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Title: Investigations of Market Entry Strategy for CleanTechnology CompaniesSubmitted in partial fulfilment of the require...
Statement of Academic HonestyI declare that this dissertation is entirely my own original work.I declare that, except wher...
Acknowledgements        This dissertation would not be possible without the support of my wife, Corinne Tanwho has stood b...
Abstract        Investigations of Market Entry Strategy for Clean Technology Companies        Clean technology companies o...
Contents     List of Tables and Figures .....................................................................................
B: Analysis of Factors That Influence Market Entry Choice......................................42   C: Analysis of Product...
List of Tables and FiguresFigure 1:    Comparison of entry modes against investment levels, risk, ownership and           ...
Chapter 1 Introduction        Clean technology start-up ventures have grown tremendously around the world inrecent years. ...
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Investigations of Market Entry Strategies for Clean Technology Companies

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Final Project Thesis for MBA

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Investigations of Market Entry Strategies for Clean Technology Companies

  1. 1. Title: Investigations of Market Entry Strategy for CleanTechnology CompaniesSubmitted in partial fulfilment of the requirementof the degree of Master of Business Administrationof the University of StrathclydeTHE UNIVERSITY OF STRATHCLYDEBUSINESS SCHOOLLim Chee Hong2013, MACVICARName of Project Supervisor: Dr. Nina Rosenbusch STRICTLY CONFIDENTIAL 1
  2. 2. Statement of Academic HonestyI declare that this dissertation is entirely my own original work.I declare that, except where fully referenced direct quotations have been included, noaspect of this dissertation has been copied from any other source.I declare that all other works cited in this dissertation have been appropriately referenced.I understand that any act of Academic Dishonesty such as plagiarism or collusion mayresult in the non-award of a Masters degree. Signed …………………….……… Dated …….…………………… 2
  3. 3. Acknowledgements This dissertation would not be possible without the support of my wife, Corinne Tanwho has stood by me in my efforts to complete this MBA dissertation. I dedicate this work toher for her understanding and care throughout this journey. I also would like to appreciate and thank my supervisor, Dr. Nina Rosenbusch who hasbeen ever helpful in guiding and ensuring that my dissertation is of paramount quality. Herrelentless support from the other side of the world in Canada, while I am in Singapore andMalaysia, separated by time zone difference is really immeasurable, and I salute and thank herfrom the bottom of my heart. I would also like to appreciate my interview responders and also any other persons thathave directly or indirectly contributed to the completion of this dissertation.Yours Sincerely,Lim Chee Hong 3
  4. 4. Abstract Investigations of Market Entry Strategy for Clean Technology Companies Clean technology companies operate in an increasingly complex and risky businessenvironment which is dictated by new technology innovations and globalization. Entrepreneursand business managers need to carefully identify and select suitable market entry modes andinternationalization efforts in order to best utilize internal resources and reduce the risk ofbusiness failure. This study will explore the motivations, practicality and understanding of market entrystrategies deployed by companies within the clean technology industry. It seeks to understandinternationalization efforts, factors that influence market entry mode, timing of entry mode andproduct cycles and analysis of strategic objectives in market entry planning. Five companieswere studied in depth and key personnel were interviewed to obtain practical information interms of their internationalization and market entry efforts. The qualitative grounded theorymethod is employed here to develop new hypothesis and further develop theory regardingmarket entry. This study uncovered that internationalization steps for clean technology companiesrely on certain stimuli, such as risk appetite, R&D intensity and governmental incentives thatwill shape the companys approach. The approach uncovered was rather contingent, rather thanstaged, with competing companies with similar target markets employing different entry modes. Internal factors such as market returns, product differentiation and prior experience inusing specific entry modes were found to be the most influencing internal factors, while externalfactors were market barriers and existence of competitors in the foreign market. Product launchand timing on market entry decisions are largely based on market situations such as demandlevels, as clean technology ventures mature quickly. It was also uncovered that strategicplanning activities are central towards market entry development. Noting that external factorsare rarely able to be influenced and internal factors are within the control of the company, arefinement towards the market entry framework for clean technology is made.Key words: international business, strategyWord Count: 13,012Lim Chee Hong 4
  5. 5. Contents List of Tables and Figures ..............................................................................................7 Chapter 1 Introduction................................................................................................8 Chapter 2 Definition of Key Terms ..........................................................................10 2.1 Definition of Market Entry Strategies ..............................................................10 2.3 Definition of Modes of Market Entry ..............................................................11 2.3.1 Countertrade................................................................................................12 2.3.2 Piggyback ....................................................................................................12 2.3.3 Export..........................................................................................................12 2.3.4 Licensing .....................................................................................................12 2.3.5 Franchising..................................................................................................13 2.3.6 Joint Venture and Alliances ........................................................................13 2.3.7 Foreign Direct Investment ..........................................................................13 Chapter 3 Internationalization Theories .................................................................15 3.1 Internationalization of Firms ............................................................................15 3.1.1 Economics of internationalization and trade theories .................................15 3.1.2 Staged International Expansion ..................................................................16 3.1.3 Contingency Theory of Internationalization ...............................................19 Chapter 4 Overview and Analysis of the Clean Technology Industry ..................24 4.1 Industry Segment .............................................................................................25 4.2 Industry Growth and Trend ..............................................................................26 4.3 Industry Funding ..............................................................................................27 4.4 Clean Technology by Countries and Major Players ........................................29 4.5 Clean Technology Companies in Singapore ....................................................29 Chapter 5 Research Methodology ............................................................................31 5.1 Research Method (Theoretical Sampling) .......................................................31 5.2 Selection of Startup Companies as Case Studies .............................................31 5.3 Interview Methodology ....................................................................................32 Chapter 6 Case Studies of Clean Technology Companies......................................33 A: Exporting - REC Corporation ................................................................................33 B: Joint Venture - Vestas Wind Systems A/S .............................................................34 C: Licensing - A Smart Grid Company in Singapore .................................................35 D: Licensing: Koninklijke Philips Electronics N.V. (Philips Electronics) .................36 E: Foreign Direct Investment via wholly owned subsidiary – Q-Cells AG ................37 Chapter 7 Analysis of Market Entry Strategies within the Case Studies .............39 A: Analysis of Internationalization Efforts .................................................................39 5
  6. 6. B: Analysis of Factors That Influence Market Entry Choice......................................42 C: Analysis of Product Cycle and Timing of Product Entry.......................................44 D: Analysis of Strategic Objectives with Market Entry Planning ..............................45 E: Summary of Analysis .............................................................................................46Chapter 8 Conclusions and Implications .................................................................48 8.1 Implications to Theory .....................................................................................49 8.2 Constraints of Study ........................................................................................50 8.3 Suggestions for future research ........................................................................50Chapter 9 Appendix......................................................................................................52Chapter 10 References..................................................................................................66 6
  7. 7. List of Tables and FiguresFigure 1: Comparison of entry modes against investment levels, risk, ownership and controlFigure 2: Vernons Product cycle theoryFigure 3: The Uppsala Model of InternationalizationFigure 4: The transaction cost model for Foreign Market EntryFigure 5: OLI Framework using advantage assessment to determine market entry modeFigure 6: Comprehensive international entry strategy frameworkFigure 7: Premature annual deaths from household air pollutions and other diseasesFigure 8: Sector Representation for Clean TechnologyFigure 9: Global Clean Energy Projected GrowthFigure 10: Global Cleantech Venture Capital Investment by TechnologyFigure 11: Venture Capital Investments into 2011 Global Cleantech CompaniesFigure 12: Clean technology country innovation indexFigure 13: Model for describing international efforts of clean technology companiesFigure 14: Reinforced model for factors influencing market entry mode for clean technology.Table 1: Market entry mode and reason for market entryTable 2: Product cycle and timing of market entry and launchTable 3: Strategic objectives comparison 7
  8. 8. Chapter 1 Introduction Clean technology start-up ventures have grown tremendously around the world inrecent years. The reason for this is the continuous depletion of natural resources and the need tomanage energy efficiency as well as reducing waste and carbon emissions. Clean technologyindustries such as renewable energy, biomass, green transportation and energy efficient lightingare often heralded as the next best alternative for traditional manufacturing, offering lowpollution, and employment opportunities for the local economy, as well as providing value addand much needed foreign investment for developing countries. Entrepreneurs in clean technology ventures bear significant risks of failure during thestartup phase compared to other types of traditional businesses. The reason for this is becauseclean technology ventures rely heavily on venture capital and new technology adoption bymarkets, both which carry significant risk of business failure, in addition to general market entryrisks that are common to other brick and mortar businesses. Companies embarking on strategicinitiatives such as internationalization do so to tap on new opportunities in order to gain accessto new markets and customers, exploit core competencies, gain competitive advantage and somedo it just to survive. Some companies are able to capitalize on the market entry strategy and relyon a particular method to remain competitive, while other in their pursuit fail to do so and bearsignificant loss of resources and profits. There are also examples of companies havingdetermined market potential unable to succeed in the market entry strategy due to lack ofinternational experience and understanding of the countrys macro and micro environment. Anunderstanding of the environment and internal factors being employed for a particular marketentry strategy would yield important information on how a new venture would be able to ensuresustainable competitive advantage is achieved and risk of failure is reduced. This paper will investigate the various market entry strategies being adopted by selectedclean technology companies. The aim of the project is to provide deeper understanding of therelationship and motivations of internationalization efforts, factors that influence such decisionsas well as timing of entry and strategic planning implications towards market entry decisions.As such the synergy between the environmental risks, internal capability and type of marketentry strategies adopted will also be uncovered. This paper will also aim to show that actualpractical data from the researched companies are able to support new theories and frameworkson market entry planning. 8

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