Organisations have a choice of a wide range of market entry strategies in order to expand their operations internationally. The mode of entry into an international market is a reflection of the relative importance assigned to the following criteria:
The level of control the organisation wishes to exercise over its interests/concepts overseas
The amount of resources it is willing to commit to international expansion
The flexibility it wishes to retain to allow its interests internationally to change their activities or operations quickly and at low cost
The extent of payback required to meet overall sales/growth targets
Market Entry Methods
Cunningham1 (1986) identified five strategies used by firms for entry into new foreign markets:
i) Technical innovation strategy - perceived and demonstrable superior products
ii) Product adaptation strategy - modifications to existing products
iii) Availability and security strategy - overcome transport risks by countering perceived risks
iv) Low price strategy - penetration price and,
v) Total adaptation and conformity strategy - foreign producer gives a straight copy.
There are a variety of ways in which organisations can enter foreign markets.
Exporting is the most traditional and well established form of operating in foreign markets. Exporting can be defined as the marketing of goods produced in one country into another. Whilst no direct manufacturing is required in an overseas country, significant investments in marketing are required. The tendency may be not to obtain as much detailed marketing information as compared to manufacturing in marketing country; however, this does not negate the need for a detailed marketing strategy.
The advantages of exporting are:
manufacturing is home based thus, it is less risky than overseas based
gives an opportunity to "learn" overseas markets before investing in bricks and mortar
reduces the potential risks of operating overseas
The disadvantage is mainly that one...