Foreign market entry strategies
Using real world examples, compare and contrast foreign market entry strategies used by different Multinational Enterprises. Evaluate the success of these entry strategies by referring to real world examples. You may refer to cases discussed in seminars and also provide new examples.
Multinational corporations are those with bases and production plants in several countries, usually but not always with headquarters in the more developed countries. Multinational enterprises invest overseas to expand their profit amongst several other reasons. Companies become multinational by making investments and expanding their ventures abroad, through exporting or foreign direct investment. There are several ways by which a firm can expand its horizons. I will be comparing these in my essay and will provide some real world examples.
A firm expanding internationally must decide which markets to enter, when to enter them, on what scale and how to enter them (the choice of entry mode). Firms can enter foreign markets through exporting, turnkey projects, licensing, franchising, joint ventures or wholly owned subsidiaries. The central managerial trade-off between the alternative modes of market entry is that between risk and control. When choosing foreign market entry strategy the firm must consider its goals and objectives, the degree of control they are after, the firms resources and capabilities and the risks they face by taking on a foreign venture. Different modes of entry expose the firm to different degree of risk.
There are several successful multinational enterprises that benefit from investing abroad. Some move their production plants abroad where the labor and raw materials are cheaper in order to minimize production costs. This in turn increases their profit margins. Others reach a bigger consumer base by establishing their brand internationally, with branches abroad serving in the foreign country. Others choose to risk less and expand through exporting
Multinational corporations are those with bases and production plants in several countries, usually but not always with headquarters in the more developed countries. Multinational enterprises invest overseas to expand their profit amongst several other reasons. Companies become multinational by making investments and expanding their ventures abroad, through exporting or foreign direct investment. There are several ways by which a firm can expand its horizons. I will be comparing these in my essay and will provide some real world examples.
A firm expanding internationally must decide which markets to enter, when to enter them, on what scale and how to enter them (the choice of entry mode). Firms can enter foreign markets through exporting, turnkey projects, licensing, franchising, joint ventures or wholly owned subsidiaries. The central managerial trade-off between the alternative modes of market entry is that between risk and control. When choosing foreign market entry strategy the firm must consider its goals and objectives, the degree of control they are after, the firms resources and capabilities and the risks they face by taking on a foreign venture. Different modes of entry expose the firm to different degree of risk.
There are several successful multinational enterprises that benefit from investing abroad. Some move their production plants abroad where the labor and raw materials are cheaper in order to minimize production costs. This in turn increases their profit margins. Others reach a bigger consumer base by establishing their brand internationally, with branches abroad serving in the foreign country. Others choose to risk less and expand through exporting
Bibliography: David Arnold 2003 ‘strategies for entering and developing international markets’ S. Schifferes ‘Cracking chinas car market’ BBC news 2007