This document discusses international entry modes for businesses considering global expansion, detailing criteria for country selection and various strategies for entering foreign markets. It examines both proactive and reactive motivations for firms to venture abroad, explores product adaptation versus standardization, and outlines specific entry mechanisms such as exporting, licensing, and joint ventures. Additionally, it highlights the importance of understanding market conditions and cultural differences in successful international business approaches.

1. INTERNATIONAL ENTRY MODESPresented By:AmitKumarAvanika Babel

2. THIS PRESENTATION WILL COVER THE FOLLOWING:IntroductionCriteria for country selectionVarious market entry modes

3. INTRODUCTIONIn today's globalizing world, firms are increasing, looking towards other regions of the world to trade in. What are the steps taken by the executives of these firms before deciding on which market to enter? How do they make sure they make their journey a successful one?

4. Introduction contd.The decision requires an analysis of the aspects of the foreign market. - Whether to go abroad - Which markets to enter - How to enter those markets - Choice of marketing program -Marketing organization

5. Introduction Contd.Criteria for Country selection :1. Country/market Attractiveness in terms of the following: o Market size o Market growth and need potential in terms of demand2. Company strength in terms of brand and accessibility3. When the risk e.g. political is marginal compared to opportunities4. Customer response5. Competitive situation

6. Introduction contd.A firm becomes proactive i.e. pulled by the potentials and advantages in the foreign market due to the following reasons:1. The firms specific advantages in terms of profit2. The advantage of having a unique brand3. When a firm possesses technological advantages4. The availability of resources in the foreign countries5. Economies of scale6. Economic and political factors

7. Introduction Contd.A firm becomes reactive i.e. pushed by bad domestic markets when the following is evident:1. The pressure of domestic competition2. Poor domestic market due to stagnant or declining sales figures3. Saturated domestic markets4. Overproduction

8. Choosing Product to trade in I.Manything that can be offered to market to satisfy a want or need.They can be physical goods, services, experiences, events, persons, places, properties, organizations, information's & ideas.What are new products?New product lineAddition to product lineRepositioning to new market segmentsImprovements/revisionsCost reductionsReason of failure of different foreign companies like Kellogg's, Pizza hut, Mac Donald, Dominos was-Gross overestimation of spending patterns of Indian consumersGross overestimation of strength of the transnational brandGross underestimation of the strengths of ethnic Indian products

9. INTERNATIONAL BUSINESS APPROACHESETHNOCENTRIC APPROACHPOLYCENTRIC APPROACHREGIOCENTRIC APPROACHGEOCENTRIC APPROACH

10. ETHNOCENTRIC APPROACHUnder this approach , companies market the products in various countries in the same way it does domestically.POLYCENTRIC APPROACHUnder this approach, the companies customizes the marketing mix to meet the taste, performance and needs of the customers of each international market.REGIOCENTRIC APPROACHUnder this approach, the company operating successfully in a foreign country thinks of thinks of exporting other neighboring countries of the host country.At this stage, the concerned subsidiary considers the regional environment ( such as laws, culture, policies etc) for formulating the policies & strategies.

11. GEOCENTRIC APPROACHUnder this approach, the company analyses the tastes, preference and needs of the customers in all foreign markets and then adopts a standardized marketing mix for all the foreign markets.Coca-cola adopted this strategy by selling its popular soft drink with the same content, packaging, branding & advertisement themes worldwideWhirlpool designs a world-washer – small, stripped-down automatic washing machine for Mexico, Brazil & India. However, it modified its product for Indian market to wash the delicate “sarees”.

12. Global Product Strategies

13. Strategy for new product launchWaterfall approachSprinkler approach

14. STRATEGIC OPTIONSEXTENSION STRATEGY –Same approach as home marketADAPTATION STRATEGY -Makes changes to fit new market requirementsINVENTION STRATEGY -Entirely new approach is developed for the new marketSTANDARDIZATON – Same product, all marketsGLOBAL PRODUCTS - Only some aspects of the product is standardized

15. OPTION 1.PRODUCT EXTENSION – COMMUNICATION EXTENSIONProduct Strategy Communications Strategy HighlightExtension Extension Standardized product with same communications strategy across the globe. - This strategy is Cost effective - Allows for greater economies of scale - Rarely used for consumer type products except soft drink and some luxury type goods -Used mainly for industrial type products

16. OPTION 2.PRODUCT EXTENSION – COMMUNICATION ADAPTATIONProduct Strategy Communications Strategy HighlightExtension Adaptation Standardized product with different communications strategies across the globe. - Cost effective because communications adaptation is less expensive than the tailoring product to a local market. - Can be used for consumer type products eg. Bicycles

17. OPTION 3.PRODUCT ADAPTATION - COMMUNICATION EXTENSIONProduct Strategy Communications Strategy HighlightAdaptation Extension Changes made to the product, same communications strategy across the globe. - Product formulations are changed without consumers knowing it. E.g. detergents - Entails research, development expenses and tooling costs. - Do not allow for economies of scale to the extent possible under an product extension strategy - savings can be realized from the creation of a single communications strategy

18. OPTION 4.PRODUCT ADAPTATION - COMMUNICATION ADAPTATIONProduct Strategy Communications Strategy HighlightAdaptation Adaptation Dual adaptation: Changes made to the product, changes made to communications strategy - Recognizes the socio-cultural differences from country to country -To make this option profitable, the foreign market or markets need to be of sufficient volume - Calls for extensive research and development expenses and tooling costs

19. OPTION 5.PRODUCT INVENTIONProduct Strategy Communications Strategy HighlightInvention Develop new communications Usually redesigning of an original product at a lower level of complexity. - Recognizes the socio-cultural and economic differences from country to country -Leads to more purchases as a result of the reinvention of the product

20. STANDARDIZATION vs ADAPTATIONFactors encouraging product standardization:Economies of Scale in:

21. Production

22. Marketing/communications

23. Research & Development

24. Stock Holding

25. Easier management and control

26. i.e. familiarity

27. Homogeneity of markets

28. i.e. markets available without adaptation

29. e.g. Denim jeansSTANDARDIZATION VS ADAPTATION contd…Cultural insensitivity

30. (except industrial & agricultural products)

31. Where “made in” image is important

32. e.g. France for perfumes, Sheffield for stainless steel

33. For a firm selling a small proportion of its output overseas, the incremental costs may exceed the incremental sales value

34. Consumer mobility for travellers/tourists for example standardization is expected in certain products:

35. Camera film

36. Hotel ChainsSTANDARDIZATION VS ADAPTATION contd…Factors encouraging adaptation/modificationVoluntary factors influencing product adaptation in I.M

37. Consumer Demographics

38. Culture

39. Local custom & Tradition

40. Condition of use

41. Price

42. Mandatory Modification: