International Marketing PPT

7/28/2019 International Marketing PPT

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International MarketEntry Strategies

Nilesh Dhumal-KHR2011SMBA24P002

Ramesh Gaonkar-KHR2011SMBA24P006

Batch 24


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1. Target Market Selection2. Choosing the Mode of Entry

3. Exporting

4. Foreign Production5. Owner Ship Strategies

6. Entry Analysis

7. Exit Strategies

8. Conclusion

Index


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1-Target Market Selection

A crucial step in developing a global expansionstrategy is the selection of potential targetmarkets

A four-step procedure for the initial screeningprocess:

1. Select indicators and collect data

2. Determine importance of country indicators

3. Rate the countries in the pool on eachindicator

4. Compute overall score for each country


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Decision Criteria for Mode of Entry: Market Size and Growth

Risk

Government Regulations

Competitive Environment/Cultural Distance

Local Infrastructure

2-Choosing the Mode of Entry


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2-Choosing the Mode of Entry


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ExportingIndirect ExportingDirect Exporting(Companyowned Subsidiary)

Foreign ProductionLicensingFranchisingContract ManufacturingAssemblyLocal Production

Ownership Strategies

AlliancesJoint Ventures

Entry AnalysisProfitabilityAssets

CostsSalesRisk Factors

Entry Strategy Alternatives

Exist Strategy

EntryStrategy


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3-Exporting

1. Indirect Exporting

Export merchants

Export agents

Export management companies (EMC)2. Cooperative Exporting

Piggyback Exporting

3. Direct Exporting

Firms set up their own exportingdepartments ( Company own Subsidiary) E.g. International Representative, Local Agents,

Foreign Distributers and Commercial Subsidiary


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4-Foreign Production

A contractual agreement whereby one company

(the licensor) makes an asset available to another

company (the licensee) in exchange for royalties,license fees, or some other form of compensation

-Patent

-Trade secret

-Brand name-Product formulations

4.1 Licensing


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Benefit to Licensing-Provides additional profitability with little initial

investment

-Provides method of circumventing tariffs, quotas, andother export barriers

-Attractive ROI

-Low costs to implement

4.1 Licensing


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Caveats to Licensing-Limited participation

-Returns may be lost

-Lack of control

-Licensee may become competitor

-Licensee may exploit company resources

4.1 Licensing

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Contract between a parent company-franchisor and a franchisee

that allows the franchisee to operate a business developed by the

franchisor in return for a fee and adherence to franchise-wide

policies

4.2 Franchising

Benefits:

Overseas expansionwith a minimuminvestment

Franchisees profits tiedto their efforts

Availability of localfranchisees knowledge

Caveats:

Revenues may not be adequate

Availability of a master franchisee

Limited franchising opportunities overseas Lack of control over the franchisees

operations

Problem in performance standards

Cultural problems

Physical proximity

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Company provides technical specifications to a subcontractor or

local manufacturer

Allows company to specialize in product design while contractorsaccept responsibility for manufacturing facilities

Looking at this emerging trend, some smart Indian hardware

product companies like D-Link, TVS Electronics and WeP

Peripherals have started offering CM services.

TVS Electronics, which recently launched Indias first

indigenously developed printer for the retail market.Anothersuccessful company is D-Link, one of the very few hardware

companies in India that does local manufacturing.

4.3 Contract manufacturing

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Benefits:

Labor cost advantages

Savings via taxation, lower

energy costs, raw materials,and overheads

Lower political andeconomic risk

Quicker access to markets

Caveats:

Contract manufacturer may becomea future competitor

Lower productivity standards

Backlash from the companys home-market employees regarding HRand labor issues

Issues of quality and productionstandards

4.3 Contract manufacturing-Cont

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It is a strategy in which an international firm locates a portion of

manufacturing process in the foreign country .

Typically consist of only last stages of manufacturing

Depends on ready supply of components or manufactured parts

to be shipped in from another country.

Motor vehicle manufacturers majorly uses this strategye.g. G.M, Toyota, Ford,

4.4 Assembly

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To take advantage of lower cost in a country ,international

companies may establish factories in those country to gain new

business and providing a better basis for competing the local firms.

Important in industrial market where service and reliability of

supply are main factors demining product of supplier choice.

Moving with established customers

Shifting production abroad to save cost like Compaq computers

shifted factory from USA to European market in 1985 and double

the size of factory with in two years due to high sales in Europe.

4.5 Local Production.

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ExportingIndirect ExportingDirect Exporting(Companyowned Subsidiary)

Foreign Production

LicensingFranchisingContract ManufacturingAssemblyLocal Production

Ownership StrategiesAlliancesJoint Ventures

Entry AnalysisProfitabilityAssets

CostsSalesRisk Factors

Entry Strategy Alternatives

Exist Strategy

EntryStrategy

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5-Ownership Strategies

AStrategic Alliance is a relationship between two or more parties to

pursue a set of agreed upon goals or to meet a critical business need

while remaining independent organizations. This form of cooperation

lies between M&A and organic growth.

Type of Strategic alliancesTechnology Based, Production

Based, Distribution Based.

For Example, Rival private airlines Jet Airways and KingfisherAirlines, announced a strategic alliance to help them reduce cost and

enhance efficiency. The alliance will involve code-sharing on domestic

and international flights, an interline agreement, joint fuel

management, common ground-handling services and cross-selling

flights through the global ticketing system.

5.1 Strategic Alliance.

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5-Ownership Strategies

A joint venture (JV) is a business agreement in which parties agreeto develop, for a finite time, a new entity and new assets bycontributing equity. They exercise control over the enterprise andconsequently share revenues, expenses and assetsBenefits:

Higher rate of return and more control over the operationsCreation of synergySharing of resourcesAccess to distribution network

Contact with local suppliers and government officialsCaveats:

Lack of control

Lack of trust

Conflicts arising over matters such as strategies, resource allocation,

transfer pricing, ownership of critical assets like technologies and brand

names

5.2 Joint Ventures

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6-Strategy Entry Analysis

International market entry decisions should also cover the following

timing-of-entry issues:When should the firm enter a foreign market?

Other important factors include: level of international experience, firm

size

Also, the broader the scope of products and services

Mode of entry issues, market knowledge, various economic

attractiveness variables, etc.

Analyst must go through following factors for strategic Entry:SalesCosts

Assets

Profitability

International Risk factors

Maintaining flexibility

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6-Strategy Entry Analysis

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7- Exit Strategies

Reasons for exit:Sustained lossesVolatility

Premature entry

Ethical reasons

Intense competition

Resource reallocation

Risks of exit:Fixed costs of exitDisposition of assets

Signal to other marketsLong-term opportunities

Guidelines:Contemplate and assess all options to salvage the foreign businessIncremental exit

Migrate customers

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8-Conclusion

The World is comprised of total 242 countries or markets as on

Today.

So entry decisions for International companies make most

frequently

Type of Entry Strategy is related to Market Success andtherefore need to be based on Careful Analysis

Also to Survive in Global battle, companies must become bolder

and more creative in their Entry Strategy Choices.

We expect other types of entry strategies in future that will

change international markets like Super Alliance, VirtualCooperation etc.

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Thank You

International Marketing PPT

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