The paper "Modes of Entry into Foreign Markets" is a good example of marketing coursework. Entry into foreign markets is associated with a variety of challenges that have to be dealt with if success is to be achieved. Some of the challenges include the need to carry out extensive research in order to learn aspects associated with the foreign market’ s economy, consumer behaviours, trade agreements, policies and market trends. There is also a need to learn about the religion, culture, language and etiquette of the foreign market in question. There could also be some logistics challenges (Sharan, 2008, p.
367). The challenges are brought about by differences that exist among nations, economies, markets as well as human behaviours. This piece of work will give a critical discussion of the manner in which business organizations try to deal with the challenges that they face as they enter foreign markets. Much emphasis will be given to the adoption of various modes of entry. Modes of entry Adoption of different modes of entry has been seen as a way of dealing with challenges associated with entry into foreign markets.
This is more so because every mode has some advantages and drawbacks and are more applicable in some circumstances than they are in others. An organization ought to choose the most applicable mode of entry based on the benefits involved as well as the degree of success to be achieved. According to Blomstermo, Deo Sharma and Sallis (2006, p. 221), there are different ways in which an organization can enter a given foreign market. There is no single market entry strategy that is suitable for all foreign markets.
One could be the most apposite strategy in one market and not in the other. There are various factors that influence the choice of strategy at any given point. They include transportation and marketing costs, tariff rates as well as the required extent of product adaptation among others. In most cases, the above factors may raise an organization’ s cost. Nonetheless, an increased sale of the products or services involved is likely to offset the cost, to the advantage of the organization. The options for entry made for organizations include turnkey projects, licensing, franchising, foreign direct investment, and exporting.
All these have some benefits and drawbacks which are largely influenced by trade barriers and transport costs, business risks, cost, firm strategy as well as economic and political risks involved. The appropriate entry mode varies by the circumstances as influenced by the above factors. Exporting This entails marketing and making sales of goods that are produced locally to another nation(s). It could take different forms such as indirect exporting for small enterprises and direct exporting for more experienced business companies. It is considered a traditional and well-structured strategy of venturing into foreign markets.
The fact that exporting does not necessitate that products are produced in the target nation means that investment in foreign production is not required. Marketing expenses are the major costs of exporting. Some of the fundamental players in the exporting process are the government, the exporter, the importer and the transport provider (Navarro, Acedo, Losada & Ruzo, 2011, p. 193).
Blomstermo, A., Deo Sharma, D. and Sallis, J., 2006. “Choice of foreign market entry mode in service firms.” International Marketing Review, vol. 23 no.2, pp.211-229.
Dikova, D. and Van Witteloostuijn, A., 2007. “Foreign direct investment mode choice: entry and establishment modes in transition economies.” Journal of International Business Studies, vol. 38 no. 6, pp.1013-1033.
Navarro, A., Acedo, F.J., Losada, F. and Ruzo, E., 2011. “Integrated model of export activity: Analysis of heterogeneity in managers' orientations and perceptions on strategic marketing management in foreign markets.” Journal of Marketing Theory and Practice, vol. 19 no. 2, pp.187-204.
Nielsen, B.B. and Nielsen, S., 2011. “The role of top management team international orientation in international strategic decision-making: The choice of foreign entry mode.” Journal of World Business, vol. 46 no. 2, pp.185-193
Pehrsson, A., 2008. “Strategy antecedents of modes of entry into foreign markets.” Journal of Business Research, vol. 61 no. 2, pp.132-140.
Sharan, V., 2008. International Business 2/e, Concepts, Environment And Strategy. Delhi: Pearson Education India.