Market Entry Mode Strategy - Vauxhall
Market Entry Mode Strategy
It is important for any organisation who wishes to operate its business worldwide to know the ways on how to enter a foreign market. Either it’s an existing product or even a new product, to identify thus implementing the correct mode of entry is crucial in order for a business to survive in a foreign market. Among the strategies on mode of entries are; Exporting, Licencing, Joint Ventures and Manufacturing (Ghauri and Cateora, 2010). Knowing that the economy in Russia is emerging and its automotive industry is strong, rules and regulations as well as the tax and tariff imposed by the target market for foreign businesses, the best mode of entry that can be applied by the company is through joint venture strategy. Joint venture is a tool in a development of a business between two or more organisations acting together, structured to a corporation, partnership for a specific business activity (Egan, 2010).
Among the advantages of joint venture between Vauxhall and Lada is it will give a potential boost to the automotive industry in Russia. An example is when the joint venture between Ford and Soller where it was approved of a credit line amounted $1.4 billion by VEB bank on the production of Ford cars in Russia (RT, 2011). Both organisations also will able to access to better resources, technologies and finance (NI Business Info, 2013). Vauxhall’s adopted the ecoFLEX approach, a range of eco-friendly cars that have low CO2, emission reduction as well as fuel efficiency (Vauxhall, 2013). This technology adopted by Vauxhall can be shared with Lada in which can be used to build a new model. Vauxhall also is able to access to the Russian market (Tarjesen, n.d.) Apart of building a new model of car, Vauxhall is able to sell its cars to Lada’s existing customers in the market. Furthermore, both companies are able to share their existing staff in which will benefit from complementary, specialised staff (Tarjesen, n.d.).
Joint ventures also
It is important for any organisation who wishes to operate its business worldwide to know the ways on how to enter a foreign market. Either it’s an existing product or even a new product, to identify thus implementing the correct mode of entry is crucial in order for a business to survive in a foreign market. Among the strategies on mode of entries are; Exporting, Licencing, Joint Ventures and Manufacturing (Ghauri and Cateora, 2010). Knowing that the economy in Russia is emerging and its automotive industry is strong, rules and regulations as well as the tax and tariff imposed by the target market for foreign businesses, the best mode of entry that can be applied by the company is through joint venture strategy. Joint venture is a tool in a development of a business between two or more organisations acting together, structured to a corporation, partnership for a specific business activity (Egan, 2010).
Among the advantages of joint venture between Vauxhall and Lada is it will give a potential boost to the automotive industry in Russia. An example is when the joint venture between Ford and Soller where it was approved of a credit line amounted $1.4 billion by VEB bank on the production of Ford cars in Russia (RT, 2011). Both organisations also will able to access to better resources, technologies and finance (NI Business Info, 2013). Vauxhall’s adopted the ecoFLEX approach, a range of eco-friendly cars that have low CO2, emission reduction as well as fuel efficiency (Vauxhall, 2013). This technology adopted by Vauxhall can be shared with Lada in which can be used to build a new model. Vauxhall also is able to access to the Russian market (Tarjesen, n.d.) Apart of building a new model of car, Vauxhall is able to sell its cars to Lada’s existing customers in the market. Furthermore, both companies are able to share their existing staff in which will benefit from complementary, specialised staff (Tarjesen, n.d.).
Joint ventures also
References: 1. Russian Times., 2011. Ford and Sollers Will Boost Auto Market. [online] Available at: <http://rt.com/business/ford-sollers-car-market/ > [Accessed 25 July 2013] 2. NI Business Info, n.d. Joint Ventures and Partnering. [online] Available at: <http://www.nibusinessinfo.co.uk/content/joint-venture-benefits-and-risks > [Accessed 25 July 2013] 3. Vauxhall, 2013. ECOFLEX: PERFORMANCE AND LOW RUNNING COSTS. [online] Available at: <http://www.vauxhall.co.uk/vehicles/ecoflex_models/cars.html > [Accessed 25 July 2013] 4. Terjesen. S., n.d. Joint Ventures: Synergies and Benefits. [online] Available at: < http://www.qfinance.com/contentFiles/QF01/g4fqn4jz/10/0/joint-ventures-synergies-and-benefits.pdf > [Accessed 25 July 2013] 5. KPMG, 2009. Joint Ventures: A Tool for Growth During an Economic Downturn. [online] Available at: <http://www.kpmg.com/KY/en/IssuesAndInsights/ArticlesPublications/PublishingImages/Joint-Ventures-tool-for-growth-downturn.pdf > [Accessed 25 July 2013] 6. RPEmery, 2012. Advantages and Disadvantages of a Joint Venture. [online] Available at: <http://www.rpemery.com/articles/advantages_and_disadvantages_jv.htm > [Accessed 25 July 2013] 7. McPheat. S., 2009. Disadvantages of a Joint Venture. [online] Available at: <http://www.seanmcpheat.com/marketing/joint-ventures/disadvantages-joint-venture > [Accessed 25 July 2013] Bibliography * Muhlbacher. H., Leihs. H. and Dahringer. L., 2006. International Marketing: A Global Perspective. 3rd Edition. Thomson Publishing. * Burkwoods. M., 2010. Essential Guide to Marketing Planning. 2nd Edition. Prentice Hall.