see also - related pages from GloboTrends: entering the European market from overseas, Marketing, strategy , Exports , Import Export business models, export subsidy , Spain market entry for cachaca , barriers to entry , 5 forces analysis , Entering the US market from overseas
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Market Entry Strategy:
The decision to enter a foreign market is one of the most daunting strategic challenges a manager must face. What makes this so is the magnitude of the financial commitment the firm must assume and the degree of complexity and, correspondingly, the uncertainty that attaches to most efforts to enter foreign markets. No element of this process is more important than the choices firms make with respect to what markets to enter and what market entry strategies to employ.
market entry (strategy)
Once a company decides to market their products overseas, and enter the global competition, the next obvious questions is "how do I do it?". The essence of a well designed market entry strategy is to know your target audience. Measure the size of the potential market, figure out how many cities you need to target, work on you product differentiation, local adaptations, segmentation and positioning. Then, conduct a breakeven analysis to figure out how many units you will need to sell to cover your fixed costs (which includes advertising, promotions, etc).
US market Entry
see our discussion on: Entering the US market from overseas
First comers advantage:
http://www.strategy-business.com/press/16635507/18881
Table of Contents:
FDI = O+ L+ I
OLI theory for trade: According to Dunning FDI will occur when these conditions are satisfied:
O: There is an Ownership advantage- the firms must own some unique competitive advantage that overcomes the disadvantages of competing with foreign firms on their home turfs. (monopolistic advantages (patent), scarce resouce ownership, technology, brand name, benefits of economies of scale, scope, access to financial markets, diversification advantages, etc)...
L: There is a Location advantage: Undertaking the business activity must be more prodfitable in a foreign location than undertaking it in a domestic location. These are "country specific advantages"
I: There is a Internalization advantage: the firm must benefit more from controlling the foreign business activity than from hiring an indepedent local company to provive the service. Refers to HOW a company moves abroad. Export vs. JV , or set up subsidiary, fully owned, etc...
read more:
When you shouldn't go Global:
- see GloboTrends page: troubles going global (business)
- article from Harvard HBR
- Three questions to ask:
- Are there potential benefits for our company? (dont just follow competitors. Dont overestimate the benefits)
- Do we have the necessary management skills? (do you REALLY have the skills?)
- Will the costs outweigh the benefits? (extra coordination costs, setup costs, etc)
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- Examples of failed globalization strategies:
- ABN AMRO
- AES - (US power company)
- Daimler- Chrysler merger
- BTR - industrial conglomerate
- TCL - chinese maker of electronics
- Kelda - a UK water utility
- Deutsche Telekom (Tmobile)
- Deutsche Post - overpaid for DHL and Airborne
- AXA - French insurance group
- BenQ- acquisition of Siemens mobie device business
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- Good examples of well executed globalization strategies:
- Telefonica
- GE commercial finance devision
- Renault + Nissan
Troubles going global
please see our discussion on troubles going global (business)
Suggested Academy
Internationalization Process of the Firm
The Internationalization Process of the Firm informs on the following issues: the internationalization process of companies that want to conduct international business; the different frameworks and theories regarding how companies handle the internationalization process; the role of company size on a company’s ability to efficiently achieve its internationalization goals; the factors that dictate the choice of a particular foreign market entry mode; and why gradual entry used to be the method of choice, but is becoming obsolete.
Category: Market Research and Entry
The World is Open for Business
This module was created in cooperation with the U.S. Commercial Service and is the first chapter of the bookA Basic Guide to Exporting. In this module, we will cover: Why you should sell globally; agencies that specialize in helping small to medium-sized businesses export successfully; old assumptions about exporting that may not be accurate; and how to transform yourself and your business through exporting. A case study on the company Domes International is also included.
Category: Exporting
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Country Analysis
The first step, of course it to conduct a thorough country analysis, including culture, political risk, product adaptations, and more...
Tech Companies - expanding globally:
How to take a product global. Case study: iPhone
iPhone coming to Japan's NTT DoCoMo?
Posted Dec 18th 2007
According to the Wall Street Journal Asia, Jobs and Co are in Japan working out the details for a domestic iPhone launch. It's no surprise then that Jobs was rumored to have just met with NTT DoCoMo's president, Masao Nakamur, to discuss the deal with the largest carrier in the world's second-largest economy. As usual, Apple seems to be playing the carriers off one another with rumors that The Steve is courting Softbank as well. However, "people familiar with the situation" say that DoCoMo is the first choice. While the revenue sharing is a sticking point as usual, WSJA says that Apple doesn't expect to have any difficulty closing the deal. Funny, that's what everyone was saying about Vodafone in Europe.
P.S. -For what it's worth, NTT DoCoMo does not run a GSM / EDGE network. Any iPhone released on DoCoMo's FOMA service will be UMTS / HSDPA -- right, the 3G iPhone.
Product Expansions:
MySpace vs. Facebook
Facebook is now the largest social network in the world. But they continue to trail MySpace by a massive 36 million users in the U.S., and at current growth rates it will take them 18 years to overtake them. Most of Facebook’s growth is international, where they’ve executed on a brilliant strategy for quickly rolling out localized versions of sites by getting their users to do the translation work for them (MySpace, by contrast, expands via a command-and-control infrastructure that puts people on the ground in each new international market). But the commercial value of some of those international users is far less than the U.S., the UK, Japan and a handful of other countries with robust online advertising markets.
Best Buy
article from FT.com
Brad Anderson, the 58-year-old chief executive of Best Buy, says the leading US consumer electronics retailer has been "extraordinarily concerned" about the risks of rapid international expansion. But last week, Mr Anderson announced a $2.2bn investment in a retail Joint Venture in Europe with the UK's Carphone Warehouse, with stores in nine different European countries, alongside initial plans for its own-brand larger-format stores in Europe. Best Buy will also open stores this year in Turkey and Mexico, adding to stores in Canada and China.
"We've looked at the history here," says Mr Anderson, who argues that the record of US retailers going to Europe is "arguably worse" than that of Europeans who have expanded to the US.
In an interview with the Financial Times in New York yesterday, Mr Anderson maintained that Best Buy has reduced some of the risks of its latest international expansion by following a strategy it has pursued before in Canada and China - slowly developing its own-brand stores alongside joint ventures or acquisitions run by experienced local management.
"We're not intending to come in and tell them how to do it; we're intending to provide resources to help them do it," he says of the joint venture.
"If you've got genuinely independent management teams that function in a highly independent way, we don't think there's the same-scale problem as if you are trying to transplant a given specific strategy."
While there is ongoing speculation among investors in Europe that Best Buy might be interested in taking over all of the retail venture, or making further retail acquisitions, both Mr Anderson, and Bob Willett, head of the group's international division, argue that the retailer needs to continue its cautious strategy.
Mr Willett says that the retailer "knows how to open stores, once we are clear about what we are doing".
"If you get in right in those first few stores, then you can scale fast. The danger is - and I think this is where others have gone wrong - is to try to scale too quickly."
For Mr Anderson, the international expansion marks a long journey from 1976, when after deciding not to follow his father into the Lutheran church, he started working at a hi-fi store in Minnesota that eventually became Best Buy. He drove 80 miles to install a set of speakers in the home of his first customer, so desperate was the young Mr Anderson to make the sale.
He has argued that that first sale established a theme that eventually translated into the embrace of customer centricity (see box) at Best Buy's large stores, which dot shopping plazas across America. This year the strategy is entering a second phase, expanding the concept to increasingly specific groups of local neighbourhood customers.
read more here
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see also: entering the European market from overseas, Marketing, strategy , Exports , Import Export business models, export subsidy , Spain market entry for cachaca , barriers to entry , 5 forces analysis , Entering the US market from overseas
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