The paper "Equity Mode of Entry Techniques " is an outstanding example of marketing coursework. An organization that wants to succeed in the business must consider the concept of entering into the global market. It is because of the competition in the domestic market as well as technology developments. As a result of this, many countries have eliminated trade barriers with the aim of attracting and retaining investors to improve their economic growth. In this regard, various market entry strategies are available. They are classified into equity and non-equity modes (Hill, 2014, 2).
It is the responsibility of the management of the company to select the most appropriate market entry strategy that enables them to succeed in the new market. The purpose of this paper is to discuss the merits and demerits of the global entry strategies which are classified as equity and non-equity. The keywords used in this essay include franchising which is a contractual agreement between two companies, direct exporting where an organization exports products directly to the customers, equity and non-equity international market entry strategies. The structure of the essay starts by discussing non-equity entry techniques and then discusses equity strategies with their merits and demerits.
Self-reflection is also provided and finally the conclusion summarizing the entire findings of the essay. Non-equity entry strategies The following are the non-equity entry strategies an organization can adopt when entering into new markets; Direct exporting It is the mode of entry where a company manufactures products in the home country and exports them to a different global market. It is applied when an organization wants to enjoy economies of scale. For instance, a manufacturing company makes products at a central place and distributes them to different markets globally (Dyer et al, 2003, 12).
It means that the company has control over the distribution channels. The technique introduces the products into a new market through export once the company has identified an opportunity in the international market. Advantages The first advantage of direct exporting is that the company has control over the foreign markets to distribute the products. It means that the company has the exclusive choice of the international markets and representative companies. Also, the direct export improves communication between the company and the customers because they provide effective feedback thus building a strong relationship (McDonald et al, 2002, 23).
Furthermore, the company is able to protect its patent rights such as trademarks intellectual property. Also, the company can increase its sales because of its large market share. In this regard, the company will have exclusive rights to control its operations. Disadvantages Despite the benefits of direct exports, demerits also exist. The first demerit is that there are high startup costs and high risks as compared to indirect exports. For instance, there is a high risk of distributing the products to the wrong markets and rejection by the target market (Peng, 2008, 21).
Also, it requires a large investment so that it can be successful. For instance, it requires a competent workforce to conduct market research and adequate time to transport the products to the new markets. It also takes time to promote the products in the new market.
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