Essays on Why Multinational Companies Choose Different Entry Modes for Different Markets at Different Times Coursework

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The paper "Why Multinational Companies Choose Different Entry Modes for Different Markets at Different Times" is a good example of marketing coursework.   Today, due to increased globalization of business, more intense pressure has been put on most multinational companies to seek immediate entry into the foreign region, because markets are being integrated with each other and countries are becoming more dependent on one another in order to exchange the wealthy resources available. This is scrapping off the geographical barrier that existed in the past years, thus creating free accessibility for foreign investments by the international competitors, development in transport and communications which have reduced cost and risks as well as improving the flow and filtering of sensitive market information, therefore making foreign investments to be more attractive than it used to be (Hill, C.W. L., Cronk2010).

This has been facilitated due to the fact that we are living in a global economy whereby the time people take to move from one continent to another has been greatly reduced as a result of modern technology such as internet and other similar connections which make it so instant for network connections in the business sector to be very fast and economical.

Therefore there is an immediate need for all the businesses which operate in this global market to develop all the appropriate strategies so as to cope up with these dynamic developments in the market sector. One of the best examples of such companies in the food industry which have taken such measure is Kellogg’ s, Cadbury Schweppes and Nestle that have developed market networks and global distribution based on power brands. As a result of the globalization of business, the work hade has grown massively than the world output.

This lead to surging of foreign direct investments while imports penetrated deeply into the world industrial nations and the comparative pressures increased from one particular industry to another. To retaliate and cope with this global pressure, firms started expanding to other foreign countries (Hill, 2010; Berlet & Ghoshal1087; Donnell, 2000). Despite all the benefits such as increasing both sales and market shares that are accompanied with a company trading in the foreign markets, entry into these markets is very challenging from the marginal point of view (M. W.

2010). It is necessary that when a firm chooses to operate outside its domestic market, there is an urgent need for it to choose which market to enter, the entry mode for entering the new market and the organizational structure to use. Entry mode is a defined institutional plan that a company applies to market its product into any foreign market for the first five years (Sivakuma & Ekeledo 2003). This entry modes can be classified into different categories, for instance, a firm might choose to export its products through independent intermediaries so as to enter in one market, while another firm may choose to operate overseas by having contractual modes like franchising and licensing or export through an integrated entity-owned channel or even through foreign direct investments such as wholly-owned subsidiary and joint ventures (Eramili, 2006).

Selection of an appropriate entry mode has a very important role when determining the performance and success of any firm in the new market (, J. R. 2008 & Ekeledo, 2003), because when inappropriate mode entry is selected, it may result into a significant financial loss and exit out of the foreign market.

Reference

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