MARKETING AND SRATEGY
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Running Header: Case Study on Market Entry Strategies into a New Market
1
Case Study on Market Entry Strategies into a New Market
Case Study on Market Entry Strategies into a New Market
2
Q1. Brazil is a large and diverse market that offers many opportunities for foreign companies but
poses challenges, such as high taxes, complex regulations, and political instability. Some of the primary market entry strategies that companies should evaluate are: Exporting
: This method of entering the Brazilian market is relatively simple and risk-free as it does not have to establish a local presence or comply with local customs regulations. Nevertheless, the high import duties and taxes which are imposed on imported goods as well as logistics and transport costs must be borne in mind by exporters.
Licensing
: This is when the right to use a foreign company's intellectual property, e.g., patents, trademarks, and technologies in exchange for a number of fees or royalties shall be granted to local companies. Entry into the market may be a low-cost and low-risk way, but it also entails relinquishing certain control over the quality and distribution of products or services.
Franchising
: This involves allowing a local company to operate under a foreign company's brand name and business model while providing training, support, and quality control. This can be an excellent way to leverage an established brand and reputation. However, it also requires finding a reliable and trustworthy partner and ensuring compliance with local laws and standards.
Joint venture
: This involves forming a partnership with a local company to share the risks and rewards of entering the market. This can provide access to local knowledge, resources, and networks, but it also requires careful negotiation, coordination, and management of the relationship, as well as the protection of intellectual property rights.
Case Study on Market Entry Strategies into a New Market
3
Wholly owned subsidiary
: This involves setting up a new company or acquiring an existing one
in Brazil and having full ownership and control over its operations. This can offer the most potential for growth and profitability, but it also requires the most investment and commitment, as well as compliance with local laws and regulations, and adaptation to local culture and preferences.
The role of the country's economic and political landscape in making informed decisions about market entry methods and timing is crucial, as it affects the demand, supply, and competition in the market, as well as the legal and regulatory environment and the risks and opportunities involved. Some of the factors to consider are: Economic growth and stability
: With an estimated GDP of $1.84 trillion in 2020, Brazil's economy is both sizable and expanding, ranking it as the largest in Latin America and the ninth largest in the world. It does, however, also confront several difficulties, like elevated levels of inflation, unemployment, debt, and inequality; also, the COVID-19 pandemic's aftermath resulted in a 4.1% contraction in 2020.
Political situation and governance
: Brazil is a federal presidential republic with a multi-party system and a bicameral legislature. The current president is Luiz Inácio Lula da Silva, who took office in 2023 with a populist and nationalist agenda. The political situation in Brazil is volatile and unpredictable, with frequent protests, strikes, and social unrest.
Trade and investment policies
: In addition to having free trade agreements with other nations, including Israel, Egypt, and Chile, Brazil is a member of the World Trade Organisation (WTO) and the Mercosur trading group. It also enjoys advantageous trade agreements with South Africa,
Case Study on Market Entry Strategies into a New Market
4
India, and the European Union. But Brazil still imposes significant tariffs and non-tariff barriers on a wide range of imported products and services, and it prohibits foreign investment in several industries, including mining, telecommunications, oil and gas, and other industries. According to
the World Bank's Doing Business 2020 report, Brazil is ranked 124th out of 190 nations, suggesting a difficult business environment.
Q2. China has the second-biggest economy and the largest population in the world, with 1.4 billion people living there as of 2020 and a GDP of $14.72 trillion. For international businesses, it brings a plethora of opportunities as well as formidable obstacles like intense competition, intricate rules, and cultural disparities. Some of the actions to take in order to perform thorough market research, identify potential opportunities and threats, and develop market entry strategies that are tailored to the particular business environment and consumer behaviour in China are as follows:
Define your target market and segment
: China is a huge and diverse country, with distinct requirements, tastes, and behaviours in different areas, cities, and consumer groups. It is critical to narrow your target market and segment it based on key characteristics like geography, income,
age, gender, lifestyle, and so on. This will assist you in tailoring your product or service, pricing, distribution, and promotion techniques to your target customers' preferences.
Conduct primary and secondary research
: Primary research is gathering information directly from your target market using methods such as surveys, interviews, focus groups, observation, and so on. This will allow you to acquire insights on your potential customers' demand, preferences, expectations, and satisfaction, as well as their feedback on your product or service.
Case Study on Market Entry Strategies into a New Market
5
Secondary research entails analysing data from previously published sources such as reports, statistics, publications, websites, and so on. This will assist you in understanding the market's size, growth, trends, opportunities, risks, competitive landscape, regulatory environment, and cultural elements.
Select your market entry strategy
: There are various ways to access the Chinese market, each with its own set of benefits and drawbacks, such as:
Exporting
: This means selling your products or services to people in China, either directly or indirectly, without having a presence there. It can be a cheap and easy way to test out the market,
but it also means you have less control over how your products and services are sold and marketed, and you have to deal with high tariffs and other barriers like quotas, licenses and standards.
Licensing
: This involves entrusting a Chinese company with the use of your intellectual property, including patents, trademarks, and technology, in return for a commission or royalty. This may be a cost-effective and low-risk approach to entering the market, however, it also implies relinquishing control and income of your product or service, as well as the risk of loss or breach of intellectual property rights.
Franchising
: To maximize brand exposure and reputation, it is necessary to entrust a Chinese company with the responsibility of operating under your brand and business model, as well as providing training, assistance, and quality assurance. However, this requires finding a dependable and reliable partner, as well as adhering to local laws and regulations.
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Related Questions
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a)
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Use this case study provided below to answer the question:
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Question 44 options:
Each participant must hold on to his or her respective "something of value."
The items of value offered by the buyers and sellers must be tangible in nature, such as money and cars.
Products offered should be standardized by sellers.
Buyers and sellers must be able to communicate about the "something of value" available to each.
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Locational choice (as in the linear city model)
B.
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C.
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