A winning framework for market entry strategies

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Jan 302010
 

A market entry strategy is the planned method of delivering goods or services to a new target market and distributing them there. When importing or exporting services, it refers to establishing and managing contracts in a foreign country. Few companies successfully operate in a niche market without ever expanding into new markets but most businesses achieve increased sales, brand awareness and business stability by entering a new market. Developing a win-win market entry strategy involves a thorough analysis of  multiple factors, in a planned sequential manner.

When an organization makes a decision to enter an new market, there are  various issues that needs to be thought out. These options vary with cost, risk and the degree of control which can be exercised over them. The simplest form of entry strategy is often exporting, using a direct (agent) or indirect method (counter trade). More complex forms include truly global operations which may involve joint ventures, or export processing zones.

An organization wishing to enter a new market faces 3 major issues:

  1. Marketing - which markets, which segments, how to manage and implement marketing effort, how to enter – with intermediaries or directly, with what information?
  2. Sourcing - whether to obtain products, make or buy?
  3. Investment and control – joint venture, global partner, acquisition?

Firms can follow the mentioned steps in sequence to create that successful blend of strategies while entering a new market.

Planning these few steps in details would ensure that firms face less risk while entering a new market during expansion. Although there is no absolute success mantra to enter a new market, these activities would significantly lower the risk exposure of the firm and create a winning scenario.

Have you read our article on the Porter’s Five Forces analysis of industry competitiveness? This is a must-read article for anyone planning to get into a new market.

Read more about market entry frameworks.

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Arpan Kar

Arpan Kar (PhD) is a business management researcher from XLRI School of Business and Human Resources. He specializes in e-business, technology management, marketing management and supply chain management. He has multiple international publications to his name and is a member of the IEEE Computer Society, Association of Information Systems (USA) and the Association for Computing Machinery (USA). He is the Editor of Business Fundas and also writes for Technorati & eZine Articles.
 Posted by Arpan Kar at 4:49 am  Tagged with: , , , ,
  • http://business-fundas.com/author/admin/ Arpan Kar

    Thanks guys for your comments.
    @ Eugene : Thanks for your inputs. Yes, political stability is a rather important issue, which is often captured by the Market Attractiveness dimension. As for IPR issues, its very important for sectors like information technology product and services firms which thrive on the same.

  • Eugene Chang

    Hi Arpan, thanks for posting useful information. I just wanted to add the dimension of political stability, the level of corruption as important market entry considerations. Under “Legal and Regulatory Assessment” it is useful also to note the level of IP protection and enforcement in the regime particularly for businesses relying heavily on intellectual property and innovation. 

    Thanks again,
    Eugene

  • Hritesh

    Is the model a verified one? Whats its formal name?

  • Shovan Roy

    And another favorite on Google search, if I remember correctly

   
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