Entry Barriers of Global Marketing

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Entry Barriers in Global Marketing
An understanding of the entry barriers to internationalization and their effect on entry mode selection is important because they can assist in determining why global marketers are unable to exploit their full potential and why many firms fail or incur financial losses in their international activities. The height and nature of market entry barriers directly influence the entry mode chosen by a company. Entry barriers increase the cost of entry and constraint the option available, and where they are high, the company might have only one choice of entry mode or else have to stay out.
The concept of entry barriers comes from the economics of industrial organization. It generally connotes any obstacle
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The cost of Barriers
The economic costs of entry barriers are well known. The efficiency created by barriers translates into higher prices for consumers. What this means to the marketer is that the barriers create additional costs for the foreign entrant.
Regardless of the source of barriers, their existence means that some firm or individual will have a chance to profit from a monopolistic position. This individual sometimes refers to as a gatekeeper, since he or she holds the keys to the market. For example, where regulations prohibit foreign ownership of broadcast media, domestic cable companies can keep prices high and service levels low. Where a domestic company has built a viable defense for its products with a strong brand image, it can collect “rent” by charging premium prices. Where close ties in distribution channels are necessary, natives with good contacts garner considerable fees by simply arranging a meeting between two prospective partners. The cost of doing business is very high in some countries because of such barriers.

Types of Entry Barriers in Global Marketing
To encourage development of domestic industry and protect existing industry, government may establish such barriers to trade as tariff, quotas, boycotts, monetary barriers, nontariff barriers, and market barriers. Barriers are imposed against imports and foreign businesses.
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