Intl mkt entry


Published on

Describes different modes of entries

Published in: Business
1 Like
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Intl mkt entry

  3. 3. SWOT ANALYSIS</li></li></ul><li> Foreign market portfolios: technique and analysis<br />international market entry<br />2<br />Rajesh Narang<br />
  4. 4. SWOT Analysis<br />a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. <br />SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.<br />A SWOT analysis process generates information that is helpful in matching an organization or group’s goals, programs, and capacities to the social environment in which it operates. <br />international market entry<br />3<br />Rajesh Narang<br />
  5. 5. SWOT<br />Strengths:Positive tangible and intangible attributes, internal to an organization. They are within the organization’s control. <br />Weakness:Factors that are within an organization’s control that detract from its ability to attain the desired goal. Which areas might the organization improve? <br />Opportunities :External attractive factors that represent the reason for an organization to exist and develop. What opportunities exist in the environment, which will propel the organization?Identify them by their “time frames”<br />Threats :External factors, beyond an organization’s control, which could place the organization mission or operation at risk. contingency plans that May address them .<br /><ul><li>Classify them by their “seriousness” and “probability of occurrence”.</li></ul>international market entry<br />4<br />Rajesh Narang<br />
  6. 6. international market entry<br />5<br />Rajesh Narang<br />
  7. 7. SW :PRIMO-FPeople II Resources III Innovation & Ideas II MarketingII Operations II Finance<br />strength could be:What do you do well? Is there anything you do better than most? Better than anyone else? <br />Your specialist marketing expertise. <br />A new, innovative product or service. <br />Location ,Quality processes that adds value to your product or service. <br />A weakness could be:What should be improved? What do you do poorly? What should you avoid, based on mistakes in the past?<br />Lack of marketing expertise. <br />Undifferentiated products ,Poor quality<br />Damaged reputation.<br />international market entry<br />6<br />Rajesh Narang<br />
  8. 8. OT Profile<br /><ul><li>Opportunities :Where can you find, or create, a competitive advantage? What are some major trends in your business? - Consolidation / Diversification? Specialization / Generalization?- Changes in technology. Such as computer software .- Changes in the types of businesses in your market.- Changes in social patterns, population profiles, lifestyle. - trends. Changes in demand
  9. 9. Threats :What obstacles do you face?
  10. 10. What are your competitors doing that may result in a loss of clients, customers, market share? Are the required specifications for your job, products or services changing? </li></ul>Is changing technology threatening your position? Do you have cash-flow problems? <br />international market entry<br />7<br />Rajesh Narang<br />
  11. 11. SWOT Analysis Examples<br />Example 1 - Wal-Mart SWOT Analysis. Strengths - Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store.Weaknesses - Wal-Mart is the World's largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control.Opportunities - To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region. Threats - Being number one means that you are the target of competition, locally and globally.<br />international market entry<br />8<br />Rajesh Narang<br />
  12. 12. Example 2 - Starbucks SWOT Analysis. Strengths - Starbucks Corporation is a very profitable organisation, earning in excess of $600 million in 2004.Weaknesses - Starbucks has a reputation for new product development and creativity. Opportunities - New products and services that can be retailed in their cafes, such as Fair Trade products. Threats - Starbucks are exposed to rises in the cost of coffee and dairy products.<br />Example 3 - Nike SWOT Analysis.Strengths - Nike is a very competitive organisation. Phil Knight (Founder and CEO) is often quoted as saying that 'Business is war without bullets.'Weaknesses - The organisation does have a diversified range of sports products. Opportunities - Product development offers Nike many opportunities. Threats - Nike is exposed to the international nature of trade.<br />.<br />international market entry<br />9<br />Rajesh Narang<br />
  13. 13. international market entry<br />10<br />Rajesh Narang<br />
  14. 14. INTERNATIONAL MARKET ENTRY STRATEGIES<br /><ul><li>International market entry concept & modes
  15. 15. Factors affecting the selection of entry mode</li></li></ul><li>Concept of international market entry<br /><ul><li> mode of entry: an institutional mechanism by which a </li></ul> firm makes its products or services available <br /> consumers in international markets.<br /><ul><li> mode of entry determined by:</li></ul>- the ability and willingness of the firm to commit <br /> resources<br />- the firms’ desire to have a level of control over <br /> international operations<br />- the level of risk the firm is willing to take<br />international market entry<br />12<br />Rajesh Narang<br />
  16. 16. Market entry strategies<br />international market entry<br />13<br />Rajesh Narang<br />
  17. 17. Market entry strategiesExporting<br />Direct<br />Domestic base<br />Overseas sales branch<br />Traveling sales representative<br />Foreign-based distributors/agent<br />Indirect-occasional, or active exporting<br />Domestic-based export merchant <br />Domestic-based export agent<br />Cooperative organizations<br />Export-management company<br />international market entry<br />14<br />Rajesh Narang<br />
  18. 18. Franchising: A contractual arrangement where a wholesaler or retailer (the Franchisee) agrees to make some payment and to meet the operating requirements of a manufacturer or other franchiser in exchange for the right to use the firm’s name and to market its goods or services<br />Foreign Licensing:an agreement that grants foreign marketers the right to distribute a firm’s merchandise or to use its trademark, patent, or process in a specified geographic area.<br />Subcontracting: a contractual agreement where a firm hires a local company to produce goods or services in a specific geographic area.<br />Market entry strategiesContractual Agreements<br />international market entry<br />15<br />Rajesh Narang<br />
  19. 19. Market entry strategiesInternational Direct Investment<br />An additional strategy for entering global markets <br />Requires direct investment in foreign firms, production, and/or marketing facilities<br />Advantages<br />cheaper labor cost in some countries<br />government incentives<br />creates better image<br />deeper relationships with government, customers, suppliers and distributors<br />full control of operations and marketing<br />Risks involved:<br />economic difficulties of the host country<br />political instability and negative perception<br />international market entry<br />16<br />Rajesh Narang<br />
  20. 20. Modes of international market entry<br />Production in home country<br />exports:production is carried out in home country and finished goods are shipped to the overseas markets for sale<br />indirect exports:process of selling products to an export intermediary in the company’s home country who in turn sells the products in the overseas markets<br />direct exports:process of selling the firm’s products directly to an importer in the overseas market<br />international market entry<br />17<br />Rajesh Narang<br />
  21. 21. Modes (contd)<br />complementary exporting:use of distribution channels of an overseas firm to make the product available in the overseas market<br />provide offshore services:to overseas clients with the help of information and communication technology<br />international market entry<br />18<br />Rajesh Narang<br />
  22. 22. Modes (contd)<br />Production in a foreign country<br /><ul><li>contractual entry modes</li></ul>international licensing: process by which a domestic company allows a foreign company to use its intellectual property and specific business skills for a compensation (royalty)<br />international franchising: transfer of intellectual property and other assistance over an extended period of time with greater control compared to licensing<br />international market entry<br />19<br />Rajesh Narang<br />
  23. 23. Selecting the International Entry Mode, continued<br />Licensing<br /><ul><li>Licensor offers know-how, shares technology, and shares brand name with licensee
  24. 24. Licensee pays royalties
  25. 25. Lower-risk entry mode; limits exposure to economic, financial, and political instability
  26. 26. Permits the company access to markets that may be closed or that may have high entry barriers</li></ul>DOWNSIDE: Can produce competitor in the licensee<br />international market entry<br />20<br />Rajesh Narang<br />
  27. 27. Selecting the International Entry Mode, continued<br />Franchising<br /><ul><li>Franchisor gives franchisee right to use brand name, trademarks and business know-how</li></ul>Less risk, higher level of control<br />Very rapid market penetration<br />DOWNSIDE: Can create future competitors who understand the operations of the franchise<br />international market entry<br />21<br />Rajesh Narang<br />
  28. 28. Modes (contd)<br />overseas turnkey projects: conceptualize, design, install, construct, and carry out primary testing of manufacturing facilities or engineering structures for an overseas client organisation<br />types : built and transfer (BT), built, operate, and transfer (BOT), built, operate, own (BOO)<br />international management contracts: a company provides its technical and managerial expertise for a specific duration to an overseas firm<br />international market entry<br />22<br />Rajesh Narang<br />
  29. 29. Modes (contd)<br />international strategic alliance: the relationship between two or more firms that cooperate with each other to achieve common strategic goals but do not form a separate company<br />international contract manufacturing: a contractual arrangement under which a firm’s manufacturing operations are carried out in a foreign countries<br />international market entry<br />23<br />Rajesh Narang<br />
  30. 30. International Strategic Alliances<br />Typically, the term refers to nonequity alliances; for example:<br />Manufacturing<br /><ul><li>Contract manufacturing, engineering, technological, and research and development alliances</li></ul>Marketing<br /><ul><li>One firm handles marketing for another, or some aspect of the marketing process</li></ul>Distribution<br /><ul><li>One firm handles the distribution for another, or some aspect of the distribution process</li></ul>international market entry<br />24<br />Rajesh Narang<br />
  31. 31. Modes (contd)<br />Investment entry modes<br />assembly in overseas markets: refers to exporting various components of the product in completely knocked down (CKD) condition and assembles them overseas<br />international joint ventures: equity participation of two or more firms resulting into formation of a new entity<br />international market entry<br />25<br />Rajesh Narang<br />
  32. 32. Selecting the International Entry Mode, continued<br />Joint Venture<br /><ul><li>Preferred entry mode of governments of developing countries
  33. 33. Help develop local expertise
  34. 34. If production is exported, helps with country’s balance of trade
  35. 35. Foreign company and local company establish a jointly-owned new company
  36. 36. Parties share capital, equity, labor
  37. 37. 70% of all joint ventures break up within 3.5 years</li></ul>DOWNSIDE: Joint-venture partners can turn into viable competitors; and 70% of all joint ventures break up within 3.5 years.<br />international market entry<br />26<br />Rajesh Narang<br />
  38. 38. Selecting the International Entry Mode, continued<br />Consortia<br /><ul><li>Involve three or more companies
  39. 39. Monopoly effect
  40. 40. Allowed
  41. 41. where expensive R&D is involved
  42. 42. in underserved markets
  43. 43. in markets where the government and/or the marketplace can control its activity</li></ul>international market entry<br />27<br />Rajesh Narang<br />
  44. 44. Factors for selecting partners for cooperation<br /><ul><li>the alliance partner should have some strength which </li></ul> can be translated into business values for the alliance<br /><ul><li> the alliance partners should be committed to </li></ul> cooperative goals<br /><ul><li> it is preferable that the alliance partner should have </li></ul> multi-cultural business environment<br />international market entry<br />Rajesh Narang<br />28<br />
  45. 45. Investment mode(contd)<br />Wholly owned foreign subsidiaries<br /><ul><li>to have complete control and ownership of </li></ul> international operations a firm opts for foreign <br /> direct investment through:<br /> 1. acquiring a foreign company and all its resources in <br /> a foreign market (acquistion)<br /> 2. the establishment of production and marketing <br /> facilities by a firm on its own from scratch (green field)<br />international market entry<br />29<br />Rajesh Narang<br />
  46. 46. Selecting the InternationalEntry Mode, continued<br />Wholly Owned Subsidiaries<br /><ul><li>Can be developed by the company –greenfielding – or can be purchased (acquisition or merger)
  47. 47. Involve long-term market commitment
  48. 48. High cost
  49. 49. High control of operations
  50. 50. Greatest level of risk </li></ul>international market entry<br />30<br />Rajesh Narang<br />
  51. 51. Selecting the InternationalEntry Mode, continued<br />Branch Offices<br /><ul><li>Entities are part of the international company, rather than a new company (as in the case of the subsidiary)
  52. 52. Involves substantial investment</li></ul>sales office<br />showroom<br /><ul><li>Engages in a full spectrum of marketing activity
  53. 53. High level of control</li></ul>international market entry<br />31<br />Rajesh Narang<br />
  54. 54. Comparison of Market Entry Strategies<br />Form Control Risk Advantage<br />Export Very limited Low Low cost <br />Licensing Limited Moderate Low cost<br />Joint Ventures Shared Moderate Local expertise <br />Ownership Total High Control<br />Internet Total High No physical <br /> presence required<br />international market entry<br />32<br />Rajesh Narang<br />
  55. 55. Factors affecting the selection of entry mode<br />External factors<br /><ul><li>Market size
  56. 56. Market growth
  57. 57. Government regulations
  58. 58. Level of competition
  59. 59. Level of risk
  60. 60. political
  61. 61. economic
  62. 62. operational
  63. 63. Production and shipping costs</li></ul>international market entry<br />33<br />Rajesh Narang<br />
  64. 64. Factors affecting the selection of entry mode (contd)<br />Internal factors<br /><ul><li>Company objectives
  65. 65. availability of company resources
  66. 66. level of commitment
  67. 67. international experience
  68. 68. flexibility</li></ul>international market entry<br />34<br />Rajesh Narang<br />
  69. 69. Foreign market portfolios: technique and analysis<br />international market entry<br />35<br />Rajesh Narang<br />
  70. 70. Thank you<br />