Intl mkt entry
- 1. INTERNATIONAL MARKETING RESEARCHTRADE DATA ANALYSIS
- 2. MARKET ATTRACTIVENESS/ COMPANY STRENGTH ..ANALYSIS
- 3. SWOT ANALYSIS Foreign market portfolios: technique and analysisinternational market entry2Rajesh Narang
- 4. SWOT Analysisa tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.A SWOT analysis process generates information that is helpful in matching an organization or group’s goals, programs, and capacities to the social environment in which it operates. international market entry3Rajesh Narang
- 5. SWOTStrengths:Positive tangible and intangible attributes, internal to an organization. They are within the organization’s control. Weakness:Factors that are within an organization’s control that detract from its ability to attain the desired goal. Which areas might the organization improve? Opportunities :External attractive factors that represent the reason for an organization to exist and develop. What opportunities exist in the environment, which will propel the organization?Identify them by their “time frames”Threats :External factors, beyond an organization’s control, which could place the organization mission or operation at risk. contingency plans that May address them .Classify them by their “seriousness” and “probability of occurrence”.international market entry4Rajesh Narang
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- 7. SW :PRIMO-FPeople II Resources III Innovation & Ideas II MarketingII Operations II Financestrength could be:What do you do well? Is there anything you do better than most? Better than anyone else? Your specialist marketing expertise. A new, innovative product or service. Location ,Quality processes that adds value to your product or service. A weakness could be:What should be improved? What do you do poorly? What should you avoid, based on mistakes in the past?Lack of marketing expertise. Undifferentiated products ,Poor qualityDamaged reputation.international market entry6Rajesh Narang
- 8. OT ProfileOpportunities :Where can you find, or create, a competitive advantage? What are some major trends in your business? - Consolidation / Diversification? Specialization / Generalization?- Changes in technology. Such as computer software .- Changes in the types of businesses in your market.- Changes in social patterns, population profiles, lifestyle. - trends. Changes in demand
- 9. Threats :What obstacles do you face?
- 10. What are your competitors doing that may result in a loss of clients, customers, market share? Are the required specifications for your job, products or services changing? Is changing technology threatening your position? Do you have cash-flow problems? international market entry7Rajesh Narang
- 11. SWOT Analysis ExamplesExample 1 - Wal-Mart SWOT Analysis. Strengths - Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store.Weaknesses - Wal-Mart is the World's largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control.Opportunities - To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region. Threats - Being number one means that you are the target of competition, locally and globally.international market entry8Rajesh Narang
- 12. Example 2 - Starbucks SWOT Analysis. Strengths - Starbucks Corporation is a very profitable organisation, earning in excess of $600 million in 2004.Weaknesses - Starbucks has a reputation for new product development and creativity. Opportunities - New products and services that can be retailed in their cafes, such as Fair Trade products. Threats - Starbucks are exposed to rises in the cost of coffee and dairy products.Example 3 - Nike SWOT Analysis.Strengths - Nike is a very competitive organisation. Phil Knight (Founder and CEO) is often quoted as saying that 'Business is war without bullets.'Weaknesses - The organisation does have a diversified range of sports products. Opportunities - Product development offers Nike many opportunities. Threats - Nike is exposed to the international nature of trade..international market entry9Rajesh Narang
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- 14. INTERNATIONAL MARKET ENTRY STRATEGIESInternational market entry concept & modes
- 15. Factors affecting the selection of entry modeConcept of international market entry mode of entry: an institutional mechanism by which a firm makes its products or services available consumers in international markets. mode of entry determined by:- the ability and willingness of the firm to commit resources- the firms’ desire to have a level of control over international operations- the level of risk the firm is willing to takeinternational market entry12Rajesh Narang
- 16. Market entry strategiesinternational market entry13Rajesh Narang
- 17. Market entry strategiesExportingDirectDomestic baseOverseas sales branchTraveling sales representativeForeign-based distributors/agentIndirect-occasional, or active exportingDomestic-based export merchant Domestic-based export agentCooperative organizationsExport-management companyinternational market entry14Rajesh Narang
- 18. Franchising: A contractual arrangement where a wholesaler or retailer (the Franchisee) agrees to make some payment and to meet the operating requirements of a manufacturer or other franchiser in exchange for the right to use the firm’s name and to market its goods or servicesForeign Licensing:an agreement that grants foreign marketers the right to distribute a firm’s merchandise or to use its trademark, patent, or process in a specified geographic area.Subcontracting: a contractual agreement where a firm hires a local company to produce goods or services in a specific geographic area.Market entry strategiesContractual Agreementsinternational market entry15Rajesh Narang
- 19. Market entry strategiesInternational Direct InvestmentAn additional strategy for entering global markets Requires direct investment in foreign firms, production, and/or marketing facilitiesAdvantagescheaper labor cost in some countriesgovernment incentivescreates better imagedeeper relationships with government, customers, suppliers and distributorsfull control of operations and marketingRisks involved:economic difficulties of the host countrypolitical instability and negative perceptioninternational market entry16Rajesh Narang
- 20. Modes of international market entryProduction in home countryexports:production is carried out in home country and finished goods are shipped to the overseas markets for saleindirect exports:process of selling products to an export intermediary in the company’s home country who in turn sells the products in the overseas marketsdirect exports:process of selling the firm’s products directly to an importer in the overseas marketinternational market entry17Rajesh Narang
- 21. Modes (contd)complementary exporting:use of distribution channels of an overseas firm to make the product available in the overseas marketprovide offshore services:to overseas clients with the help of information and communication technologyinternational market entry18Rajesh Narang
- 22. Modes (contd)Production in a foreign countrycontractual entry modesinternational licensing: process by which a domestic company allows a foreign company to use its intellectual property and specific business skills for a compensation (royalty)international franchising: transfer of intellectual property and other assistance over an extended period of time with greater control compared to licensinginternational market entry19Rajesh Narang
- 23. Selecting the International Entry Mode, continuedLicensingLicensor offers know-how, shares technology, and shares brand name with licensee
- 25. Lower-risk entry mode; limits exposure to economic, financial, and political instability
- 26. Permits the company access to markets that may be closed or that may have high entry barriersDOWNSIDE: Can produce competitor in the licenseeinternational market entry20Rajesh Narang
- 27. Selecting the International Entry Mode, continuedFranchisingFranchisor gives franchisee right to use brand name, trademarks and business know-howLess risk, higher level of controlVery rapid market penetrationDOWNSIDE: Can create future competitors who understand the operations of the franchiseinternational market entry21Rajesh Narang
- 28. Modes (contd)overseas turnkey projects: conceptualize, design, install, construct, and carry out primary testing of manufacturing facilities or engineering structures for an overseas client organisationtypes : built and transfer (BT), built, operate, and transfer (BOT), built, operate, own (BOO)international management contracts: a company provides its technical and managerial expertise for a specific duration to an overseas firminternational market entry22Rajesh Narang
- 29. Modes (contd)international strategic alliance: the relationship between two or more firms that cooperate with each other to achieve common strategic goals but do not form a separate companyinternational contract manufacturing: a contractual arrangement under which a firm’s manufacturing operations are carried out in a foreign countriesinternational market entry23Rajesh Narang
- 30. International Strategic AlliancesTypically, the term refers to nonequity alliances; for example:ManufacturingContract manufacturing, engineering, technological, and research and development alliancesMarketingOne firm handles marketing for another, or some aspect of the marketing processDistributionOne firm handles the distribution for another, or some aspect of the distribution processinternational market entry24Rajesh Narang
- 31. Modes (contd)Investment entry modesassembly in overseas markets: refers to exporting various components of the product in completely knocked down (CKD) condition and assembles them overseasinternational joint ventures: equity participation of two or more firms resulting into formation of a new entityinternational market entry25Rajesh Narang
- 32. Selecting the International Entry Mode, continuedJoint VenturePreferred entry mode of governments of developing countries
- 33. Help develop local expertise
- 34. If production is exported, helps with country’s balance of trade
- 35. Foreign company and local company establish a jointly-owned new company
- 36. Parties share capital, equity, labor
- 37. 70% of all joint ventures break up within 3.5 yearsDOWNSIDE: Joint-venture partners can turn into viable competitors; and 70% of all joint ventures break up within 3.5 years.international market entry26Rajesh Narang
- 38. Selecting the International Entry Mode, continuedConsortiaInvolve three or more companies
- 39. Monopoly effect
- 40. Allowed
- 41. where expensive R&D is involved
- 43. in markets where the government and/or the marketplace can control its activityinternational market entry27Rajesh Narang
- 44. Factors for selecting partners for cooperationthe alliance partner should have some strength which can be translated into business values for the alliance the alliance partners should be committed to cooperative goals it is preferable that the alliance partner should have multi-cultural business environmentinternational market entryRajesh Narang28
- 45. Investment mode(contd)Wholly owned foreign subsidiariesto have complete control and ownership of international operations a firm opts for foreign direct investment through: 1. acquiring a foreign company and all its resources in a foreign market (acquistion) 2. the establishment of production and marketing facilities by a firm on its own from scratch (green field)international market entry29Rajesh Narang
- 46. Selecting the InternationalEntry Mode, continuedWholly Owned SubsidiariesCan be developed by the company –greenfielding – or can be purchased (acquisition or merger)
- 47. Involve long-term market commitment
- 48. High cost
- 49. High control of operations
- 50. Greatest level of risk international market entry30Rajesh Narang
- 51. Selecting the InternationalEntry Mode, continuedBranch OfficesEntities are part of the international company, rather than a new company (as in the case of the subsidiary)
- 52. Involves substantial investmentsales officeshowroomEngages in a full spectrum of marketing activity
- 53. High level of controlinternational market entry31Rajesh Narang
- 54. Comparison of Market Entry StrategiesForm Control Risk AdvantageExport Very limited Low Low cost Licensing Limited Moderate Low costJoint Ventures Shared Moderate Local expertise Ownership Total High ControlInternet Total High No physical presence requiredinternational market entry32Rajesh Narang
- 55. Factors affecting the selection of entry modeExternal factorsMarket size
- 56. Market growth
- 58. Level of competition
- 59. Level of risk
- 60. political
- 61. economic
- 62. operational
- 63. Production and shipping costsinternational market entry33Rajesh Narang
- 64. Factors affecting the selection of entry mode (contd)Internal factorsCompany objectives
- 65. availability of company resources
- 66. level of commitment
- 68. flexibilityinternational market entry34Rajesh Narang
- 69. Foreign market portfolios: technique and analysisinternational market entry35Rajesh Narang
- 70. Thank you