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Concept
Market entry strategy
Summary
Market entry strategy is a planned distribution and delivery method of goods or services to a new target market. In the import and export of services, it refers to the creation, establishment, and management of contracts in a foreign country.
Many companies can successfully operate in a niche market without ever expanding into new markets. On the other hand, some businesses can only achieve increased sales, brand awareness and business stability if they enter a new market.
Developing a market-entry strategy involves thorough analysis of potential competitors and possible customers. Relevant factors that must be considered when deciding the viability of entry into a particular market include trade barriers, localized knowledge, price localization, competition, and export subsidies.
Lymbersky has said that "What countries to enter and when mainly depends on the financial resources of a company, the product life-cycle and the product itself."
The different strategies available are:
Waterfall model
Wave strategy
Sprinkler strategy
Some of the most common market entry strategies are: directly by setup of an entity in the market, directly exporting products, indirectly exporting using a reseller, distributor, or sales outsourcing, and producing products in the target market. Others include:
Licensing
Greenfield project
Franchising
Business alliance
Exporting-(Direct/Ind)
Turnkey project
Joint ventures
Outsourcing
See also Permanent establishment risk
Some of the risks incurred when entering a new market and start domestic or international trade include:
Weather risk
Systematic risk, different from systemic risk, the systematic risk is the risk inherent to the entire market or an entire market segment
Sovereign risk
Foreign exchange risk
Liquidity risk
Cultural risk
While some companies prefer to develop their own their market entry plans, other outsource to specialised companies. The knowledge of the local or target market by those specialized companies can mitigate trade risk.
Official source
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