Once SAB Miller has decided to establish itself in the global market, it becomes necessary for the marketing manager to study and analyze the various options available to enter the international markets and select the most suitable one. The selection of the entry mode is one of the most significant decisions.SAB Miller takes in the process of internationalization, as it involves commitment of resources with long-term financial and structural implications.
Mode of entry may be defined as an institutional mechanism by which a firm makes its products or services available to consumer in international markets. Root (1994) defines the market entry for international markets as a comprehensive plan which sets forth the objectives,goals,resources,and policies that guide a company’s international business operations over a future period long enough to achieve sustainable growth in world markets.
FACTORS AFFECTING THE SELECTION OF ENTRY MODE
EXTERNAL MODES
MARKET SIZE:Market size is one of the key factors an international marketer has to develop to keep in mind when selecting an entry strategy.Countries with a large market size justify the modes of entry with investment,such as wholly owned subsiaries or equity participation.
MARKET GROWTH:Most of the large,established markets,such US,Europe and Japan,have more or less reached a point of saturation for consumer goods such as automobiles,consumer electronics.Therefore,the growth of markets in these countries is showing a declining trend.For instance,the overall growth in most of the US and European market is about 7% while emerging markets like India and China is over 30% which indicates tremendous market potential in time to come.Therefore,from the perspective of long-term growth potential such as China,India,Thailand,Indonesia etc.These markets are also termed emerging markets.
GOVERNMENT REGULATIONS:The selection of market entry modes to a great extent affected by the legislative