While considering entering into a new market, prior planning should be done in order to understand how the company would deliver the goods and services to the target market and distribute them there. When one needs to enter into new markets in foreign countries, importation and exportation would need to occur.
This would mean that the company would need to establish and manage contracts in the foreign countries. Most companies are successful even when they remain in a specific niche market without considering entering into new markets elsewhere. However, some prefer to enter into new markets in order to experience increased sales and stabilize the business (Lymbersky, 2008). They also do this in order to enhance brand awareness in other regions.
In order to enter into new markets, a company must use market entry strategies. This could be through analyzing the potential competitors in the new market and the potential customers. There are various factors to consider while deciding whether it is viable to enter into the specific market.
They include competition, the trade barriers that exist, localized knowledge, among many others. As the Senior VP of Global Operations in my company, I have been instructed to come up with strategies as I enter two new markets including Germany and Afghanistan.
The company could consider various options as it plans to enter foreign markets in Germany and Afghanistan. The major include exportation, licensing, joint ventures or directly investing in the countries (Lymbersky, 2008). Exporting is most used form. This involves producing goods in a particular country and marketing them in another country. Direct manufacturing of the products is not required in the country to be entered.
However, this would require significant investments to be made on marketing. This strategy is advantageous in various respects. Firstly, it would be less risky to manufacture the commodities at home rather than overseas.
This would also give the company ample time to learn the overseas marketing before it decides to focus its resources in its investments there. There are various potential risks involved with operating overseas. For example, Afghanistan is known to be an unstable country in terms of security issues. Therefore, manufacturing at home would help eliminate such risks.
However, disadvantages of exporting also exist. This is because the company would not have control and would mainly rely on the mercy of the agents overseas who may dictate to producers. My company is an aggressive one and has clearly defined plans and strategies. This includes issues to do with the products, the prices, promotion and distribution.
In order to be well established in the new market, it would be important to be the pioneers in order to establish a significant and sustained market share-advantage. However, if pioneers in the target market are already in place, it is necessary to make several considerations as the late entrants.
Certain competitive strategies would need to be employed. This would depend on the nature of the market environment where the existing players operate. The positioning and product portfolio would also determine the strategies to employ. One of the strategies to employ would be to use reduced prices in order to penetrate the market.
The company would need to introduce their products at lower prices those of the existing players. This would help attract the new customers hence expand the business. This would also attract the customers from the pioneers in the market to make their purchases from the new entrants.
Licensing allows the firm in the target market and allows it to use certain property. This property mostly includes the intangible ones. These include things such as patents and trademarks. Others may also want to adopt the production techniques. This would require the company to pay a certain fee in order to earn the rights to use them.
The other strategy is the use of joint ventures. This would help the company in areas of market entry, risk and reward sharing, and joint production development (Pehrsson, 2008). However, this strategy has several disadvantages including performance ambiguity and conflicts over irregular new investments. Another issue could be cultural clashes. For example, the culture of my company and those in Afghanistan greatly differ. Therefore, it would be important to consider that.
Foreign direct investment is another strategy. This is whereby a company directly owns facilities in the countries where they are introducing their businesses. The company would need to transfer its resources to the target countries. These include its personnel, the technology and capita.
This may be made through establishing new enterprises there or acquiring the existing enterprises. Any company considering establishing its business in new markets overseas must analyze the various entry strategies and determine which best suits it (Levesque & Shepherd, 2004).
Market entry into a foreign country is the delivering and distribution of goods and services in a new market in a foreign country. It requires the use of market entry strategies and the strategy to be used must be selected carefully by the company since this would determine the success or failure of the business. These strategies include exportation, licensing, joint ventures and directly investing. My company would make considerations and choose the best strategy to use in market entry.
Levesque, M., & Shepherd, D. (2004). Entrepreneurs’’ choice of entry strategy in emerging and developed markets. Journal of Business Venturing, 19(1), 29-54.
Lymbersky, C. (2008). Market entry strategies. Hamburg: Management Laboratory Press.
Pehrsson, A. (2008). Strategy antecedents of modes of entry into foreign markets. Journal of Business Research, 61(2), 132-140.