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. A theoretical approach to the methods introduction to. 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. Direct exporting, in general, avoid all the costs and confusion of a middleman. Market entry strategies exporting indirect direct joint venturing. Over the last 45 years, there have been a number of studies investigating the antecedents and outcomes of this strategy. Busy tech quickly realizes that they have several options, each fit for a variety of business scenarios. Another less risky market entry method is licensing. Export marketing strategies for high exporting performance 6 implications for export promotion. When the decision is made to enter a new product market, the entry strategy becomes critical. 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. Indirect exporting is the cheapest entry strategy available to an organization. Choose a market entry strategy choose a market entry strategy.
Indirect exporting allows entry to foreign markets free from risks associated with direct exporting. Each of these entry vehicles has its own particular set of advantages and disadvantages. With reference to specific examples, we will analyse the advantages and disadvantages of an export strategy. 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. 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. Direct export means direct sales to a customer abroad. In indirect exporting, the legal relationships exist between the organizations supplier intermediary and its immediate client buyer. The best strategy will depend on your firms level of resources and commitment, and the degree of risk you are willing to incur.
Familiarize yourself with the regulations and licenses that may apply to your products. Began by establishing subsidiaries to export cars in key markets in the. 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 advantages and disadvantages of indirect exporting. Piggybacking as a method of international market entry. Jul 19, 2019 direct exporting involves exporting directly to a customer interested in buying your product rather than to a third party distributor. The organisation produces their product in their home market and then sells them to customers overseas.
Developing a new business internally means that the concept, strategy, and team can be. The chapter begins by looking at the concept of market entry strategies within the control of a chosen marketing mix. Seminariedatum 20180530 amne masteruppsats i foretagsekonomi 30 hp. In this section, we will explore the traditional internationalexpansion entry modes. Indirect export another method to enter the china market is through an intermediary i. 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. A market entry strategy is the method in which an organization enters a new market. 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. Make sure your objectives are clear and that all staff involved in export contribute to the strategy. You are responsible for handling the market research, foreign distribution, logistics of shipment, and invoicing. 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. 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.
Market entry strategies available to a firm internationalising for the first time consist of exporting, sourcing importing, foreign direct investments, licensing and joint venture. Market entry strategy presents an overview of current strategy where applicable and presents options based on the companys business model. 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. Market entry strategies exporting indirect exporting direct. This is the most common approach for many new zealand companies doing business internationally.
The organisations sells their product to a third party who then sells it on within the foreign market. To research the options of entry strategy can help in determine which strategy to use. The two most widely options are exporting and foreign direct investment. Pdf the direct or indirect exporting decision in agri. An investigation of market entry strategy selection. The future growth of international business unit depends upon the right mode of entry into foreign market. Market entry modes for international businesses chapter 7. Pdf the direct or indirect exporting decision in agrifood. Its greatest advantage is that the intermediary organizations handle all the exporting activities. More complex forms include truly global operations which may involve joint ventures, or export processing zones. It involves ongoing discipline to assess why your company should export and how you will achieve your goals. An evaluation of the theory of export market entry. By choosing to export, a company can avoid the substantial costs of establishing its own operations in the new country, but.
Export channel selection is an important strategy for exporting firms. An overview of different modes of entering the chinese market, from exporting to investing, from joint ventures to wholly foreignowned enterprises. The firm does not have to build up an overseas marketing infrastructure. Report 3 exporting goods, services and technology to the chinese market. Entering a new market is always a risky business, with a big potential of failure. When importing or exporting services, it refers to establishing and managing contracts in a foreign country. 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. The nonequity modes category includes export and contractual agreements. 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. Export strategy taking the decision, assessing a products export potential, value of the planning process, and approaches to exporting. When youre exporting a service, the strategy defines ways of obtaining contracts and delivering them in that country. Leverage market research to learn about the target markets industry standards, consumer preferences, etc. The five most common modes of internationalmarket entry are exporting, licensing, partnering, acquisition, and greenfield venturing. 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.
Download austrades export plan template pdf useful websites. While each mode of market entry offers its strengths and weaknesses, most companies develop a. Consider indirect exporting utilizing an export intermediary. The most common entry routes are internal development and acquisition. Indirect exporting by selling to, or through, a channel partner is a relatively cheap and straightforward way to enter a new market. The market entry barriers tend to be less in this form of exporting. Internationalization, market entry mode, south korean market, export, finnish foodstuff products number of pages. 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. Key factors examined included international business experience. 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.
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. Another ordinary mistake is to come to a bad decisions regarding cooperators, and finally. It is flexible, and exporting activities can cease immediately if required. A market entry strategy is the planned method of delivering goods or services to a target market and distributing them there. View notes market entry strategies from business 6023 at arkansas state university. No one market entry strategy works for all international markets. 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. Options are presented with special considerations where applicable. Piggybacking your goods or services is another viable indirect export option. Indirect exporting entry strategies corporate management. 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. Market entry strategies market entry strategies exporting.
Title foreign market entry strategies evidence from a developed and an emerging market. A market entry strategy maps out how to sell, deliver and distribute your products in another country. A critical issue for firms considering conducting business overseas is the choice of market entry mode. 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. The choice of foreign market entry strategy is to be made very cautiously as it has longterm implications and it cannot be easily reversed. Indirect exporting the principal advantage of indirect exporting for a smaller u. Indirect export is the market entry technique that offers. Resource dependency and institutional theory perspectives 1.
Indirect exporting the firm is not engaging in international marketing and no special activity is carried on within the firm. An organization willing to go internationalfaces 3 major issues. Foreign market entry strategy is an important strategic decision for international business units. The five common internationalexpansion entry modes. Indirect export is the market entry technique that offers the lowest level of from business 104 at university of greenwich.
H200712 sme choice of direct and indirect export modes. Pdf market entry modes for international businesses. Export strategy how to develop a sound business plan for. 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. Direct exporting involves exporting directly to a customer interested in buying your product rather than to a third party distributor. There will be a number of factors that will influence your choice of strategy. The exporter will not have to worry about managing product distribution in a foreign country as this is done by an export partner. 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. Most export transactions do not require specific approval in the form of licenses from the u. Confidential export marketing plan cochise college.
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