Market Entry Modes

Decent Essays

International market entry modes allow firms to enter foreign markets and can choose the most appropriate entry mode for their industry. After analysing market drivers, demand and consumer behaviour, Pharmaceutical firms may choose the most strategic mode of entry to enter a market. The market entry mode is strategic and is regarded as a major factor in the Internationalisation process (Morschett et al.,2015, p.323). As illustrated below, the International market entry model outlines that Pharmaceutical firms may enter foreign markets through Exports/Imports, Subsidiaries, Mergers/Acquisitions, Joint ventures, or Licensing.
Figure 2.4 An international market entry model for pharmaceutical companies. (Adapted from Javalgi&Wright,2003, p.277).

• Joint Venture
A joint venture is characterised by the need to achieve a business transaction while remaining separate from each other. Each firm maintains its resources and independence while engaging in an activity, with the objective of achieving certain objectives. The need for joint ventures in the Pharmaceutical industry may be characterised by the need to reduce high R&D costs and by so doing, share costs through common equity (Roijakkers&Hagedoon,2005, p.8). Joint venture as a mode of market entry may …show more content…

In process licensing, a firm gives the licensee the right to use production processes. This type of licensing may be common in the Pharmaceutical industry, regarding patented drugs/products. Product licensing allows a firm to grant specific rights in the manufacture of products, while distribution licensing gives the licensee the ability to market and distribute products in an area. Brand licensing allows a firm to use a firm’s brand. Licensing enables the licensor to benefit from the skills, comparative advantage, and other capacities of the licensee (Morschett et al., 2015,

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