Entry Strategy in International Business

It plays a great role in changing the psychology of consumers to convince them to switch brands

Sometimes it is hard for people to start and operate a business in their own countries. It is sometimes advisable that these people should start thinking of launching their business in foreign countries. To start your international business, there are many methods that are available to an enterprise for opening a business in a foreign nation. Globalization has made expanding into foreign markets easier for huge corporations as well as small businesses. These methods include:

Market entry mode is to create the possibility by arranging company’s products, technology, human skills, management or other resources to enter into a foreign country. The problem faced by the company is what kind of strategy should be used for the entry mode selection.

POLITICAL AND BUSINESS RISKS Last Name 3between various countries may negatively impact on the global business operations. As such, afirm cannot effectively operate to achieve its full capacity and maximize its profits. Political risksalso include the legal legislations that a country imposes on the international businesses that openup their operations in these countries. The government may devise a policy that limits theoperations of the multinationals in the country. Such legislation by the government is a hindranceto the efficient operation of the international businesses.Business risk refers to the likelihood that a company will have lower profits thanexpected (Wild & Han, 2014). There are a number of factors which influence the risk; theyinclude the price of commodities, sales volume, competition, the economic conditions and thegovernment interventions. These factors negatively influence the global business operations.Therefore, as large

• • Barriers to enter Factors affecting the barriers to entry are: – E Economies of scale i f l – First mover advantage – Relationships with suppliers and customers – Legal barriers

In markets such as North America and Western Europe, premium beer’s share of total sales is already well above the global average. On the other hand, premium’s share of 10.1% in Central and South Africa and 3.0% in Africa shows the significant opportunity that still exists for premium beer sales in these regions. There is sizeable potential in Colombia and Brazil where premium beers respectively claim 3.7% and 5.6% of total sales (Karrenbrock, 1990).

For many firms, seeking for new countries’ markets is the mainly attempt to spread their products or services into the foreign markets, and the firms will retain and construct their participation in present markets to increase their worldwide competitive force (Doole and Lowe, 2012, 218; Hollensen, 2007, 5).About market , there is no perfect market entry plan and different market entry methods might be adopted by different firms entering the same market and/or by the same firm in different markets (Bukley, 1985).

Depending on (other factors), there are other strategies that could have been chosen when entering the global market. Exporting merchandise can be conducted directly to other nations as well as indirectly; this option is more suitable for companies that have established business contacts within that foreign area to have a better chance of producing international sales and turn a profit. Like indirect exportation, a firm has a relatively low amount of risk involved and financial investment as there is no development of any new plants necessary to enter the new market.

Foreign firms deciding to entrer a host country face numerous options of entry modes, which include equity joint ventures, wholly foreign owned enterprises, acquiring existing firms, franchising and licensing, contractual joint ventures, representative offices, build-operate-transfer and so forth. However, the most important process a foreign company should do before deciding an entry modes is to make sure it know the targeted market very well by considering the production factor, the market factor, and environment factor in host country.

Founded in 1975, Microsoft is a “global competitor”, that is, a global corporation following a unified strategy to coordinate many national operations (Porter, 2011); is the oldest major producer of software for personal computers (PCs) and the world 's largest software company with a strong, leading market share for its core products that make up over 80% of its revenue (Moody 's, 2013).

Entry modes are the strategic ways to enter a new country to achieve strategic goals of entering the target country. Thus an MNC deciding to enter a foreign market should decide upon which entry mode to choose.

According to (Koch, 2001), the entry mode chosen depends on what kind of calculation methods the company utilized – Benefit or Risk Calculation, Cost or Control Calculation. For instance, based on control calculation the company would choose wholly owned subsidiaries as it grants them more control. Franchising and Licensing would be more suitable for cost calculation.

There are many different types of market entry strategies that may be implemented by a foreign firm in an emerging country. Amongst the most popular are:

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.

For companies that has reached its potential in the local market, they would have to expand globally in order to boost their profits and stay competitive. Thus, understanding the available foreign modes of entry can help their business to enter into foreign markets more easily.