Week 8- Marketing entry strategies

Nafisat provides a brief and in depth look at the different kinds of ways companies enter international markets

WHAT IS MARKET STRATEGY

It’s the way a company chooses to enter a new country’s market

WHAT ARE THE TYPES OF MARKET ENTRY?

   Non-Equity Based (No ownership)

o   Exporting

o   Licensing

o   Franchising

o   Strategic Alliance (can be non-equity)

 

  Equity based (ownership involved)

o   Joint ventures

o   Wholly owned enterprises (WOEs)

WHAT IS EXPORTING?

The production of goods in one country and distribution and sales of the good in another country

OR

Make products in one country, sell them in another

WHAT ARE 2 PROS AND 2 CONS OF EXPORTING?

PROS:

·       Full of control over production

·       Low risk

CONS:

·       Can be costly. Due to taxes or trade rules

·       Less control over marketing in the foreign country

WHAT IS LICENSING?

when the international company (licensor) gives permission to another company (license) in a foreign market use a limited set of its technologies, usually protected by copyrights, patents or trademarks, for a period with a certain royalty fee payment to the licensor

OR

a company lets another company use its technology or brand for a royalty fee

WHAT ARE 2 PROS AND 2 CONS OF LICENSING?

PROS:

·       Both parties benefit

·       Saves money on research

CONS:

·       Licensor loses control over quality and reputation

·       Licensee might become a competitor

WHAT IS FRANCHISING?

The franchiser (original superior company) gives the franchisee ( a company in another country inferior to it) the right to use its intellectual property business activity, following specific rules regarding the operations of the business upfront and royalties

OR

A company lets another use its brand and business model, with rules and fees

WHAT ARE 2 PROS AND 2 CONS OF FRANCHISING?

PROS:

·       More income

·       Expands into new markets

CONS:

·       Hard to control quality

·       Franchisee might compete with the original company

WHAT DOES FDI INCLUDE?

·       Whelly Owned Enterprises

·       Joint ventures

·       Strategic Alliances

·       Greenfield FDI

WHAT IS WHELLY OWNED ENTERPRISE?

The internationalizing company owns 100% of the company/subsidiaries established aboard

OR

the company owns 100% of the business in the foreign country

WHAT ARE 2 PROS AND 2 CONS OF WOEs?

PROS:

·       Full control over everything

·       Protects company secrets

CONS:

·       Very expensive

·       Takes on al risks

WHAT IS AN INTERNATIONAL ACQUISITION?

occurs when a company buys major stake, if not all, of a targeted company abroad to assume control of the target company

OR

Buying a company in another country

WHAT ARE 2 PROS AND 2 CONS OF INTERNATIONAL ACQUISITION?

PROS:

·       Keeps control of their own business

·       Gains local knowledge

CONS:

·       Hard to mix two companies

·       Might overpay

WHAT IS STRATEGIC ALLIANCE ACCORDING TO ALAN 2O22?

occurs when two or more companies come together to establish some sort of operation

ORCompanies work together based on a contract. Can be with or without ownership

WHAT ARE THE TYPES OF STRATEGIC ALLIANCE?

·       Non-equity alliance: No ownership, just contract

·       Equity alliance: one company owns parts of the other

WHAT IS GREENFIELD FDI?

Occurs when the multinational company starts a new business or expands its operations abroad by constructing a new operation facility from the ground up

OR

Building a new facility from scratch in another country

WHAT ARE 2 PROS AND 2 CONS OF GREENFIELD FDI?

PROS:

·       No risk of overpaying

·       No mixing problems

CONS:

·       Need to learn local ways

·       Takes longer to start

WHAT IS A JOINT VENTURE?

This is a partnership that involves two or more companies/entities join their resources together to achieve a common business goal

OR

Two or more companies work together and share resources

WHAT ARE 2 PROS AND 2 CONS OF JOINT VENTURES?

PROS:

·       Local partner help

·       Share risks and costs

CONS:

·       High investment

·       Risk of losing company secrets

WHAT ARE THE PROACTIVE(PLANNED) REASONS COMPANIES GO INTERNATIONAL?

·       Tax savings

·       Access to resources

·       Bigger scale

·       Government support

WHAT ARE REACTIVE (FORCED) REASONS COMPANIES GO INTERNATIONAL?

·       Competition

·       Too much production

·       Home market is full

·       Foreign customers are asking

·       The need to be closer to customers