entry into market

8/8/2019 Entry Into Market

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Entry into Market

Amay Kothari

Growth Strategies

There are a number of strategies forgrow e.

Intensive growth strategy

Integrative growth strategy

Diversification growth strategy


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Intensive growth strategies aim at

products.

There are three important intensivegrowth strategies.

Market Penetration StrateMarket Development Strategy

Product Development Strategy

Market Penetration Strategy

It strives to increase the sale of the

markets.

There are the following three majorstrategies to achieve this.Increase sales to the current customers.

u customers rom t e compet torsproduct.

Convert non users into users


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Intensive growth strategies aim at achieving.

There are three important intensive growthstrategies.

Market Penetration Strategy

Market Develo ment StrateProduct Development Strategy


It involves expansion the market for apro uc .

By adding new market segments

By entering new market segments

By entering new geographical markets.


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Intensive growth strategies aim atac ev ng ur er grow or ex s ngproducts.

There are three important intensivegrowth strategies.

Market Development Strategy

Product Development Strategy

Product Development Strategies

A company may be able to increases curren us ness y pro uc

improvement or introducing products

with new features.E.g. Nokia, Vaio, Colgate, Lux, Pepsi


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Growth Strategies



Integrative growth strategyDiversification growth strategy

Integrative growth Strategies

Horizontal Integration

business in the same industry.

Vertical Integration

Integration of different levels/ stages ofbusiness in the same industry

Forward Integration

industry

Backward IntegrationBackward integration involves starting the precedingstage of the current business.


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Growth Strategies



Integrative growth strategy

Diversification growth strategy

Diversification

It means adding new lines of business.

Reasons for DiversificationSaturation or decline of the current business

Additional opportunities

Better opportunitiesRisk minimisation

Better utilisation of resources and strength

Competitive strategy

Need related diversification

Consolidation

Inspiration


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Methods for Entry in Marketing

Different Modes of entry in internationalBusiness.

ExportsInternational licensingFranchisingContract manufacturing

Contract marketingManagement contracts.

Joint ventureForeign direct investmentMergers and acquisitionsTake overTurnkey projects


ExportsIt means physical movements of goods and service from

port by following the rules of both the country of originand the country of destination.

Depending upon the involvement of exporter , it could be

classified as a direct exportand indirect export.In Direct exports goods and services is in their ownname. All proceeds are directly remitted from the buyer tosuch exporters.

Indirect exporter supplies to direct exporter wherein theindirect exporter has to depend on direct exporter orders.

Lack of expertise, lack of international contracts and lackof manpower make them to depend upon directexporters.


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Exports contd.De endin u on the size of the business,exporters are classified into

Small exporters,Export housesTrading housesStar trading houses andSuper star trading House.

Exim policy of India provides incentives and

ac es o e ca egory o expor ouse anabove.Depending upon the products, the exporterscould be classified as

Single product exporterMulti product exporter


International licensing.

It is an agreement between the licensorand licensee for over a period of time for

the use of brand name, marketing knowhow, copyright, work methods, and

trademark by passing license fee.

e censor s av ng m n muminvolvement in day to day functions.

The return is also comparatively low.


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Franchising.

franchiser exercises more control over the

franchisee.

They also supply a main part of the product like

Trade marks

Operating system

Product brand reputations.Advertising

Training of the employees

Quality assurance


Contact Manufacturing.

Many of the companies outsource theirproducts and concentrate mainly on

marketing operations.Contact manufacturing is a strategy ofidentifying a manufacturing unit to

pro uce ems a a compe ve pro ucein any part of the world.


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Contact marketingcompan es, w c ave s reng o

production, need not have equalmarketing strength but they arecomfortable to deal with marketingoutlets around the world.

Such manufacturing unit, entering in

marketing agreement do concentratemore on backward part of the coremarketing systems, production at a lowcost.


Management Contracts.ompan es w ow eve ec no ogy

and managerial expertise may seek theassistance of foreign companies.

A management contract is an agreementbetween two companies whereby onecompany provides managerial andtechnical assistance in which a propermonetary compensation is given, eitheras a flat lump sum fee or percentageover sales or share in the profit.


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Methods for Entry in MarketingJoint Venture.

It is like a marriage blinding between two venture partners toset up a project either in the home country or host country or

r coun ry w a comm men o o n r s a ng an o nprofit sharing.

Many joint ventures has miserable failures in the past.

In the initial stages every venture promise excellentopportunities to both the venture partners.

When operation starts, certain functional level grievancesand issues become inevitable.

,

the aspects of management, investment and regulations ofthe countries where they operate.

The business unit should have a crystal clear guidelines andoperation manuals wherein the role of every one should bewell defined.


Foreign direct InvestmentFlow of fund from one destination to anotherdestination is called investment.

Companies, which are constantly involved ininternational business, invest their money specially in

manufacturing and marketing bases throughownership and control.

The most attractive part of operation is directinvestment, which contributes to optimisation ofresources n e os coun ry, genera ng emp oymenopportunities and enhancing their standard of living.

Contribution through investment in the capital starvingeconomies and exposing the host countries toadvance technology and quality products.


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Foreign direct Investment Contd.

e mos sa van age are ac oclarity of repatriation of profit,imposition of restrictions by hostcountries and elimination of small andmedium industries through financialmuscle by the investor.

Generally, the foreign investment istaking place in all the developedcountries only in the green fields.

It take place in specific sector.


Merger and Acquisitions

company rom ome coun ry se ec s

foreign company and merges itself with a

foreign company and acquires its control of

ownership.

This mode of entering gives an outstandingcompetitive edge over others.

Such companies are comfortable to

strengthen their international manufacturingfacilities and marketing network.


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Take Over

a e over s a s ra egy o a company o

identify a healthy unit and bring under the

management of another healthy unit in orderto reach the leadership and guaranteed

success.

Since many contestants focus on well

known company for take over, thecompetition becomes inevitable.

Out of those contestants only one will win and

the winner has to withstand hostiles.


Take Over Contd.

take - over and the winner is called take over tycoon.

The take over is also in different levels likeCompany take over

Business take over

Product take over

Brand take over

Eg. Uniliver take over of Brook Bond andLipton enhanced its position as the leader intea industry in India.


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Turnkey projects

urn ey pro ec s a con rac un er w c a

company would be fully involved from the

concept to completion.

Generally, supply of manpower, capital,

erection, installation, commissioning and trailoperation if a project would be the total deal.

For this, either the turnkey project contractorsget fixed price or cost plus profit are collected

over a long period of time.

entry into market

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