Differences: Advantages And Disadvantages Of Entry Mode

✓ You would have access to a network of distribution and It would more easy to access the market with a local partner who knows the market.

standalone operations, joint ventures and strategic alliances, as much as possible and as rapidly as

There are many strategies that organizations can incorporate in today’s business environment. An organization can decide to take on a low-cost provider strategy, a focused low-cost strategy, broad differentiation strategy, focused differentiation strategy, and/or a best-cost provider strategy. While all of them have their own unique features and can offer a competitive advantage over its rivals, Competitive Shoes, Inc. decided to incorporate the best-cost strategy into its organization in order to compete against it rivals. By incorporating the best-cost strategy into its organization, Competitive Shoes Inc. felt that they could stay

Although partners learn from each other through alliances, promoting inter-firm learning happens when all participants acknowledge a number of critical factors that help or hinder collaboration (Dickson et al., 1997). Compatibility is a critical factor when companies decide to join with one another, and management on both sides examine if the partnership will deliver desired results (Dickson et al., 1997). Although partnering with businesses that offer

Potential for new entrants - The primary prevention to entrance are higher barriers within industry with the threats of new entrants as competitors (Porter, 1998).

The strong competition among rivals pursuing a similar strategy is vastly based on product differentiation and a niche market attraction, as companies are constantly working to surpass their competitors and seek to provide just what certain consumers want.

Last but not least, having a cross-border strategic alliance with a partner will help to bring unique resources, skills, and personnel when working together. Because B/E Aerospace already has its operations in the global market, this method works when the company learns how to develop new core competencies and new capabilities from its global partner(s). However, the challenges of a cooperative strategic alliance lay between the differences of the organizational culture and the partner’s culture. The very first stage of strategic alliances is to choose the right partner based on the foundation of trust and honesty. Complex laws, regulations, and initiatives can be hard to mutually benefit both partners.

To develop such strategy mix of strategic options will be applied including Integration to deal with competition and Intensive + Diversification strategies for product and market development.

One barrier to entry in a market is research and development. Heavy investment into research and development from large firms can deter other firms from entering into a market. Research and development also goes into developing new products

Another reason that the virtual company strategy is the best option is because of the autonomy that each

efficiently than if either firm attempted to do so on its own. The role of strategic alliances in shaping the

The 3 entry modes present different advantages and drawbacks, Franchising Strategy showed low control in the operations, low risk of exposure, low investment and high support from the local partner. Joint Venture entry mode indicated moderate-high investment, moderate risk, medium exposure and moderate control. Lastly, Greenfield entry mode denoted high risk, high investment, high control of the operations and high exposure.

One of the advantages of wholly owned subsidiary is that H&M has a free hand to establish the strategy for the subsidiary including marketing strategy, production, even window design. It enables H&M to keep all the profit from American market and don’t need to share profit with partners.

Partners may provide the strategic alliance with resources such as products, distribution channels, manufacturing capability, project funding, capital equipment, knowledge, expertise, or intellectual property. The alliance is cooperation or collaboration which aims for a synergy where each partner hopes that the benefits from the alliance will be greater than those from individual efforts. The alliance often involves technology transfer (access to knowledge and expertise), economic specialization, shared expenses and shared risk.

The reluctance of firms to change entry modes once they are in place, and the difficulty involved in doing so, make the mode of entry decision a key strategic issue for firms operating in today’s rapidly internationalizing market place.