Essay on Market Entry Strategy


Market Entry Strategy

Entering another market in an international business scenario involves major contemplation on the company’s part as the mode of entry in a country can become the determinant of the company’s growth in the target country. Considering the enterprise of Feathers, it is essential to analyze each entry mode to decide which of them will be appropriate for Feathers to expand internationally in the United States of America. The entry modes which can be considered for international expansion are:
Direct Exporting

Exporting is a low cost option for a firm who wants to try how their products would sell in other countries. This mode is a stepping stone towards other modes. For Feathers, it is a viable option if cost is a barrier. Products can be exported to agents and distributors who would sell the products after importing but it is a downside if brand building is to be considered.
Turnkey Projects

Turnkey Projects is an entry mode appropriate for public sector enterprises involved in construction, energy, or chemical sectors. In this mode, the facility for operating in constructed from scratch to be handed over after completion. In this mode, mostly the financing is done by governments as the project is large scale. Feathers is an enterprise involved in sales of Leather goods and even if it decides produce their products there, turnkey projects are not the right way to go.
Licensing

Licensing as a business entry mode in another country means that a business provides the license to produce or sell the goods of the company in its name. This mode is viable when an enterprise is planning to sell their products through a company which has a high market share in a country. In this method, cost is low, but profits are also relatively lower. Other factor is that Feathers will have to constantly monitor quality to ensure that customers are getting quality goods and the brand image of the company is maintained.
Franchising

Franchising is an entry mode that has been hugely successful and applied by many companies to have a global reach, maintain profits, and optimize the brand image. It is considered a North American approach but currently it is a globally preferred approach. This approach requires a unique business model which Feathers has. Also having a unique product not widely available in the target country helps. The cost factor is low but the possibility of the creation of future competitor is imminent. It is viable option if brand image is a concern and quality is maintained well (Food & Agriculture Organizations of United Nations, 2015).
Joint Venture

This entry mode is about the creation of a unique brand through the amalgamation of two separate brands. This is possible when both the brands have an equal stature as both the brands are losing their individual identity and it is always a fact that a company won’t settle for that if the other company is way below the reputation of the former company. For Feathers, it means that it can share its name with another brand with which the enterprise will be set up. It is viable if Feathers finds a brand which sells similar products and would benefit from the joint venture (International Strategy Solutions, 2014).
Wholly Owned Subsidiary

Wholly Owned Subsidiary is a preferable entry mode for enterprises that want to start a whole branch which is fully owned and operated by the company itself. This is appropriate when companies rely largely on produced goods which have a quality element to them. Even in service providing enterprises it is a priority that operations are fully under control of the parent company. It takes a large of amount of investment because production facilities or selling outlets have to be set up. This requires the analysis of costs regarding transportation, construction, renting, hiring employees, materials, etc as everything has to be acquired from the target country. A high level of market knowledge is also required for this method. Considering that feathers has two outlets in UAE, expanding to USA at such a high cost would not be feasible (TradeStart, 2015).
Considering all the entry mode with their advantages, disadvantages and appropriateness of Feathers, it is considerable that Licensing and Franchising are viable options because they both require low cost. The consumer interaction and setting up venues can be done by the licensees or franchisees because they know the market better. The recruitment will be on their own hands. Certain regulations or policies can be implemented by Feathers for the growth of the franchised stores which ensure standards of quality. For licensing, it is critical to observe quality regularly and the expense of training will be feasible compared to setting up a complete business. A higher level of integration can be done after considerable progress in licensing and I franchising. Setting up more franchises remains to be the only option.
Bibliography
Food & Agriculture Organizations of United Nations. (2015). Market Entry Strategies. Retrieved from www.fao.org: http://www.fao.org/docrep/w5973e/w5973e0b.htm
International Strategy Solutions. (2014, 12 4). Which international market entry method is right for your business? Retrieved from www.international-strategy.com: http://www.international-strategy.com/2014/12/exporting-franchising-joint-venture-wholly-owned-subsidiary-international-market-entry-method-right-business/
TradeStart. (2015). MARKET ENTRY STRATEGIES. Retrieved from www.tradestart.ca: http://www.tradestart.ca/market-entry-strategies

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March 7, 2018

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