How to design foreign market entry strategies?

Discuss the elements of foreign market entry strategies.

Global_Business

Designing Foreign Market Entry Strategies

Company may enter into foreign markets for several reasons;

  • Some go because home markets are stagnant and foreign markets are faster.
  • Other may follow their domestic customers who are going international. Services companies—computer, engineering, insurance etc.
  • Still other firms in oligopolistic industries go to match foreign market entry of a domestic rival or penetrate domestic markets.
  • Or companies may go abroad in search of greater sales volume to reduce unit costs and strengthen their competitiveness.
  • The conscious impulse behind a company’s initial entry into foreign markets is almost always the prospect a profit on immediate sales.

The point is not the all companies should go international, but rather that they should plan for growth and survival in a world of global competition.

To become international they will need to commit resources and assume new risks that are necessary to a station participation in foreign markets.

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Elements of Foreign market entry strategies
A foreign market entry strategy is a comprehensive plan. It sets forth the objectives, goals, resources and policies that will guide a company’s international business operation to achieve sustainable growth in world markets.
Although it is a common to speak of a company’s foreign market entry strategy as if it were a single plan, it is actually a composite of several individual product/market plans.
Managers need to plan entry strategy for each product in each foreign market. The constituent product/market entry strategies require decisions on the following elements;

  1. The choice of a target product/market.
  2. The objectives and goals of the target markets.
  3. The choice of an entry mode to penetrate the target market.
  4. The marketing plan to penetrate the target market, and
  5. The control system to monitor performance in the target market.

Elements of Foreign market entry strategies

Although the elements are shown as a logical sequence of activities and decisions in the figure, the design of a foreign markets entry strategy is actually iterative with many feedback loops. Evaluation of alternative entry modes, for instance, may cause a company to revise target market objectives or goals or even to initiate the search for a new target market. Again, the formulation of the marketing plan may call into question as earlier preference for a particular entry mode. After operation begin, variances in market performance may lead to revisions in any or all of the first four elements, as indicated by the dashed lines emerging from the control system box. In short, planning for foreign market entry is a continuing, open-ended process.

To managers in small and middle-size companies, planning foreign market entry strategies may appear to be something that only big companies can afford to do. These managers identify such planning with elaborate research techniques that are applied by specialists to a massive bode of quantitative data. But this is a misconception of the entry planning process.

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