Market Entry Strategy Analysis Report

Type of paper: Report

Topic: Company, Market, Business, Box, Management, Commerce, Risk, Manufacture

Pages: 3

Words: 825

Published: 2021/01/27

Introduction

There are various operational concerns that one experiences when introducing a product in a foreign market. For this reason, one would experience some operational concerns when introducing M-Box in German. Trade is determined by the transport costs, which are in turn determined by variables such as transportation technology, fuel costs, distance, trade facilitation measures and infrastructure quality (Venables & Behar 2). The high transportation costs have an impact on the introduction of M-Box in German. The costs of transportation are high hence this acts as an obstacle to the successful introduction of M-Box in German. For instance, the cost of a typical, three-night business trip for one person from New York to Berlin in Hilton Hotel according to the Expedia website is $1020. In addition, the cost of sending a four-foot square crate of M-Boxes weighing 100 pounds from New York to Berlin according to FedEx website is $432.
The other operational concern surrounding the introduction of M-Box in German is the cultural nuance. The marketing messages influence the consumers to purchase a product. However, the failure to understand the culture, morals, religious views, and customs of Germans might lead to the creation of ineffective advertisements that insult or confuse the consumers. As a result, this might affect the introduction of M-Box in German. Finding reliable partners in the host country is the other operational concern that surrounds the introduction of M-Box in German. In essence, competent and trustworthy individuals in the host country facilitate the success of the introduction of a product in a foreign market. Consequently, the failure to find reliable partners in German might be a challenge to the successful introduction of M-Box in German.
It is imperative for a company to engage in the local sales effort when launching M-Box in German to make it successful. Thus, the company should endeavor to understand the sales methods utilized in the German market by participating in the sales efforts. As a result, this would increase the company's market awareness and facilitate the success of M-Box launch within the country. However, engaging in the local sales efforts might not be fruitful due to different barriers to effective communication. Undertaking the local manufacturing operations would also make the company succeed in introducing M-Box in German. It would make the exporter understand the efficient production processes in German to utilize when launching M-Boxes. In addition, undertaking the local manufacturing operations in German would help the company reach the untapped market and succeed in introducing M-Box. However, undertaking the local manufacturing operations in German might offer an element of uncertainty and jeopardize the company.
The utilization of Germans in managing the company introducing M-Box in their country would facilitate its success. The Germans have a better understanding of various marketing strategies within their country than the foreign individuals hence this would increase the success of the business in launching M-Boxes. Nonetheless, the business might employ incompetent and untrustworthy Germans who might lead to the failure of the company.
The companies can enter foreign markets in different ways. There are numerous market entry modes that a company might utilize in introducing M-Box in German as below explained. There does not exist a precise model for all the companies since each has various disadvantages and advantages (Durmaz, Yakup, and Taşdemir 52). The various advantages and disadvantages are as below explained.

Exporting

The company might sell the M-Boxes in German directly through the use of distributors and sales agents. The exporting entry strategy decreases the possible risks of a company operating overseas. In addition, a company gets an opportunity to learn the international markets prior to entering such markets. However, finding the information on the foreign market might be unquestionably more time-consuming and difficult hence this might affect the company.

Countertrade

The company may also enter the German market through counter purchase, offset and barter forms of countertrade entry mode. Countertrade would ease the company’s entry into the German market and lead to better capacity utilization. In addition, it would increase its sales of M-Boxes and employment in German. Conversely, there might be some logistical issues and higher costs when the company uses the countertrade mode of entry.

Turnkey project

The company might introduce M-Box in German through constructing a manufacturing plant within the country. As a result, the company might earn huge profits after a successful establishment of the plant. However, the turnkey entry strategy presents the risk of the company revealing its secrets to the rivals companies in German.

Management contract

The company can introduce M-Boxes in German by a written agreement between it and a third-party management company. As a result, this would give the company an assurance of continuity. In addition, the management contract would make the company enter the German market devoid of taking a vast risk of putting its physical assets at stake. However, the management contract would make the company give up some of its privacy and possibly enter into disputes with the third-party management company.

Licensing

The company desiring to enter the German market may enter into an international licensing agreement with a German company. As a licensor, the company might grant non-exclusive rights or exclusive rights to a certain licensee (Durmaz, Yakup, and Taşdemir 49). One of the advantages of licensing market entry strategy to the company is the minimization of political risks and other risks. The company would expand quickly without investing heavily and experiencing much risk. The company might also reach new markets in German that would otherwise not be accessible. Nonetheless, an incompetent partner might ruin the trademark and reputation of the company hence this entry strategy presents a risk.

Franchising

The international franchising mode of entry would benefit the company introducing M-Boxes in the German in some ways. For one, good partners would bring managerial capabilities and financial investment to the operations of the company in German. In addition, franchising makes the political risk and cost low for the company. However, it may be difficult for the company to maintain control over the franchisee. Additionally, there might be conflicts with its franchisee.

Contract manufacturing

The company introducing M-Box in the German market might obtain a cost advantage through contract manufacturing. Additionally, the company would receive substantial operational benefits from using the contract manufacturing. There is a substantial flexibility in contract manufacturing (Durmaz, Yakup, and Taşdemir 50). However, contract manufacturing presents the problem of added costs of dealing with the other company.

Joint venture

The company desiring to introduce the M-Box in German might form a joint venture with another company to ease its market entry. One of the advantages of this market entry strategy that the company would get is the access to the superior resources including specialized technology and staff. In addition, the company would share the risks with its venture partner hence this reduces the chances of failure. The joint venture market entry strategy also offers the company with the chance to obtain new capacity and training. What’s more, the international joint venture market strategy offers quick access to the distribution channels (Stewart, Milton R., and Ryan D. Maughan n. p). As a result, this considerably improves the likelihood of success for the company. One of the disadvantages of joint venture market strategy is the failure of the ventures in offering enough support and leadership during the early stages. Finally, there might be poor cooperation and integration due to the difference in the management styles and culture between the company and its partner.

Recommendation

The joint venture is the most suitable entry mode for the M-Box in Germany due to a number of reasons. Firstly, the entry mode facilitates a faster entry of the company introducing M-Box in German than all the other entry modes. In addition, it is the most cost-effective and efficient way for the company to enter the German market.

Works Cited

Durmaz, Assist Prof Dr Yakup, and Ahmet Taşdemir. "A Theoretical Approach to the Methods Introduction to International Markets." International Journal of Business and Social Science Vol. 5, No. 6(1); May 2014. Retrieved from http://ijbssnet.com/journals/Vol_5_No_6_1_May_2014/5.pdf
Stewart, Milton R., and Ryan D. Maughan. "International Joint Ventures, a Practical Approach." Davis Wright Tremaine LLP, 2011. Retrieved from http://www.dwt.com/files/Publication/1b841dbe-3453-4983-97cd-d6f5b44e5b2f/Presentation/PublicationAttachment/47d38fc0-1cc3-4c3e-b91f-d8aacd2ce6d1/International%20Joint%20Ventures%20Article_Stewart.pdf
Venables, Tony, and Alberto Behar. Transport Costs and International Trade. No. 488. 2010. Retrieved from http://www.economics.ox.ac.uk/materials/working_papers/paper488.pdf

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WePapers. (2021, January, 27) Market Entry Strategy Analysis Report. Retrieved June 17, 2024, from https://www.wepapers.com/samples/market-entry-strategy-analysis-report/
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Market Entry Strategy Analysis Report. Free Essay Examples - WePapers.com. https://www.wepapers.com/samples/market-entry-strategy-analysis-report/. Published Jan 27, 2021. Accessed June 17, 2024.
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