Market entry strategies exporting indirect exporting direct. The organisations sells their product to a third party who then sells it on within the foreign market. Foreign market entry modes or participation strategies differ in the degree of risk they present, the control and commitment of resources they require, and the return on investment they promise. It is flexible, and exporting activities can cease immediately if required. Choose a market entry strategy choose a market entry strategy. Its greatest advantage is that the intermediary organizations handle all the exporting activities.
Market entry export entry contractual entry investment entry indirect direct export houses agents commission agent exporters agent abroadassemblycontract manufacturinglicensingfranchisingcoproduction agreementmanagement contract joint venture wholly owned subsidiary major minor 50. Export marketing strategies for high exporting performance 6 implications for export promotion. Alternative market entry strategies exporting contractual agreements strategic alliances, and direct foreign investment fdi import regulations may be imposed to protect health, conserve foreign exchange, serve as economic reprisals, protect home industry, or provide revenue in the. Pdf the direct or indirect exporting decision in agrifood. The advantages and disadvantages of indirect exporting. Title foreign market entry strategies evidence from a developed and an emerging market.
By choosing to export, a company can avoid the substantial costs of establishing its own operations in the new country, but. Market entry strategies available to a firm internationalising for the first time consist of exporting, sourcing importing, foreign direct investments, licensing and joint venture. The international market of education has changed during the last years, and in sweden we just had one big change when the introduction of tutoring fees was determined. Foreign market entry strategy is an important strategic decision for international business units. Indirect exporting the marketentry technique that offers the lowest level of risk and the least market control is indirect export, in which products are carried abroad by others. Indirect exporting the market entry technique that offers the lowest level of risk and the least market control is indirect export, in which products are carried abroad by others lambin, 2007. The future growth of international business unit depends upon the right mode of entry into foreign market. When you sell directly to endusers, you eliminate the middlemen making it easier to customise your market entry strategy to reflect the market conditions you may face. In this section, we will explore the traditional internationalexpansion entry modes. Direct exporting may be the most appropriate strategy in one market while in another you may need to set up a joint venture and in another you may well license your manufacturing. The simplest form of entry strategy is exporting using either a direct or indirect method such as an agent, in the case of the former, or countertrade, in the case of the latter. The firm does not have to build up an overseas marketing infrastructure. Alternative marketentry strategies exporting contractual agreements strategic alliances, and direct foreign investment fdi import regulations may be imposed to protect health, conserve foreign exchange, serve as economic reprisals, protect home industry, or provide revenue in the.
The five most common modes of internationalmarket entry are exporting, licensing, partnering, acquisition, and greenfield venturing. Indirect exporting the firm is not engaging in international marketing and no special activity is carried on within the firm. An evaluation of the theory of export market entry. Market entry strategies exporting indirect direct joint venturing licensing franchising contract manufacturing management contracting joint ownership direct investment assembly manufacturing amount of commitment, risk, control, profit potential. Report 3 exporting goods, services and technology to the chinese market. When youre exporting a service, the strategy defines ways of obtaining contracts and delivering them in that country. When importing or exporting services, it refers to establishing and managing contracts in a foreign country. While each mode of market entry offers its strengths and weaknesses, most companies develop a. The most common entry routes are internal development and acquisition. An organization willing to go internationalfaces 3 major issues. It then goes on to describe the different forms of entry strategy, both direct and indirect exporting and foreign production, and the advantages and disadvantages connected with each method. The best strategy will depend on your firms level of resources and commitment, and the degree of risk you are willing to incur. You are responsible for handling the market research, foreign distribution, logistics of shipment, and invoicing.
Marketi g strategy a d active i ter atio alizatio a systematic approach to foreign market entry translates in strategic planning and an effective organizational structure for the marketing function louter, ouwerkerk and bakker 1991. Developing a new business internally means that the concept, strategy, and team can be. Sammanfattning titel foreign market entry strategies evidence from a developed and an emerging market. With this method you allow another noncompeting company, which has a customer and distribution base already in place, to sell your companys product or service in addition to its own, giving you immediate overseas market access at a nominal expense. A market entry strategy is the planned method of delivering goods or services to a target market and distributing them there. Key factors examined included international business experience. Indirect exporting the marketentry technique that offers the lowest level of risk and the least market control is indirect export, in which products are carried abroad by others lambin, 2007. To research the options of entry strategy can help in determine which strategy to use. Direct exporting, in general, avoid all the costs and confusion of a middleman. More complex forms include truly global operations which may involve joint ventures, or export processing zones. With reference to specific examples, we will analyse the advantages and disadvantages of an export strategy. Introduction in comparison to large multinational firms, small and medium sized enterprises smes are typically regarded as resourceconstrained, lacking the market power, knowledge and resources. Indirect exporting is a rapidly growing form of foreign market entry since it involves less financial outlay for the manufacturer. Direct export means direct sales to a customer abroad.
Indirect exporting is the cheapest entry strategy available to an organization. Indirect exporting allows entry to foreign markets free from risks associated with direct exporting. Indirect export is the market entry technique that offers the lowest level of from business 104 at university of greenwich. The nonequity modes category includes export and contractual agreements. The five common internationalexpansion entry modes. It involves ongoing discipline to assess why your company should export and how you will achieve your goals. The market entry barriers tend to be less in this form of exporting. Began by establishing subsidiaries to export cars in key markets in the. Market entry strategies market entry strategies exporting. When you sell indirectly to end users, exports are not handled directly by the manufacturer or producer, but through intermediaries such as agents, export management and trading companies. Most export transactions do not require specific approval in the form of licenses from the u. The two most widely options are exporting and foreign direct investment. Export channel selection is an important strategy for exporting firms.
Confidential export marketing plan cochise college. An overview of different modes of entering the chinese market, from exporting to investing, from joint ventures to wholly foreignowned enterprises. Indirect exporting entry strategies corporate management. A critical issue for firms considering conducting business overseas is the choice of market entry mode. Leverage market research to learn about the target markets industry standards, consumer preferences, etc. Piggybacking your goods or services is another viable indirect export option.
Pdf market entry modes for international businesses. The choice of foreign market entry strategy is to be made very cautiously as it has longterm implications and it cannot be easily reversed. Export strategy taking the decision, assessing a products export potential, value of the planning process, and approaches to exporting. Resource dependency and institutional theory perspectives 1. The exporter will not have to worry about managing product distribution in a foreign country as this is done by an export partner. Foreign market entry modes or participation strategies differ in the degree of risk they present, the control and commitment of resources they require, and the return on investment they promise there are two major types of market entry modes. Indirect exporting the principal advantage of indirect exporting for a smaller u. A theoretical approach to the methods introduction to. Indirect export is the market entry technique that offers. A market entry strategy is the method in which an organization enters a new market.
Internationalization, market entry mode, south korean market, export, finnish foodstuff products number of pages. Familiarize yourself with the regulations and licenses that may apply to your products. Market entry modes for international businesses chapter 7. Export strategy how to develop a sound business plan for. Whether the best choice for you is direct or indirect export depends on your situation, your product, and the demands posed by the foreign market. Direct exporting involves exporting directly to a customer interested in buying your product rather than to a third party distributor. Over the last 45 years, there have been a number of studies investigating the antecedents and outcomes of this strategy. Market entry strategies exporting indirect direct joint venturing. Pdf the direct or indirect exporting decision in agri.
Make sure your objectives are clear and that all staff involved in export contribute to the strategy. Jul 17, 2015 indirect exporting the market entry technique that offers the lowest level of risk and the least market control is indirect export, in which products are carried abroad by others. When the decision is made to enter a new product market, the entry strategy becomes critical. Options are presented with special considerations where applicable.
View notes market entry strategies from business 6023 at arkansas state university. Download austrades export plan template pdf useful websites. Another ordinary mistake is to come to a bad decisions regarding cooperators, and finally. This study examined a number of factors which have been suggested in the literature as important determinants of the choice between these two entry modes. A market entry strategy maps out how to sell, deliver and distribute your products in another country. Seminariedatum 20180530 amne masteruppsats i foretagsekonomi 30 hp. There will be a number of factors that will influence your choice of strategy. Each of these entry vehicles has its own particular set of advantages and disadvantages. The organisation produces their product in their home market and then sells them to customers overseas. Entering a new market is always a risky business, with a big potential of failure. Channel partners can include agents or distributors based in your target export market. Consider indirect exporting utilizing an export intermediary. H200712 sme choice of direct and indirect export modes. Jul 19, 2019 direct exporting involves exporting directly to a customer interested in buying your product rather than to a third party distributor.
Indirect exporting by selling to, or through, a channel partner is a relatively cheap and straightforward way to enter a new market. Beyond importing, international expansion is achieved through exporting, licensing arrangements, partnering and strategic alliances an international entry mode involving a contractual agreement between two or more enterprises stipulating that the involved. Busy tech quickly realizes that they have several options, each fit for a variety of business scenarios. United kingdom market entry strategy uk market entry generalizes on the best strategy to enter the market, e. In indirect exporting, the legal relationships exist between the organizations supplier intermediary and its immediate client buyer. Market entry strategy presents an overview of current strategy where applicable and presents options based on the companys business model. No one market entry strategy works for all international markets. The chapter begins by looking at the concept of market entry strategies within the control of a chosen marketing mix. An investigation of market entry strategy selection. This is the most common approach for many new zealand companies doing business internationally. Sales can be made directly between you and endusers, or they can be made through local sales representatives who promote your product andor service without taking ownership. Another less risky market entry method is licensing. Piggybacking as a method of international market entry. Indirect export another method to enter the china market is through an intermediary i.
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