Market entry

strategies
The New Manager
Theory Z





GLOBAL BUSINESS INVOLVEMENT:
MARKET ENTRY STRATEGIES
Entry strategies vary in terms of their
advantages, disadvantages, and levels of
involvement. The marketing options open
to firms are in part determined by mode f
entry.
Entry Strategies

Exporting --Historically Most Popular
1. Types
a. Direct - firm handles all tasks to sell
within host country
b. Indirect - firm delegates the tasks to an
intermediary

Entry Strategies
2. Advantages
a. Minimizes political risk
b. Useful when market potential is hard to
assess
c. Offers channel flexibility
d. Prepares firm for greater involvement
e. Offers ease in market withdrawal

Entry Strategies
3. Disadvantages
a. Exchange rate fluctuations and
governmental intervention can affect
earnings
b. Lack of market presence can affect
response time
c. Loss of marketing control can affect
corporate image
Entry Strategies
Licensing - Payment of Fee or Royalty for
Use of Anything of Value
1. Advantages
a. To firm, cost effective
b. To importing country, brings
technology and managerial expertise
Entry Strategies
2. Disadvantages
a. Can restrict firms full realization of
market potential
b. Can create third market competitors
c. Can result in loss of control over
technology and product quality
d. Can result in conflicts between parties
Entry Strategies
Franchising - Payment of Fee and Royalty
in Exchange for Anything of Value Plus
Operational and Managerial Help
1. Advantages: same as for licensing
2. Disadvantages: same as for licensing

Entry Strategies
Contract Manufacturing - Contractual
Partner manufactures Parts or Product for
Firm
1. Advantages
a. Firm can focus exclusively on
marketing
b. Economical means of expansion
Entry Strategies
2. Disadvantages
a. Partner may turn competitor
b. Loss of control over manufacturing
c. Products may not always be available
on time
Entry Strategies
Management Contracting - Selling
Managerial or Technical Expertise
1. Advantages
a. Utilizes excess managerial talent
b. Establishes contacts in host country
c. Offers ease of remitting consulting fees
d. Provides resources t its nearby operations
2. Disadvantages: limited duration may
necessitate withdrawal from country
Entry Strategies
Turnkey Operations - Complete the
Project Before Turning It Over to Owner
1. Advantages: projects are large, long-
term, an profitable
2. Disadvantage: outcome is more
uncertain over longer period of time
Entry Strategies
Foreign Direct Investment
1. Joint ventures (JVs) - partners share
ownership, risk, profit, and control
a. Between foreign-owned firm and privately
owned local firm
b. Between foreign-owned firm and local state
firm or government
c. Between several foreign-owned firms with no
local participation
Entry Strategies
2. Wholly-owned subsidiaries (WOSs)
3. Advantages of both JVs and WOSs
a. Greater control
b. Entry into closed markets
c. Potential for vertical integration
d. Access to supplies
e. Ability to respond to competitive
challenges
Entry Strategies
4. Disadvantage of JVs: potential for
disagreements among partners
5. Disadvantage of WOSs: greater risk
Entry Strategies
Strategic Alliances - Cooperation
Between Firms Without creating a
New Entry
1. Advantages
a. market access
b. Shared R&D expenses, resources,
and risks

Entry Strategies
2. Disadvantages
a. Potential to lose competitive edge
b. Possible ineffectual communications
among partners from different cultures
Factors Influencing Entry
Strategies
Internal Conditions - Specific to the Firm
1. Objectives - what firm wants to achieve in
relation to the product
2. Management orientation - biases affect entry
strategy decisions
3. Resources - impose constraints that affect
entry strategies
4. Type of product - what strategy best fits the
characteristics of the product
Factors Influencing Entry
Strategies
External conditions
1. Market potential - which strategy will
maximize market potential
2. Competitive environment - existing and
expected

Factors Influencing Entry
Strategies
3. Home country regulations - affect how
and where firm can sell
4. Host country regulations - affect entry
options
5. Political risk - high risk favors less
involvement; low risk favors more


Stages of Business Involvement
The International Product Life-Cycle
Hypothesis
1. New-predate stage: manufactured at
home, some exports to developed
countries (DCs), domestic sales dominate,
no competition, high price, patent
protection

Stages of Business Involvement
2. Maturing-product stage: DC demand rises,
increasing exports yield to production in DCs,
domestic exports decline, competition
increases, prices fall, DCs produce for selves
and export
3. Standardized-product stage: fierce price
competition, production shifts to developing
countries, they start exporting to DCs who
become net importers
The new manager and
management
2001 Pearson Education Canada Inc. Chapter 1 1
Managing in the
Managing in the
21st Century
21st Century
2001 Pearson Education Canada Inc. Chapter 1 7
The e
The e
-
-
CEO
CEO
Speed
Brutally honest
Constantly focusing
companys and
employees attention
Younger and richer
Comfortable with
ambiguity & speed
Monitors market
trends and
competitors
2001 Pearson Education Canada Inc. Chapter 1 17
The New Management
The New Management
Smaller units
Team-based
organizations
Empowerment
Flatter structures
New power bases
Vision and values
Knowledge-based
organizations
Agents of change
Leadership
E-commerce
Managing Oneself
Who Am I? What are My
Strengths?
How do I Work?
Where do I Belong?
What is My Contribution?

Take Responsibility!
Plan for the Second Half of Your Life!
Strategy the New Certainties
4. Global Competitiveness

Cheap Labor No Longer Works
NO HARD WORK BUT SMART WORK
Growing Global Standards
Protection No Longer Protects
Tariffs, Taxes, etc
The Change Leader
Sees Change as an Opportunity
Abandonment
Organized Improvement
Exploiting Success
Make the Future
Theory Z
William Ouchi, management researcher
Integrates Japanese and American
business practices
Japanese emphasis on collective decision
making and concern for employees
American emphasis on individual
responsibility

Japanese, American, and
Theory Z Organizations