Essays on Market Entry Option - Chery Cars China Case Study

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The paper "Market Entry Option - Chery Cars China" is a great example of a marketing case study. Chery as an automobile manufacturer producing SUV’ s, minivans and cars has to found a way of penetrating into the U. S.A car market. There are various methods of new market entry that a manufacturing company can exploit when trying to penetrate a new market. It will be prudent for Chery to consider all possible methods of foreign market entry before selecting one or several. All foreign market entry strategies have potential advantages and disadvantages to the company.

The company has to select a method that is suitable to its circumstances (Berry, 2006). As a marketing manager, I have to critically evaluate the foreign market entry option that is available and recommend the most suitable to the Board of Directors. Some of the foreign market entry options include exporting, licensing, joint venture, manufacturing/foreign direct investment, assembly operations, Turnkey operation, and subsidiary. Every strategy has gone both advantages and disadvantages but some strategies are riskier than others. Exporting Exporting is a strategy whereby a company without any production or marketing organization overseas, exports a product from its home plant.

Chery can export directly is products to the U. S.A market. Direct exporting means that Chery will export directly to interested customers in the United States market. Chery will be responsible for handling the market research, logistics of shipment, foreign distribution, and collection of payment. There are several advantages associated with this strategy. This strategy will ensure that Chery gets greater profits since intermediaries are eliminated. Direct exporting will make a greater degree of control on all aspects concerning the transaction (Porter, 2008).

The company will understand who its customers are and they feel more secure in doing business with Chery Company. Business trips are more effective and efficient since customers selling the company’ s products. Besides, the company will know who to conduct if something is not working right. Faster and more direct feedback is provided by customers with regard to performance in the market place. With exporting there is better protection of trademarks, copyrights and patents (Salomon, 2006). Chery will have an opportunity to better understand the United States market.

As the business grows in the United States market, there will greater flexibility to redirect or improve the company’ s marketing efforts. There are also disadvantages that are associated with exporting as a foreign market entry strategy. Exporting consumers more time, money and energy that may weigh heavily on Chery as a manufacturing company. Exporting needs more ‘ people power’ to create a customer base which may be tedious for the company. Exporting makes the company accountable for whatever happens and there is no buffer zone. Risks, threats and losses are solely managed by the company (Reynolds, 2003).

Chery will not have an opportunity to respond to customer communications as quickly as compared to a local agent in the United States. All the logistics of the transaction will have to be handled by Chery company making it expensive. Technical questions will have to be handled with by Chery and offer on-site start-up training, as well as ongoing support services. In case Chery will want to export directly it must have a company-wide commitment that will include an import/export dream team to make sure that the initiative is supported fully.

References

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