Case
13: ENTRY STRATEGIES IN FOREIGN MARKETS
1
13
ENTRY STRATEGIES IN FOREIGN MARKETS
The content of this supplementary note links with the following chapters: 10 (page 249), 13 (page 300)
The key role of international development is discussed in Chapter 10, in view of the globalisation of the European and of the world economy. One of the critical questions to examine in establishing an international development strategy is to select the entry mode in the target foreign country and the distribution channel. Several alternative entry strategies can be considered, as shown in Figure Web 13.1, from a base of either domestic or foreign production. Figure Web 13.1 Entry Strategies in Foreign Markets
Domestic production Indirect exporting
Casual exporting Trading companies Export management company Co-operation in exporting
and / or
Foreign production
Assembly
Direct exportation
International representative Local agents Foreign distributeurs Commercial subsidiary
Contract manufacturing Licensing and franchising Joint ventures 100 per cent ownership
Source Tepstra and 8 edition
th
Market-Driven Management: Supplementary web resource material
© Jean-Jacques Lambin, 2007 Published by Palgrave Macmillan
13: ENTRY STRATEGIES IN FOREIGN MARKETS
2
Indirect export The market-entry technique that offers the lowest level of risk and the least market control is indirect export, in which products are carried abroad by others. The firm is not engaging in international marketing and no special activity is carried on within the firm; the sale is handled like domestic sales. There are several different methods of indirect exporting: • The simplest method is to deal with foreign sales through the domestic sales organisation. For example, if a firm receives an unsolicited order from a customer in Spain and responds to the request on a one-off basis, it is engaging in casual exporting. Alternatively, a foreign buyer may approach to the firm.
1
13
ENTRY STRATEGIES IN FOREIGN MARKETS
The content of this supplementary note links with the following chapters: 10 (page 249), 13 (page 300)
The key role of international development is discussed in Chapter 10, in view of the globalisation of the European and of the world economy. One of the critical questions to examine in establishing an international development strategy is to select the entry mode in the target foreign country and the distribution channel. Several alternative entry strategies can be considered, as shown in Figure Web 13.1, from a base of either domestic or foreign production. Figure Web 13.1 Entry Strategies in Foreign Markets
Domestic production Indirect exporting
Casual exporting Trading companies Export management company Co-operation in exporting
and / or
Foreign production
Assembly
Direct exportation
International representative Local agents Foreign distributeurs Commercial subsidiary
Contract manufacturing Licensing and franchising Joint ventures 100 per cent ownership
Source Tepstra and 8 edition
th
Market-Driven Management: Supplementary web resource material
© Jean-Jacques Lambin, 2007 Published by Palgrave Macmillan
13: ENTRY STRATEGIES IN FOREIGN MARKETS
2
Indirect export The market-entry technique that offers the lowest level of risk and the least market control is indirect export, in which products are carried abroad by others. The firm is not engaging in international marketing and no special activity is carried on within the firm; the sale is handled like domestic sales. There are several different methods of indirect exporting: • The simplest method is to deal with foreign sales through the domestic sales organisation. For example, if a firm receives an unsolicited order from a customer in Spain and responds to the request on a one-off basis, it is engaging in casual exporting. Alternatively, a foreign buyer may approach to the firm.
Bibliography: Terpstra, V. and Sarathy, R. (2001) International Marketing, 8th edn, Chicago IL, Dryden Press. Market-Driven Management: Supplementary web resource material © Jean-Jacques Lambin, 2007 Published by Palgrave Macmillan