commerce nowadays. The
specific characteristics of internet, such as being free from environmental barriers and
allowing for speedy consumer interaction led to the development of e-businesses. Day
after day e-commerce is replacing the traditional shop ideas with the new comfortable
and fast online purchase. These features enabled further communication with
customers and developed an irreplaceable tool for marketing. Effective use of e-
commerce did not only increase brand recognition, public relations, but it also
contributed for higher quality of products (Lin and Li, 2002). It is also known as a
less costly way of conducting business. Having no more employees, no real estate
shop, twenty-four hour service and using customer-driven and traffic-based online
marketing expenses are the key factors on assisting that business type in being less
resource consuming. Furthermore, it is much more profitable for a brand owner to use
e-commerce rather than relying on the traditional exporting where the firm has no
control over the distribution channels and merchandise pricing. Via using e-
commerce, any international company has an opportunity to know its customers
situated across the national boundaries and to collect smart data, which will obviously
contribute to the further business decisions regarding to an internationalization
process.
Therefore I believe in that, using e-commerce instead of traditional exporting will be
much more efficient and effective way for international companies in a globalized
world, in order to expand across countries.
1.3 Research Objectives

The following question will be answered by the research:
Is e-commerce or exporting a more effective and efficient strategy for entering foreign
markets?
The hypothesis developed after the review of literature is:
E-commerce is the more effective and efficient way of entering into new markets
because of being less risky and costly than export.
The particular objectives of this research are set as:
• To identify strategies of entering a new market;
• To explore the advantages and disadvantages of traditional market entry
modes, especially the export;
• To explore the advantages and disadvantages of an e-commerce approach;
• To compare and contrast the advantages and disadvantages of mentioned
“common” (traditional) and “modern” (e-commerce) approaches.

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1.4. Thesis outline

Chapter 1: Introduction.
In this chapter, I have introduced the main research aim and objectives of the study
and has explained the basic concept behind the proposed idea. Research questions and
hypothesis are also presented in the first chapter.
Chapter 2: Methodology.
In the second chapter, the research methodology have been discussed. I have
explained the adopted research methodology across the dissertation and the reasons
for choosing it. Data collection methods and reasons beyond their utilization are also
discussed within the second chapter, where the necessary explanation of the preferred
methods is presented. Research ethics and self-limitations have also been presented in
the Methodology part of this thesis.
Chapter 3: Literature review.
The third chapter presents the theoretical background of the dissertation. An existing
explanation of the internationalization process and other market entry methods are
provided in this chapter in a comparative way to e-commerce which is also presented
in this part of the thesis. Different factors influencing the firm's choice of foreign
market entry strategy have been examined in this Chapter from various perspectives.
The short summary of the literature review is presented in the end of the section.
Chapter 4: Research Results.
The findings received as a result of conducted research via primary and secondary
data collection are presented in the fourth chapter. Firstly, the secondary data is
examined in order to emphasize the importance of e-commerce from consumer
perspectives. Those findings are followed by the primary data results from the
author’s (my) own research conducted via interviews.
Chapter 5: Discussion.
I have answered to the previously set research question in this chapter. Research
findings achieved from the primary and secondary data analysis are also presented in
the fifth chapter where it is parallelly compared to an existing literature review.
Chapter 6: Conclusion.
In this part of the thesis, the short summary of thesis and research findings and
literature are presented in order to emphasize if I was able to achieve previously set
research objectives and prove the hypothesis. The relevant recommendations have
been suggested for for the firms considering to adopt e-commerce as a market entry
strategy. In the end of the Conclusion, not only benefits, but also barriers of adopting
e-commerce as a foreign market entry mode has been provided by me.

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2. Literature Review

2.1 Internationalization

The term of “internationalization” is equivocal and its description may vary from a
variety of dimensions. Whereas its definition was explained as a significant increase
in the process of being involved into international markets in the late 1980s
(Osarenkhoe, 2008), since then many other explanations and approaches were
nominated. For example, one of the old views, was suggested by Beamish (Lu and
Beamish, 2001) where it was prescribed as a process of assisting firms to increase
transactions with other countries. In this research, the term of ‘internationalization’ is
applied at the same context as that offered by Beamish (Lu and Beamish, 2001).
Because, this definition integrates all the above-mentioned two views in the one
holistic explanation of that concept and includes market entry strategy selection.
Another view suggested is also known as Uppsala model explains internationalization
as a process of firm’s growth beginning from close and familiar counties and
gradually expanding to farther and unfamiliar markets (Johanson and Vahlne, 2009).
The main motives for internationalization are determined as home market saturation,
need for an access to the region-specific resources, global branding etc. depending on
the company specialization and objectives (Askari, et.al, 2010). According to the ‘U-
model’, a firm’s internationalization process is driven by an interaction of knowledge
about foreign operations and connection to international business (Forgsmen, 2002).
Therefore, lack of knowledge about external markets is the main barrier for
internationalization process, however, it can be obtained through the practice in those
markets (Forgsmen, 2002). Hollenstein (2005) and Braunerhjelm (2005) and many
others investigated that issues and determined that some firms usually have some
obstacles such as less financial resources, knowledge and international experience
compared to others. This means that internationalization is even much more difficult
for some companies, considering its requirement of extensive investment and resource
commitment (Yip, Biscarri, & Monti, 2000; Oviatt and McDougall, 2005). Besides
experience, knowledge and financial resources, Arenius (2005) defined the physic
distance as another obstacle in going to international, because of cultural and
environmental differences between home country- where a firm established and a host
country – where a firm is planning to expand (Brouthers, 2002). In order to avoid
physic distance and other obstacles firms usually prefer to use Chain Model
(Whitelock, 2002). The Chain model suggests five different stages in any firm’s
internationalization process which are: no regular export, export via representatives
such as distrubuters, agents etc., joint ventures, sales subsidiary such as licensing and
franchising and finally the fifth stage- production and manufacturing subsidiary via
FDI (Foreign Direct Investment) (See: Appendix1) (Whitelock, 2002).  This model
of market entry is based on the idea of that, the more experienced a firm becomes in a
particular market, less risky its commitments of utiliziation of more resources are
(Whitelock, 2002). Rugman and Collinson (2009) determined that, the cost over those
stages gradually increase in accordance with the managerial monitoring.

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2.2 Influencing factors

As also stated by Root, one of the most critical decisions made by each international
company is the decision regarding to the choice and planning process of foreign
market entry process (Wach, K., 2014). Considering that firms might often have
various objectives in the targeted markets, it is challenging sometimes to evaluate all
the appropriate factors that could possibly have an impact on the expected return
(Wach, K., 2014). Therefore, as also stated by Alexander and Quinn (2002) the firm’s
decision of going abroad should reflect company’s capabilities in terms of resources,
market analysis and management factors. However, considering the existence of
many diverse market entry strategies and lack of money and time are making it
difficult for decision-makers to make a choice of market entry method (Wach, K.,
2014). Koch (2001 ) determined several factors influencing a firm’s decision-making
process of internationalization and divided them into internal and external factors
based on the expected benefits and costs in accordance with risks. Hollensen (2005)
in his study also distinguished many different factors influencing the firm’s market
entry mode choice that are gathered in four big groups- internal factors, external
factors, transaction factors and desired model specifications. Regarding to the
Hollensen (2005), internal factors are associated with the firm’s internal capabilities
and include the determinants such as production capability, managerial abilities and
other internal resources, whereas external factors are much more about the
environment of the host country such as cultural attitudes, demand etc. According to
Ball (2004 ), external factors in its turn can also be defined as target country market
factors and it includes demand, supply, competition and environmental determinants
(Wanjugu, 2013). Based on Cateora and Ghauri‘s (2010) argument, external factors
influencing the choice of foreign market entry method also include socio-cultural,
economic and political situation in the target country. They also indicate the
importance of the political factors that needs to be evaluated based on the
governmental policies in the host country and regulations in order to prevent any
possible political risk (Cateora and Ghauri, 2010). An ideal market would be the one
where an economy is regulated by the government as little as possible (Cateora and
Ghauri, 2010). Whereas economical factors also evaluated in terms of economic
structure, market size, performance, external economic relations against to any
possible threat for new business (Cateora and Ghauri, 2010).
Hollensen (2005) also specified transaction-specific factors which are mainly about
transaction costs and desired model which is expressing the firm’s willingness in
terms of risk, control and flexibility it wants to get over the internationalization
process.
Previously made researches showed that when a company appeals to internationalize,
the choice of the geographic location- the destination market should also be
considered as a fundamental criteria while decision-making (Ghemawat, 2001).
Ghemawat Pankaj (2001) reveals the significant impact of the distance between the
domestic and destination market. Doherty (2000) in his study, indicates that the
impact of the distance may have an enormous effect on the business development
depending on the industry type. Furthermore it is important to know that, firms often
implement their expansion strategy in a slow and regular way, such as shown above in

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the Chain Model (Whitelock, 2002). In their article, Tsai and Eisingerich indicated
that companies usually prefer to internationalize at first via entering the markets that
are close to the domestic market (Doherty, 2000). Also the research made by
Ghemawat (2001) showed that, it is much more difficult for companies to conduct
the business when there is a huge distance between home country and target market.
Tihanyi and other (2005) emphasized local cultural aspect as another influencing
external factor, which is an important component determining the choice of market
entry method considering that, different regions contain different philosophy.
Therefore Shenkar (2001) recommends firms to define the culture not only as the set
of values, norms and traditions, but also as business customs and practices in order to
avoid future failures before expanding internationally. Levitt also emphasized the
importance of cultural aspect in the internationalization process and recommended
firms to avoid standardization and to adapt firm’ s products to different markets based
on a local society’ s needs and local demand, however it can be expensive
(Whitelock, 2002).

2.3 Entry mode classification

Once a company decides of internationalization, it needs to select the method it is
going to use for entering in to a new market and the degree of resource commitment
and possible marketing involvement needs be considered (Doherty, 2000). This
decision should consider and integrate company capabilities and the relevant market
analysis (Terpstra and Sarathy, 2000). The common way of internationalization as
preffered by many companies is growing international through many stages via
gradually changing strategy and trying different tactics over the period whereas others
prefer to enter to an international market after doing a comprehensive research and
creating long-term marketing plans (Wanjugu, 2013). A particular market can attract
various of foreign companies and can be suitable for a specific market entry mode
(Doherty, 2000). In other words, the way of any particular market ‘s being served by
both local and foreign-based companies depends on the market characteristics and
company objectives (Doherty, 2000). In international trade, companies usually
divided into three categories based on their objectives in going to international
(Czinkoa and Ronkainen, 2007). Those are market seeking, efficiency seeking and
resource seeking (Czinkoa and Ronkainen, 2007).
Companies enter foreign market through different ways including export,
subcontracting, licensing and joint ventures (Pollard, 2001). Lumpkin and Dess
(2001) clarify new entry as the process of introduction of new venture via internet or
start-up. Another comprehensive foreign market entry decision framework is
introduced by Driscoll and Ryans, who identified export, contractual (licensing,
franchising, joint ventures) and investment (acquisition, JV and start-ups) as the three
main new market entry methods (Wu and Zhao, 2007). Hollensen (2004) on the other
hand suggests a more complex view of market entry modes via categorizing foreign
market entry strategies in three groups: export modes, intermediate modes consisting
of contractual agreement and Joint Ventures and hierarchical modes which include
wholly owned subsidiaries. Based on the hierarchical model of market entry
strategies, market entry methods are divided into two groups- equity and non-equity
market entrance methods (Ramos and RATHINAKUMAR, 2012). Non- equity
market entry methods usually utilizes less financial and managerial resources where

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the degree of involved risk, cost and control is limited whereas in equity entry modes
the level of relevant risk, control and the cost is increasing (Meyer et.al, 2008).
According to several studies provided in the late 80’s and early 90’s by several
scientists, international market entry strategies can be categorized according to the
degree of risk, control and resource involvement (Chung and Enderwick, 2001).
Based on that classification, Kim and Hwang in their study, divided entry modes into
three categories -licensing, joint ventures and wholly owned subsidiaries considering
that different level of control and risk and resource commitment are required in those
entry methods (Chung and Enderwick, 2001). Kwon and Konopa, showed that each
international market entrance method has its own particular advantages and
shortcomings in terms of control, risk, cost and ROI (Chung and Enderwick,
2001). Agarwal and Ramaswami in their study, indicated that exporting, licensing
and the joint ventures are the most commonly used three entry modes involving
distinctive level of resource commitment (Chung and Enderwick, 2001). Terpstra and
Sarathy (2000), on the other hand, divided internationalization methods into three
groups- indirect export, direct export and foreign manufacturing in accordance with
the location of the production .
As also mentioned above in the Chain model (Wanjugu, 2013) of market entrance,
firms may choose to utilize different foreign market entry methods as they become
more experienced. The similar model also presented by Rugman and Collinson (2009)
where they suggest that, an international experience might be achieved by the firm
through the stages of indirect export, direct export, licensing and franchising and FDI
in the following order.
On the other hand, Hollander suggests four ways of foreign market entrance for
international retailers (Moore et.al, 2008). He defined those methods as acquisitions,
joint ventures, establishment of new foreign subsidiaries (FDI) and franchising
(Moore et.al 2008). Furthermore, Dawson gave a short summary and explanation of
the main entry methods used by international retailers that are internal expansion,
where a company launches individual shops using firm’s internal resources; merger or
takeovers with the acquisition of the foreign firm’s control; franchising strategy where
a franchisee in the host country is allowed to use the ideas of the franchisor in the
home country in the return of annual percentage from sales; joint ventures that might
happen in different ways in order to provide the joint retailing operations (Moore
et.al, 2008). It was also noted by Dawson in 90's that, entry modes such as merger
and acquisitions require more ﬁnancial resources however also offering greater
control over the international operations, whereas less costly and therefore less risky
foreign market entry strategies such as joint venture, exporting and franchising offer
less control over the foreign operations (Moore et.al, 2008).
According to Lee and Lieberman (2010), acquisitions is much better compared to
mergers and other entry modes because of assisting an increase in the stock price and
its speed of entry, however, Ramos and Rathinakumar (2012) in their study argue
with that idea in terms of high cost involvement. Ramos and Rathinakumar (2012)
indicates that, the key thing to learn in going to international is how to minimize risks
associated with the initial steps of internationalization and therefore to reduce
resource commitment, which is called "creeping commitment" in international trade
literature, meaning the risks associated with the process needs be reevaluated during
the whole period of project realization from different aspects (Carter, 1997).
Obviously, there are many foreign market entrance modes from which to select and
each method owns particular characteristics, advantages and shortcoming related to
the firm's position in the market, its strengths and weaknesses. Besides those, each

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entry method reuires different level of resource commitment in accordance with the
company capabilities and market characteristics (Wach, 2014). In my research,
exporting, joint venture, acquisition, WOSs, licensing and franchising are referred as
“traditional” ways of entering foreign markets, because they have have been the most
common methods so far used while entering into a new market and therefore those
are considered as the main stages of internationalization process (Rugman and
Collinson, 2009).
2.4 Export

In International Trade, an export is considered as the first stage of internationalization
process of firms and it refers to the sale of goods or services to other markets rather
than the home country where it has been produced (Rugman and Collinson, 2009).
Mahoney defines exporting as a market entry mode allowing a firm to go to
international without making an enormous investment in to a target market (Chung
and Enderwick, 2001). Mahoney's explanation determines that, export does not
necessarily require considerable amount of money resources to be involved in going
to international (Chung and Enderwick, 2001). It can be considered as the market
entry method involving less risk compared to other «traditional market entry modes».
This is also supported by Carter (1997) in his study stating that the main reason of
exporting to be preferred most is because it is a less risky method and therefore it
provides the firm with an opportunity to "learn" overseas markets before making huge
investments there. Considering that fact, Piercy (2014) in his research, indicates that
exporting is the most common approach adopted by the international companies as a
major trend. Based on Wanjugu ‘s approach (2013), exporting can be considered as
the most traditional and well-established way of going to international. However,
according to Collett, there is actually another risk involved into an internationalization
while using exporting in going to international (Carter, 1997). Collet defined export
as a way of entering foreign markets with the help of involved third party and he
noted that, therefore, export requires a strong channel relationship among exporter,
importer, government and transport (Carter, 1997). In case if one of those four factors
is missing, then there is a huge risk of failure (Carter, 1997). Based on the Carter's
own idea (1997), despite it is a risky method, but exporting is also the cheapest way
of internationalization, because all the sales and market associated risks are on the
responsibility of a distributor. However, according to Agarwal and Ramaswami,
exporting is also associated with a low profit return compared to direct participation
in the market (Chung, and Enderwick, 2001). Because, as the manufacturer does not
own in-depth knowledge about the targetted market, pricing to end user depends on
the third party who has an ability to set end buyer prices (Cavusgil, et.al. 2014).
Terpstra and Sarathy (2001) define export as market-entry technique offering the least
market control, because after the distribution the owner has no longer access to
distribution channels in order to monitor the market, destiny of its products or firm’s
reputation. Agarwal and Ramaswami, in their research also mentioned that, export as
an internationalization method provides manufacturer with a little control over the
process (Chung and Enderwick, 2001). If to explain further, as it was defined by
Carter in 1997, exporter has limited responsibilities in the target market that consists
of market determination, finding representative agents in a targeted market, setting up
the delivery to a distributor and also participating in a promotion and pricing of the

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product to a distributor. As it can be seen from this definition, the exporter firm has
no further control over the process between distributor and end user. Carter (1997)
considers it as the main disadvantage of that entry method, stating that control or the
lack of it is considered a significant problem resulting in decision-making process on
the pricing, marketing and certification to be managed by others.
Therefore, indirect and direct exporting might be considered as potentially risky
market entry mode considering the possible negative impacts of reduced market
control in the public relations policy of the company (Jobber and Ellis-Chadwick,
2013).
Rugman and Collinson (2009) distinguishes two types of export which are direct and
indirect export. As mentioned above in the Chain and Rugman models,
internationalisation process usually begins with indirect export and continues with the
direct one. Carter (1997) defines indirect export as an exporting where a third party-
an intermediary in a form of private broker or a broker company or a distributor
company in the home country is involved in order to arrange the export agreements
between parties. According to the Carter (1997) indirect exporting uses much less
company resources and therefore less risk is involved compared to the direct
exporting or other traditional market entry methods. Indirect method provide exporter
with some leverage such as less experience requirement, freedom of credit acceptance
(Carter, 1997). Regarding to David Arnold (2000), there has to be a very strong
relationship between companies and local distributors in indirect exporting, because
in this mode of entry, local distributor does not only contribute to the cost reduction
and risk decrease, but they are also adding an additional value to the business. For
example, the exporting firm will be investing only smaller amount of money into
advertising and business development, because most of the marketing is done by local
distributor in case of indirect exporting. This strategy is called “Beachhead Strategy”
by Arnold (2000). It is allowing distributors to execute the marketing planning
process and results in the suppliers’ having less control (Arnold, 2000). On the other
hand it has the major disadvantage such as providing a little or no control over the
process and dependence on the intermediary Carter (1997). This character of indirect
exporting makes it quite risky from the perspectives of the original firm's control over
marketing as explained above by Jobber and Ellis-Chadwick (2013) on the contrary to
Carter's idea (1997) where he defined this entry mode as a least risk involved
internationalization strategy for firms.
Direct export, on the other hand, is explained as an exporting type where a producer
has a direct contact with operating parties in the targetted market and it is managing
the firm’s export operations itself (Carter, 1997). According to Cavusgil and others
(2014) the advantage of that entry mode is the possibility of keeping control over the
process within the distributor company, however it is hard for the manufacturer to
build marketing communication over the large distance.
There are also many different categorization of export. According to Kotabe and
Helsen (2001), there is another type of exporting which is co-operative export, where
a firm chooses to enter into new markets by an agreement with another company that
can be either local or foreign-based institution (Carter, 1997). In contrary, Pavord and
Bogart, in their research, divided export into passive and aggressive exporting
depending on the firm’s motives on going to international (Cavusgil, et.al. 2014). Based
on their idea, a passive exporter is an exporter waiting for orders to come to them by
chance, however an aggressive one is tend to develop marketing strategy providing a
comprehensive export objectives and usually have pricing, promotion and distribution
plan ready (Cavusgil, et.al. 2014). There is also another way of exporting, which is

17

piggybacking, that is also applied by some companies (Wanjugu, 2013).
Piggybacking occurs when the supplying company uses distribution services of
another party- carrier company in the selling process of its products in abroad
(Wanjugu,2013). This type of exporting is usually applied when involved companies
have complementary but non-competitive products operating in industrial fields in
order to share transportation costs and or make a profit at other companies’ products
(Wanjugu,2013). Despite of many types of exporting exists, all of those have almost
the same characteristics, such as involving the least market control, small profit and
not a considerable risk of possible failure (Cavusgil, et.al. 2014).
2.5 E-commerce

The use of Internet for commercial purposes has been increased among businesses.
According to Delone and Mclean (2004) this growth is a result of new economic
demands as it requires new business models. The utilization of internet resulted in the
significant changes in the transactions of traditional firms (Delone and Mclean, 2004).
The omnipresent nature of Internet resulted in making it an influential tool of
communication between firms and consumers (Rowley, 2001). It is also mentioned by
Delone and Mclean (2004) that, in the new economy internet has become a substantial
tool of driving modern businesses and markets via assisting communication while
business transactions. Chaffey and Smith (2008) emphasize the importance of
accommodating the people who want to make online purchases or just like to browse
on Internet. According to, Bergstrom (2000) the environment powered by e-
technology results in the growth in terms of sales quantity and transactions’ speed
made between firms and consumers. Bergstrom (2000) also mentions that internet
provides manufacturers with an access to an enhanced and broader markets via help
of “computer-aided technology” which assists marketers to reach to larger targets
with specific segmentation that could possibly be impossible to reach via traditional
approaches.
Thompson (2005) introduced another argument regarding that, there is a relationship
between the growth of Internet and modern technologies resulting in the reduction of
the delivery costs, because it allows to associate buyers with sellers over geographical
boundaries. Agrawal et al. (2012, pp. 250-257) stated that, electronic way of
commerce, also known as e-commerce, is a processs consisting of buying and selling
services and products via the e-systems such as internet and other computing
networks. Grandona and Pearson (2002) defined e-commerce as a process of sales of
the products via use of e-data and “www”.
Based Hoffman and Novak’s view, e-commerce suggests an open and easy access
platform in a form of low entry barrier which makes it easy for new businesses to
operate out of the scope of competitive restrictions (Harris et.al., 2006). Bergstrom
(2000) also suggests that e-commerce is invaluable tool in gathering the customer
data which would be impossible in exporting where an exporter has no direct
relationship with consumers. Therefore, an internet-business (e-commerce) should be
considered one of the modern market entry techniques allowing marketers to gather
and analyze data in a speedy way at lower cost which means that, e-commerce is an
adopted business form using technology as a tool for also customer relationship
building (Walsh and Godfrey, 2000). The other advantages of e-businesses are

18

summarized by Srinivasana and others (2002) such as its greater flexibility and the
opportunity of demonstrating unlimited range of product lines. Despite other entry
modes, it is much cheaper to show all the existing products in e-businesses , because
there is no rental fee and no involved physical labor in terms of changing collections
over seasons (Srinivasana et.al , 2002). However, there are also various of
disadvantages of online business model. First of all, it creates a challenging
competitive environment for firms, considering that rivalry is just in a click away
which is actually advantageous from customer perspectives for resulting in an
increase in the product quality (Grandona and Pearson, 2002) and allowing consumers
to compare different products and prices quickly (Srinivasana et.al , 2002). Therefore,
it complicates the firms to keep customer loyalty (Srinivasana et.al , 2002). Despite
those disadvantages, e-commerce is a way of conducting business that also provide
manufacture with greater control resulting in a greater convenience and the possibility
of easy and fast customization regarding to Srinivasana and others (2002).
Considering the growing number of web-users and an increasing advantages of e-
businesses firms are taking initiatives to make an investments into an expanding
online businesses (Subramani and Walden, 2001). Subramani and Walden (2001)
suggests that, a participation in an online market results in a significant increase in the
firm’s stock prices after announcing this strategic decision to publicity. Subramani
and Walden (2001) explain its reason as that, growing online means expanding into a
bigger and newer market which is expected to result in a future growth in cash flow
and balance sheet of the company. Grandona and Pearson (2002) in their studies
suggest that, e-commerce assists the ongoing business model with managerial,
operational and strategic support.
In contrary, there are also some risks associated with e-commerce such as security,
threat and fraud, according to Jha and others (2014). Those can be considered as the
risks of the modern way of conducting business (Jha, et.al 2014). Therefore, Jha and
others (2014) determine it as main reason in most cases when consumers prefer
physicals stores to online shops (Jha, et.al 2014). However, according to PwC report
(2012b) there are many laws against to cybercrime nowadays, which ensures the
security of business environment where e-businesses might safely operate.
Whilst analyzing other models of market entry such as mergers, concessions and
flagship stores Alexander and Doherty (2009) adds also “Internet sales” as one of the
market entry options for retail industries.
Taking into consideration that, e-commerce gives the owner a direct management
possibility over the sale procedures and market communication for lower price
(Turban et.al., 2010) , it needs be considered as an alternative market entry strategy.
2.6 How does this research relate to existing
literature?

There is a suggestion in the literature about that examined “traditional” methods of
foreign market entrance are quite time consuming (Keegan, 2000) and extremely
costly in most cases. If to explain further, while using exporting, licensing and then
franchising, a firm spends quite much time untill it has a considerable market
knowledge for doing foreign direct investment. But over that period, a firm usually
works with the third party in another country who has full control over pricing,
promotion and distribution places. Even a manufacturing firm does not face with the

19

possibility of financial loss in product sales, it experiences a risk from different
perspective. The relationship between risk and the selection of market entrance
strategy was at first comprehensively determined by Keith and Eliot Brouthers
(2003), who also explained that MNEs usually look for opportunities to minimize risk
related to market expansion in order to reduce the costs. Previously mentioned
“traditional” entry modes might involve high risk of investment loss only in some
cases – when a direct investment made before gaining market knowledge and offering
less control over the marketing communication process which might result in negative
impact on the firm’s prestige and future profit. Exporting was aligned as a lowest risk
involving method among others in terms of involved small capital, however it is
associated with low profit as also discussed above (Chung, and Enderwick, 2001)
and a lack of control (Terpstra and Sarathy, 2001) over the marketing and sales
process which is accompanied by the significant risk for future market activities.
Therefore, new ways of market entrance involving low cost and less risk and high
control such as e-commerce (Alexander and Doherty, 2009) are required to be utilized
by the firms in order to keep their compability in the global marketplace.
As the new idea is presented in the thesis, the study is expected to contribute to
international business by providing deep analyses of possibilities of utilization of e-
commerce as an alternative market entry strategy at the first stage of
internationalization process.
3. Research Process

3.1 Research Philosophy
This research has been based on the natural-realism philosophy. The realist paradigm
is not intended to depend on the existing scientific theories. The chosen research
philosophy certifies any study, indepdent of the number of involved elements, which
is comprehensively analyzed and has clear objectives (Easton, 2010).
Regarding to Sobh and Perry (2006) realism is an approach which is able to
differentiate researcher’s own view from reality; however, it can also be considered as
the disadvantage of the chosen paradigm because this method requires the researcher
to exclude his/her own values and to focus on the chosen objects. Therefore, I have
conducted a research in an unbiased way. Each argument in the conducted research is
supported by the facts found while data analysis or assisted by an existing literature.
This is the main idea of realist approach, that, it exists not depending on the
researcher’s mind (Riege, 2003). Magee states that there is an external reality
consisting of abstract views created by people but existing independently from
anyone’s mind or ideas (Sobh and Perry, 2006). According to Pawson and Tilley, the
main goal of the realism paradigm is to create “a family of answers” covering
different perspectives and contexts (Riege, 2003). In this thesis, each idea is
approached from various perspectives and both advantages and disadvantages of the
examined alternatives have been in-depth analyzed. According to Sobh and Perry
(2006) realist paradigm might also have negative results sometimes that does not
mean that process have been managed in an incorrect way, it does mean that there
was an intervention. In order to avoid interruption (Gummesson, 2000) in the research

20

process, the found results have been double checked and examined by me in this
paper.
Easton summarizes the responsibilities of the researcher in realism in the following
way (Sobh and Perry, 2006):
the researcher is supposed to identify the contingent causal powers that are operating in the particular situations under
research and the ways they combine and interact in order to create the particular events observed . . . to seek for the
underlying reality through the dark veil that hides it.
According to Sobh and Perry (2006), the usage of realist approach is a two-stage
process: at first it founds the conceptual framework, secondly it either approves or
denies the chosen frameworks. The reason for selecting realism is because it is
directed to the exploration of the knowledge supporting the existence of many facts
that can be revealed through experiments and research.
Considering all the above-mentioned characters of the chosen philosophy –such as its
being independent of author’s own thoughts, being mainly supported by smart
arguments and facts, I have adopted it across the study.
3.2 Research Strategy
Among many other research strategies such as descriptive rersearch, experiments,
survey, naturalistic observation, comparative case study (Gerring, 2004, p.346) has
been chosen for this study because there are two options compared to each other-
export and e-commerce as a market entry strategy in this thesis. Therefore, I have
preferred to analyze and compare two existing company experiences operating within
the same field but using two different methods of internationalization.
Comparative case study is based on a selection of the dependent phenomenon (Dion,
1998). This strategy is about choosing two forms of the same process
(internationalization) and collecting data and examining common characteristics of
the examined variables (Dion, 1998). This form of case study is considered as the
most popular research method with its specific character preferred by industrial
researchers, because compared to other research strategies it allows to test theory in
the real world circumstances (Yin, 2009). According to Bennett (2012), it is a
research design allowing to test if the suggested theory and model will actually work
in the real world. Based on Bennett (2012), the realistic simulation is much better
compared to statistical survey which is only answering to a question “how
much/many” whereas case study focuses more on the reason “why”.
There are some arguing that, case study examines a narrow sample, therefore its result
cannot be utilized, however, others believe in that, it provides a more realist response
than could be achieved if other research strategies would be applied (Yin, 2009).
Comparative case study (Creswell, 2013) have been applied while doing a research in
this paper in order to provide an easy understanding of the possibility and reasons for
choosing e-commerce as a market entry method versus exporting. Therefore, two
major international retail brands have been analyzed as a case study in order to make
explicit research for readers. The selection of those two independent cases has
provided the study with the significant information regardless of the limited data
availability in this field.

21

3.3 Population and sampling

All international companies conducting business overseas via applying to any
internationalization strategy have been taken as a population in this study.
Considering that, necessary data for achieving previously set research objectives
cannot be gathered from all the population in a short period, I have examined selected
sample of the study (O’Leary, 2004). As a part of the research, heterogeneous case
sampling (Onwuegbuzie and Leech, 2007) has been applied. The reason for choosing
heterogeneous case sampling (Onwuegbuzie and Leech, 2007) is that, only a few
companies adopting the new presented idea in the research, therefore chosen samples
have a «representative» character. Considering that, the presented idea does not
involve any statistical data and the sample to be selected is quite small, I used
heterogeneous case sampling across the study.
The US-based Victoria’s Secret’s and Italian brand Intimissimi’ s operations have
been comprehensively analyzed in the framework of Turkish market as the samples of
this study. The reason for selecting those two companies is that, the both companies
are operating within the same field- within the global lingerie market, however they
have different internationalization strategies. Victoria's Secret (L Brands, 2015)
have a global online store where the company begins delivery for any country if that
market is in the future target list of the company, whereas Intimissimi (Intimissimi,
2015) is following the convenient traditional methods, especially exporting while
going to international. The reason for focusing on those companies'
internationalization process in Turkish market, is the availability of easy accessing to
their managers for the interview and information regarding to their expansion strategy
in Turkey rather than head office.
Furthermore, besides case study, the questionaire has been hold in order to support the
secondary research results which will be explained in the next sections of the study.
While questionaire process, everyone doing online or offline purchases have been
considered as the population, where from 50 to 100 people are taken as the sampling
for the study.
3.4 Data Collection Methods
Mixed-methods (Saunders et al, 2009) are used for this study in order to assist the
main research idea with the supportive interpretation, to crosscheck the results from
different data collection methods (Bryman, 2006). Therefore, multiple ways of
collecting data have been adopted across the study, where secondary data analysis
asist the results of the primary data analysis and the questionaire has been hold in
order to support the secondary data anlysis results. The more detailed explanation is
provided in the following parts of the study. As stated by Bazeley (2004), regardless
of general challenges in incorporating two different methods, the use of mixed
methods in the study is significantly important. The importance of the integration of
those two methods have been emphasized by Patton (2002, pp. 464-5) stating that,
quantitative and qualitative methods are answering to a question from two different

22

perspectives and until they donot come together, the whole picture of the situation
stays invisible.
In this study, qualitative data is used because of providing a more detailed and
comprehensive background of the cases (Creswell, 2007) and being much more
concentrated to provide a reader with the answers to the questions of “why” and
“how” (Neuman, 2006). However, the quantitative method is also used along the
research that has a “completing” function (Bryman, 2006) for this study.
The methods chosen for collecting that data include:
3.5 Secondary data

In order to collect and analyze data about the reasons behind firms’ market entry
strategy and advantages and disadvantages of the chosen market entry modes of the
chosen samples the secondary data anlysis was conducted.
Secondary data is considered as a source that can be used in the current studies which
was conducted previously on a defined complex topic covering large amount of data
and case studies (Vartanian, 2010).
There are many reasons for using secondary data such as its being low cost or
requiring no cost in most cases (Vartanian, 2010). Besides that, secondary data is a
significant source providing access to a large amount of information, allowing a
researcher to read an existing questions and answers and therefore creating an
opportunity to develop new questions (Vartanian, 2010). However, Vartanian (2010)
also mentioned disadvantages of the utilisation of secondary data. First of all,
secondary data does not allow the researcher to have a control over the research
process as it has been conducted by someone else (Vartanian, 2010). Another
disadvantage of the use of secondary data can be that, it is no up-to-date and therefore
is not answering the current questions (Vartanian, 2010).
Therefore only a small amount of secondary data is involved into the research
process. Press releases, interviews, previously made researches in the existing
internationalization method of chosen samples are utilized during this study.
Also previously made researches in the field of e-commerce and its preferance by the
consumers have been in-depth analyzed in order to assist the questionaire results and
finding comprehensive evidences in supporting the main idea of the research.
3.6 Questionnaire

A questionnaire is a data collection tool through asking series of questions to the
survey participants in the research (Gravetter and Forzano, 2015). Questionnaire can
be conducted in person, online (in internet), by mail or via phone (Gravetter and
Forzano, 2015). Customer opinions have been collected in order to support the

23

reasons why e-commerce should be preferred to export by the firms. The reason for
conducting the questionnaire is to support the secondary data findings that, companies
should prefer e-commerce way of internationalization, not only because it provides a
firm with more control and market knowledge – which is the reason why it is less
risky, but also it is the preferred way of shopping by consumers – who are in the
center of any firms’s internationalization strategy, considering that every firm’s first
goal is to make a profit while entering into a new market. I have examined the reasons
behind the customer preferences of doing online shopping in order to support the
argument that, having e-store that serves to targetted markets have two-way benefits-
both for consumers and companies. Customers benefit from low prices, more choices
while a firm builds a brand recognition at the same time while it is also satisfying
consumers.
Approximately fifty people from differnet parts of the world have participated in the
survey where questions (See: Appendix 2) were determined to define their choice in
the shopping process- whether they prefer to shop or online and the reasons beyond
those preferences.
3.7 Interviews

Several interviews (Collis and Hussey, 2003) have been conducted as a part of the
research technique in order to check the results of the previously analyzed secondary
data and to access to more comprehensive data about the reasons behind the selected
sample firms’ market entry strategy and advantages and disadvantages of the chosen
market entry modes. In his study, Creswell (2007, p. 129) notes that, there are several
kinds of data categorizied in four categories such as observations, documents,
interviews, and audio-visual materials, however interview is situated in the “heart” of
the qualitative research. Creswell (2007) has provided further explanation regarding
to interviews mentioning that, it helps to explore the human part of the story via
interviewing people and exposing their existing experience in the specific field within
the research area. Interview also allows to a researcher to collect all the specific data
via asking the questions that are necessary for the research and to manage the
interviewing process in accordance with the objectives, which is not possible in other
ways of data collection (Creswell, 2007). Therefore this way of collecting data has
been adopted in this paper.
Structured way of conducting interview has been used for the research, because the
predetermined questions regarding to the chosen topic planned ahead of time have
been asked without any latent changes (Gill, et. al. 2008). As there are two methods
of interviewing- focused and open-ended (Benbasat, et.al, 1987), the first method was
preferred in order to receive comprehensive answers regarding to asked questions and
to generate new questions during interviews if necessary. Several probe questions
(Gill, et. al. 2008) was prepared in order to apply if the interviewee's response is not
detailed enough. Questions were ordered logically, however highest priority
questions were asked first. The number of the questions were limited, so they cpuld
be covered within 30 minute limited time of the managers and specialists. After
prepared interview protocol, an interviewer also applied to an Early Pilot (Colker,
2015), where interview questions were sent to two individuals understanding the
research topic and issues, in order to check if the interview questions are easy to

24

understand and ordered logically. After received feedbacks, I made necessary changes
to interview questions before asking them to the managers and specialists.
Nevertheless involved top managers of the selected two companies, two more
industry specialists have been involved in to interviewing process for the purpose of
collecting primary data about selected case studies that have also been analyzed based
on the secondary data results. Furthermore, the use of the research triangulation
apparently increased the quality of investigation results of the study (Robson, 2002).
Two managers of the selected companies- Intimissimi and Victoria’s Secret- who are
mainly working in the international operations have been involved into the research
process. They were contacted through a professional social network and time
arranged for a meeting after the short explanation of the contact reason. After the
agreement achieved, the employees of the selected companies have been interviewed
based on the prepared questions in the Appendix 3 and Appendix 4 by me. The
interviews were made face to face as I was able to travel to Turkey on June for
arranged meetings through professional network- Linked In. Interview process took
thirty minutes with each manager in out-of-office hours. Questions including the
market entry methods, business strategy and the impact of the online presence on the
firm’s activities and influencing factors on the business decisions have been
forwarded by interviewer to the chosen managers of the examined companies’
affiliates in Turkey, Istanbul. Besides, two e-business specialists -one from Turkey,
one from Azerbaijan were sent the interview questions in order to have a
comprehensive view about global e-commerce industry and modern business
approaches (See: Appendix 5 and Appendix 6). Interviewer had no impact on the
answers given by either by specialists or managers and original responses are attached
to the research.
3.8 Analysis of Results
As there are three main data collection methods used along the study, therefore, the
analysis of the data collected as a result of each method have been summarized and
presented in the following formats:
Analysis of questionnaire data. Data achieved in the process of questionnaire
regarding to the customer preferences and reasons for choosing online or offline way
of purchase have been summed up in the appendices and the relevant summary of the
results have been included into the “Data Analysis” part in the research paper.
Analysis of interviews. The information collected during the interview process has
been analyzed in depth and summarized in appendices and also presented in the “Data
Analysis” part of this thesis. The general interview results from industry experts have
been cited within the relevant parts of the research paper including discussions and
conclucions.
Analysis of secondary Data. Secondary data from previously made researches or
publications – that was explained above- have also been summed up and only the
materials related to a research idea has been presented in this paper within the text.
The collected data has been compared to a primary research results and presented
right after in order to assist a quick understanding of the reader. The relevant parts of
the findings related to this research have been chosen as a supportive material to be
presented in the study.

25

Considering that, realism research is about underlying the mechanisms of the process,
it is not interested in minor details of interview responses (Sobh and Perry, 2006).
Therefore, analysis of overall results has been hold in two stages. At first, data
reduction method has been used which consists of three stages in itself (Sobh and
Perry, 2006). The gathered information has been minimized in accordance with
determined conceptual framework and research context.
After data reduction, data displaying (Sobh and Perry, 2006) is used in order to
determine the presentation of the reduced data. The explanations for used terms,
quotations, chosen cases and responses are given properly in order to provide in-depth
understanding for readers.
3.9 Research Credibility

Patton (2002), in his study, indicates that, reliability and the validity of the research as
an alement that can prove the credbility of the conducted study. However Healy and
Perry (2000) determine objectivity in terms of neutrality, transferability and
consistency as the most important three factors determining the credibility of the
research, in his turn determines precision as the main criteria for checking credibility
of the conducted research. Patton (2002, p.14) notes that, while credibility hung on
the ‘instrument construction’ in quantitative research, in the qualitative one the
researcher is considered as an instrument itself. Therefore Patton (2002, p.14)
concludes that, credibility of a conducted research is highly dependent on the
capabilities of the researcher. However, Eisner explains credible research as a
qualitative research that is also a good study that can assist readers on easy
understanding of the subject matter (Golafshani, 2013). Charles mentions that, the
credibility and reliability of the research can be proved via retesting (Golafshani,
2013). In contrast to the above mentioned all arguments, Stenbacka (2001) states that,
there is no relevance of checking research reliability in qualitative data because the
reliability is concerned with measurement. Reliability is applied in the conducted
questionaire in the research. The term of “reliability” here refers to the definition
provided by Joppe (2000, p.1) as:
the extent to which results are consistent over time and an accurate
representation of the total population under study is referred to as reliability
and if the results of a study can be reproduced under a similar methodology,
then the research instrument is considered to be reliable.
In contrast Eisner, Joppe notes that, this is the only true in case of quantitative data
and the results received after retesting can be different depending on a change in
user’s environment, attitude, lifestyle etc. which may lead to errors in comparable
results (Karkukly, 2010). Therefore retesting is avoided in my research, because the
qualitative data is mainly utilised. Wainer and Braun suggests that, validity can be
determined via double-checking answers in the previously made researches in this
field (Golafshani, 2013). Creswell, J. W. and Miller, D.L (2010) in their study,
determines that, validity in the qaulitative study can be checked through different
methods depending on the research type. As also mentioned in this study before,

26

considering that the examined topic is new, there not previously made researches in
this field that can be used for comparing, however the used secondary sources
assisting the main idea the study can be double-checked. This is a triangulation -
using various data collection methods across the study in order to cross-check the
results (Creswell and Miller, 2010). This is one of the several methods suggested by
Creswell and Miller (2010) that can be used in determining the credibility of the
qualitative research.
Considering that, the research credibility has been followed via following the
triangulation across study, we might conclude that, the made research has been
answering to the credibility criteria for evaluation of the relevance of completed
research (Morse et. al, 2002). In order to secure the credibility of the conducted
research and an accuracy of the findings the level of reliability, confirmability
(Meadows and Morse, 2001) and validity (Whittemore et.al, 2001) in the research has
been reasonable because collected data results have been double-checked.
3.10 Research Ethics
Research Ethics and norms have been particularly expected during the research
process. All aspects of this study is appropriate and moral requirements (Benatar and
Singer, 2000) have been considered and justifiable conclusions are made.
Confidentiality and copyright policy requirements have also been met due to the
selected interviewed high-position managers’ and involved two specialists’ specific
request.
Social ecology (Oliver, 2010) has been maintained while the research was conducted.
Therefore meetings have been hold out of office.
Cultural and ethnicity differences have also been expected during the research process
(Oliver, 2010).
3.10.1 Confidentiality and Anonymity
The author should preserve the confidentiality of the chosen companies and interview
participants during the research process in accordance with the confidentiality and
anonimity rules (Seale, 2004). In order to provide that ‘security’, the researcher has
not provide the personal identity and location of research participants whereas the
names of the respondents will be accessed only by the researcher for the purposes of
investigation.
Considering the research ethics and norms, respondents have been offered the
opportunity to keep their identity confidential. Correspondents preferred that model
because it encourages participants for objectivity and creating a comfortable
environment for them where participants may feel free to share their thoughts on an
ongoing business models (Oliver, 2010). From researcher’s perspective anonymity
was also advantageous in terms of softening the questioning process of sensitive
issues (Oliver, 2010) such as sales numbers, cash flow etc.
Various methods can be utilized to anonymize research reports (Oliver, 2010). First of
all the real names of the research participants can be removed and they can be referred
via specific numbers and letters (Oliver, 2010). Second option is the utilization of

27

fictial names (Oliver, 2010) that has been considered as confusing and therefore first
method of anonymization has been preferred and adopted by me in this paper.
Limitations and Self-critisim

I had several limitations while doing the research. The limitations faced by me in this
thesis are:
Lack of available data: While researching the issue I faced with the lack of prior
research studies conducted on the same topic. Citing previously made researches
eould help me to build foundation of my study easier, however there were only a few
researches suggesting e-commerce as a market entry mode. This fact proves that,
there is a great need for further investigations in this field in order to contribute to
international business.
Methodology Limitation: From methodology perspectives, I faced with the difficulty
to find more existing samples using e-commerce as a market entry method. Therefore,
only 2 cases have been examined in order to collect data. However, having more
samples would contribute to the research process and provide more data for testing
hypothesis.
Time: The research hypothesis is quite new and have not been utilized by
international firms much. Therefore, the more case studies could not be conducted
due to the lack of time. Furthermore, due to lack of time, my thesis samples are
limited with the retailer industry, however further investigation is needed to prove its
adaptation into other industries.
Access: I tried to reach to the Head Office managers of the selected samples.
However due to huge distance and their non-availability, only Turkish subsidiary
managers could be reached for interviewing process. Despite the interview process
with those managers asissted the study with considerably significant data, I suggest
Head Office managers also being involved in future researches.

4. Data Analysis
4.1 Secondary Recearch
4.1.1 Impact of e-commerce on the consumer
behaviour
As a part of the presented idea in this research, in order to reveal that e-commerce can
replace the first stages of internationalization, at first I will increase emphasize on the

28

e-commerce as being preferred business way by firms because of having a crucial
impact on consumers’ buying behaviors as an important factor that each firm needs to
consider. The existing researches in e-commerce field will also be analyzed in order
to determine other specific advantages of adopting e-commerce.
A study conducted by Ebates.ca resulted in that, 84% prefer shopping online to
visiting a store (Coulson, 2014). In contrast, the global research conducted by Pwc
(2012a) in order to assist an understanding of consumer behaviour where 19,000
people from nineteen different countries were selected as a sample defined the
shopping habits and preferences of buyers revealing that, approximately 27 percent of
all consumers made weekly online shopping. Furthermore, the research found that,
the main reason behind of 65 percent of customers’ doing in-store purchases is to
avoid high delivery fees (PwC, 2012a). Survey results showed the other majority
(60%) of survey participants preferred offline shopping, because they wanted to
obtain the item immediately Pwc (2012a). According to Pwc (2012a), 70 percent of
the overall growth in e-sales in 2010 has been generated by the existing buyers via
moving to online. However, conducted another survey by Wanderful Media, in
contrast with that result revealed the major (91%) percentage of respondents have
gone into shops in a result of an online experience (Sterling, 2012). This finding
supports the argument suggested by me in this paper that, having an e-commerce store
in the first stage of internationalization process would result in the brand recognition,
product familiarity in a new market which would later result in in-store sales in the
next stages of internationalization process.
Among the reasons of e-commerce being popular among consumers one of the
reasons is its main target-especially consisting of teens whose 95% go online for
shopping and much more tend to share the purchased product in social networks
(Desilver, 2013). However another conducted research by GE Capital Retail Bank
resulted in majority of consumers preferring offline shopping (Charbonneau, 2014).
The same study also found that the majority of those customers search and analyze
products online before making in-store purchases (Charbonneau, 2014). This
information reveals a fact that, however the final purchase is made in store, the
decision-making process - as the most important factor on sales process happen
before on the Internet. According to another study conducted by United Parcel
Service Inc., the majority of consumers preferred to buy their favorite brand online
(Morris, 2013). Therefore we might conclude that buying from an online shop of
familiar brand is much easier.
Survey conducted by UPS- logistics and delivery firm, illustrated that, consumer
satisfaction is usually higher in online shopping rather than in-store purchases,
because it allows two-side communication even after purchase (Morris, 2013). That
supports the argument suggested me in this paper that, e-commerce allows firms to
have full control over sales process and therefore customer satisfaction is easier to be
reached by the firm.
The research results conducted by PwC (2012a) also showed that, online perspicacity
is required by the firms considering that demand for more selection, faster service and
transparent information in the delivery is increasing and it is among the main reasons
of e-shopping being preferred way of buying. The results achieved by PwC (2012a)
shows that despite of an existence of many reasons for e-commerce being preferred
way by shoppers, those reasons might be summed up in three categories- cost factors,
merchandise aspect and convenience factors. A study conducted by Ebates.ca
(Coulson, 2014) determined the major reasons for e-shopping as its easy processing
that does not necessarily mean consumers to be in contact with salespeople. Similarly,

29

over half (51%) showed they prefer not to leave home and other 49% found it much
more convenient to shop online.
The existing research made by Quayle (2002) and Sensis e-Business report (2006)
shows that, among the reasons why firms should apply to e-store concept the main
reason is the cost aspect (MacGregor and Vrazalic, 2007). Quayle found that, firm
benefits from having e-commerce store from reduced administrative costs and
increased transaction speed which increases business profit (MacGregor and
Vrazalic, 2007). The same studies found that the having e-commerce store
increases the information quality, improves firm’s abilities to reach to new
customer segments (MacGregor and Vrazalic, 2007).
According to a research conducted by Stockdale and Standing, e-store concept
improves the customer communication and reduces transaction-related costs
(MacGregor and Vrazalic, 2007).
According to a research made by PwC (2012a) another reason for firms adopting
online retailing is the merchandising factor. Considering that, sometimes even in the
biggest shopping stores there is not enough place for retailers to demonstrate all of
their products for four seasons, in e-commerce there is always enough space for
product presentation that can easily be categorized and accessed in one click by
consumers.

4.1.2 Victoria's Secret

Victoria's Secret is USA-based lingerie company founded in 1977 and became a
part of L Brands in 1982 (Stott, 2015) . By the late 1990s, company had over 900
shops across the country (Durbin, 2002). The brand also became globally popular
at a quick period. Soon Victoria's Secret launched 1,060 stores in the USA, 55
shops in Canada, and five shops in UK and 200 more stores all over the world
(Durbin, 2002). The success behind the brand’s popularity was explained in
comfort, style and fit despite its high prices according to the report provided by
NDP Group (Durbin, 2002).
The company operates internationally via local subsidiaries, web catalog and
online store (L Brands, 2015). As a result of executed various activities, brand
loyalty grew from 18% in 1996 to 35% in 2000 globally. Web sales increased up
to $200 million in 2001(L Brands, 2015).
The base of the firm’s strategy is to launch all the products at the same time
across all channels—catalogue, stores, Internet via the same quality, pricing and
brand positioning(Stott, 2015). As we can see, firm prefers to control its
marketing activities, especially branding issues. Therefore Victoria’s Secret
ignored indirect or direct exporting and focused more on the e-store concept that
was originally launched in 1998(L Brands, 2015). Company put forward two
objectives (Durbin, 2002). At first, it wanted to strengthen and support the
Victoria’s Secret brand recognition among potential and existing consumers and
secondly, company executives wanted to increase profits considering that e-
commerce is a preferred way of shopping by many consumers as discussed above.

30

In order to achieve those objectives, firm made an aggressive step via launching
e-store to global orders from anywhere in the world. Via doing that, company has
been planning not only to increase the sales, but also to manage the
communication process with its customers in order to strengthen its brand
recognition and to know its customers (Durbin, 2002). Obviously, having e-store
serving globally helped the company to collect customer insight that can be
considerably precious information that provides a firm with the market knowledge
in the specific country. According to Durbin (2002) Victoria’s Secret’s strategy
moving so aggressively to online in order to build a brand, made the company a
leader in online innovation. It did not only result on increase in sales, but also
resulted in the firm’s collecting market data that is one of the reasons behind
firm’s success in its investments to any new market.

4.1.3 Intimissimi

Intimissimi- part of the Calzedonia S.p.A Group companies- is another internationally
known lingerie brand and founded in 1996, in Italy (Intimissimi, 2015a). The brand is
one of the leaders in lingerie industry in Europe via selling “romantic” underwear
(Intimissimi, 2015a). In 1998, the company had already 100 retail outlets across the
world that has increased up to 2,500 stores nowadays in 31 countries (Intimissimi,
2015a).
The basic concept of the brand’s internationalization strategy is mainly consisting of
on the franchising that is achieved after performing direct exporting by the firm
(Intimissimi, 2015b). According to an agreement between the third party and
Intimissimi, they serve to the common objectives of the firm that mainly consists of
transparency and profitability (Intimissimi, 2015b). Firm cannot internationalize
independently from the third party as I mentioned in the literature review. The reason
for that is the lack of knowledge firm experiences if it decides to make direct
investment to the country. This is also mentioned by me in the literature part that,
while firm prefer to go to international via help of the third party, they miss a chance
to learn market quicker for doing investment and it also prevents the possibilities of
the company to make more profit and to build customer communication. In case of
intimissimi, the brand has preferred the secure way of internationalization
(Intimissimi, 2015a), therefore the control over the market is on the responsibility of
the engaged local partner.

4.2 Primary Research Findings
4.2.1 Questionaire
As also mentioned above, fifty people have been questioned anonymously in order to
determine their preferred way of shopping and the reasons behind it in a goal of
confirming the results of the secondary research findings. As a result of survey, the
majority of participants (60%) responded as doing more in store shopping than online

31

purchases (40%). The reason behind it was identified as most of the stores having no
e-shopping, however the consumers having their preferred brand online prefer online
purchase to in-store shopping. Among the reasons of applying e-commerce for
shopping process, there were it is being easy (35%), faster (14%), more choice and
better quality (12%) which support the convenience and cost factors from consumer
perspectives. Furthermore, the majority of participants preferring online shopping also
chose a middle or higher class brands (boutiques and luxury brands) as their preferred
e-bought products rather than small retailer brands participating in every shopping
mall which is also an element aligning the cost factors from customer perspectives as
its being much cheaper because of e-participation in the market requiring no capital
for store and staff.
Those factors support the main argument that, having an e-commerce in the target
market before beginning in-store sales there would result consumers’ attention, brand
familiarity with the brand directly under the control of the firm without a necessarily
physical participation there, as an e-commerce is a convenient way of shopping for
customers. Firms would benefit from a control and cost perspectives, whereas
consumers would be profitable in terms of convenience.
4.2.2 Interviews
As mentioned above, there were four interviews conducted with Victoria’s Secret and
Intimissimi officials in Turkey and two market specialists in order to gather objective
feedbacks and analytical opinions about each method.
4.2.2.1 Interview with Intimissimi

One of Turkey managers of Intimissimi have been interviewed in accordance
with the questions in Appendix 3 where the answers have also been
demonstrated. At first, the reasons behind Intimissimi's choice of market and
market entrance was decided in order to reveal the influencing factors in the
company's internationalization strategy. Business manager explained the
Intimissimi's interest in the specific market in the economic factors such as
market size, demand and noted that it was a local initative to launch Intimissimi
stores in Turkey.
While an interview with the contact person among the many revealed facts, the
crucial emphasize was on the firm’s choice of export as a market entry mode.
Business Unit Manager mentioned that, export and the following entry methods,
especially, franchising are the most suitable option for Intimissimi brands’
expansion and that is how the company has been conducting business in the
world for decades. Intimissimi began its activities in Turkish market with
exporting and soon moved to franchising after testing that, tehre are enough
sales. All the operations are managed by the local company as revealed during
interviews. Intimissimi's current business model in Turkey is based on the
agreement with the third party which is a part of its international strategy as
also was presneted by me in the Secondary Data Finding. The manager,

32

evaluated that strategy as the stable strategy that firm owes its success and he
also mentioned that, this is the normal way for many companies conducting their
business. It was also discussed that, this the method how internationalization
normally happens, how firms are adapted to manage business around.
The interviewed manager did not provide sensitive data about comapny
profitability, however, he mentioned indirectly that, it took almost a year for a
company to achieve sales targets. Despite of the considerable amount of
marketing budget. If to analyze the words of the manager, then we might relate
huge marketing expenses by the company to an existing competition in the
market that requires agressive movements. Interviewee also mentioned that, the
majority of the marketing budget is spent on the store activities such as
decorating it, choosing appropriate location for all 21 shops and deciding design
etc. is quite resource-taking activities. This information provided by the
Intimissimi's local Unit Manager supports the argument I provided earlier that,
having physical store is much more expensive comapred to e-commerce
entrance method because of having rental fee, sale staff salary, amortization
expenses etc. Despite, the made expenses and "considerable high" amount of
marketing budget in the interviewee's words, he still evaluates Intimissmi's
popularity as an "average" in the specific location.

4.2.2.2 Interview with Victoria’s Secret
While conversation with the manager of Victoria’s Secret in Turkey, he mentioned
that the firm as many other multinational brands were interested in Turkey since the
last 5 years considering its strtegic location between Europe and Asia and intense
textile industry. The brand's manager confirmed that the first step firm took in the
market was its product delivery to Turkey based on received online orders via e-
commerce channel of the brand’s global website which is also presented in my
secondary data findings . He also mentioned that, the investment decision into
Victoria’s Secret in this particular market was made because of achieved brand
popularity and recognition in Turkey from previous online participatio- as the the firm
understood that it can make good profit, it made direct investment into the market.
Furthermore he mentioned that, the existence of loyal customers contributed to the
firm’s quick payback period. Furthermore, another reason behind the success was
experience and knowledge of the targeted market, as VS head office has already
considerable data consisting of consumer behavior and preference. Sales reached to
net profit at short period even despite of high prices and low marketing budget
compared to alternatives in Turkey market.
4.2.2.3 Interview with the specialist on
international business.
While conversation with the trade specialist the export and its shortcomings and
advantages have been discussed as the first stage of internationalization. The Retailer
Specialist noted export as a common way of internationalization that might be utilized

33

by both manufacturing and service firms. He also mentioned that, the distributor have
more responsibilities on that mode and none of the parties are facing risks because in
case of there is no sale, the contract can be cancelled and the product’s distribution to
market can be stopped. On the specialist’s opinion, export is less riskier mode of entry
because there is a middle firm instead of producer taking all the risks. He also
mentioned that, as per average experience, this strategy end in success in Turkey
because of two main reasons. Firstly, distributor is already well-informed about the
target market and knows how to communicate to users/consumers. Secondly, if the
market is not ready to a product they might to apply for a product adaptation which
would result in a firm’s success. In accordance with interviewers questions, the
retailer specialist concluded that, the significance of any brand being successful on a
specified market depends on a distributor company because the main decisions such
as marketing, pricing are usually decided by it. Therefore there is no time limitation
for firm’s succeeding, as noted by retailer specialist. Furthermore he mentioned that,
partnerships with e-commerce companies in form of daily or weekly deals is a
common and profitable way of increasing profit, however the idea of using e-
commerce as a market entry mode sounds risky for firms, considering that it requires
special e-business management knowledge which is not similar to traditional ways of
conducting business. On the specialist’s opinion, therefore, new supply chain needs
be built and new delivery firms may be needed to be employed which requires big
effort and time which we may evaluate as a “out of convenience” for the majority of
companies which have been conducting business for many years on the traditional
ways.
4.2.2.4 Interview with the Specialist on
E- commerce
As per interview responses, e-commerce can be evaluated quite remarkable in Turkey
and in the most countries where it even stands against the physical stores. E-
commerce specialist explained exporting and online store concept from a different
perspective. Regarding to him, e-store way of selling products globally online can be
identified as self-exporting even sometimes a third party might be involved into the
procedure. Furthermore, he emphasized the importance of having control over the
distribution and deliver channel, however export would be less easy but less profitable
in internationalization. E-business specialist also noted that, this way of conducting
business directly contributes to the customer satisfaction via decreasing the number of
obstacles between producer and end user.
In accordance with interview questions, interviewed specialist found the new method
of internationalization quite creative and responding to the requirements of modern
world that could be possibly employed by many developed companies seeking for
more benefits at little cost and risk. On the specialists’s opinion, as e-commerce as not
very resource-using method of internationalization, it would succeed even for a
smaller firms looking for an opportunity to expand globally.
Finally, specialist mentioned that, knowing your customer and market without
investing much and having direct communication access to them allows this mode of
entry to be a possibly “future’s traditional business way”, however it cannot be

34

applied in all countries nowadays because of different payment methods such as only
cash.
5. Discussions. Key Findings
The considerable development of internet technology has not only accelerated the
efficiency of business operations and tighten rivalry, but it has also forced additional
way of conducting business that is beyond the firm’s traditional business scope.
Consequently, companies adopting e-commerce as a market entrance method are
following global competitive trend in the modern business circumstances. As revealed
in a result of secondary data analysis, firms may benefit from e-commerce form of
market entrance in three ways. At first, from merchandising perspectives, that, e-
commerce offers more place to demonstrate all the products however in stores there
are not enough place always to present all products at the same time. It was also
determined as one of the reasons why shoppers preferred e-stores. As also mentioned
above, as a result of conducted questionnaire I conducted, there was an option of
“more choices” among the reasons of consumers’ preferring online shopping to
physical stores.
Secondly, e-commerce is much more convenient method of shopping for people as
above-made both primary and secondary data analysis proved. As e-business gives
more control to a producing firm on being communication with consumers and
provides better service quality in terms of customer service, it keeps also being a
preferred way of market entrance based on user preferences. However, while using
exporting market entrance mode provided service quality depends on the third party
and an involved another party is responsible for the brand prestige of the brand. This
emphasizes one more time the statement made by Terpstra and Sarathy (2001) in
literature review that, export is a market-entry technique offering the least market
control which is a huge disadvantage for manufacturing/producing firm.
Finally, it should be utilized by firms as a foreign market entry strategy because of
cost factors in terms of having no hired stuff and non-existence of physical store.
However in literature review, it was suggested by Carter (1997) that, despite its being
risky exporting is also the cheapest way of internationalization, because all the sales
and market associated risks are on the responsibility of an involved third party. If to
compare both methods- e-commerce and exporting as a foreign market strategies from
cost perspectives, even there is not much difference in costs for manufacturing or
production proccess but there is a considerable difference between the end prices set
by manufacturer and the third party which has a significant impact on the end buyer's
purchase decision. As there is no need to pay salesmen, transportation and rent in e-
commerce, some products are even cheaper than usual. As a result of the conducted
questionnaire, it was determined as one of the main reasons for people preferring e-
commerce to physical stores.
Firms ignoring those facts are avoiding the existence of growing threats against the
competition. Since electronic commerce as a way of conducting business has
significantly developed and exceeded consumers’ expectations and provided the firm
with more control and has been requiring less cost- makes it less riskier, I suggest e-

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E commerce as a market entry strategy

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