04 IB Unit 3 SEM 5

INTERNATIONAL
BUSINESS
MODULE 3
MARKET ENTRY STRATEGIES IN INTERNATIONAL BUSINESS
An organization which wishes to “go International” may face some issues or challenges:
Market Research and Understanding: Organizations need to thoroughly research and

understand the target market before entering. This involves studying consumer behavior,
market trends, local competitors, and legal regulations. Lack of proper research can lead to
misjudging the demand for products or services and result in failure.
Legal and Regulatory Compliance: Each country has its own set of laws, regulations, and
compliance requirements. Organizations must navigate through these legal complexities to
ensure their operations are lawful. This includes understanding international trade
agreements, intellectual property rights, taxation, and product standards.
Basic challenges faced before entering

into International markets
Distribution and Supply Chain: Establishing efficient distribution networks
and supply chains in foreign markets can be challenging. Companies need
to consider transportation, logistics, warehousing, and local infrastructure.
Understanding local customs procedures, import/export regulations, and
finding reliable partners can also pose difficulties.
Competition and Market Saturation: International markets are often highly

competitive, with existing players who have established their presence.
New entrants must differentiate themselves and offer unique value
propositions to gain market share. Understanding the competitive
landscape and finding a competitive edge is crucial.

Financial Considerations: Expanding internationally requires significant
financial resources. Organizations must allocate budgets for market
entry, such as market research, marketing campaigns, infrastructure
setup, and talent acquisition. They also need to consider currency
fluctuations, exchange rates, and financial risks associated with
operating in foreign markets.

One of the most common and age-old market entering strategy.
Exporting refers to the process of selling goods or services produced in one
country to customers or businesses located in another country. It involves the
transfer of products or services across international borders, typically for the
purpose of generating revenue and expanding business opportunities.
ACTIVE PASSIVE
EXPORTING
TYPES OF
EXPORTING
INTRA-
DIRECT CORPORATE
TRANSFERS
INDIRECT
Government Policies
Legal Regulations
Market Research and Adaptability
Culture and language differences
Competitive Analysis
Logistics
Distribution Channels
FACTORS TO BE CONSIDERED FOR

EXPORTING STRATEGY
Export management companies – Act as export department of exporting
firms . They act as commission agents.
Co-operative societies: These are societies formed by domestic
companies which help in undertaking the operation of its members.
International Trading companies: These companies are engaged in
exporting-importing . Buying the good from domestic companies and
exporting it. The companies can export their goods by selling their
products to these export companies.
Manufacturer export Agents: They work on commission basis. They sell
domestic manufacturers products in foreign markets and act as foreign
sales department.
EXPORT INTERMEDIARIES
Export Import brokers: The brokers bridge the gap between exporter
and importer and bring these parties together.
Freight Forwarders: They help domestic manufacturers in exporting
their goods by performing various functions like transportation of goods,
arranging customs, documents and arranging transportation services
EXPORT INTERMEDIARIES
A joint venture refers to a business arrangement in which two or more
separate entities come together to form a new entity to pursue a specific
business objective or project. It is a strategic partnership where the
participants contribute resources, expertise, and capital to jointly undertake
a venture while sharing the risks, rewards, and control.
In a joint venture, the participating entities pool their resources, which can
include capital, technology, intellectual property, distribution networks, or
other assets. The purpose of a joint venture can vary widely, ranging from
entering a new market, developing new products, sharing research and
development costs, or combining complementary capabilities to achieve a
common goal.
JOINT VENTURES
Contractual agreements can be an effective mode of entry for international businesses
seeking to expand into foreign markets. A contractual agreement is a legally binding
agreement between two or more parties that outlines the terms and conditions of their
business relationship.
CONTRACTUAL AGREEMENTS
Shared Ownership: The participating entities share ownership and control of the
joint venture entity. Typically, they establish a separate legal entity, such as a
corporation or a limited liability company, to conduct the joint venture activities.
Shared Risks and Rewards: The participating entities share both the risks and the
rewards associated with the joint venture. This includes sharing financial gains or
losses, operational challenges, market risks, and potential legal liabilities.
Shared Management and Decision-Making: The management and decision-making

of the joint venture are typically shared between the participating entities. They work
collaboratively to make strategic and operational decisions, usually through a jointly
appointed management team or a board of directors.
KEY FEATURES OF A JOINT VENTURE

Specific Objectives and Duration: Joint ventures are established for specific objectives or projects. The
objectives can be short-term or long-term, depending on the nature of the venture. The duration of a
joint venture is usually defined in an agreement between the participating entities, which outlines the
purpose, scope, and timeframe of the collaboration.
Autonomy and Independence: While the participating entities work together in the joint venture, the
entity itself operates autonomously and independently from the parent organizations. It has its own
governance structure, financials, and operations, although it may still benefit from the expertise and
resources of the parent entities.
Joint ventures offer several benefits, such as access to new markets, sharing of costs and risks,
leveraging complementary capabilities, accessing new technologies or expertise, and expanding the
product or service offering. However, they also require careful planning, clear agreements, effective
communication, and mutual trust and commitment between the participating entities to ensure a
successful partnership.
KEY FEATURES OF A JOINT VENTURE

Maruti Suzuki India Limited: Maruti Suzuki is a well-known automobile
manufacturer in India. It is a joint venture between Suzuki Motor
Corporation of Japan and the Indian government. The joint venture was
established in 1981, and Maruti Suzuki has since become the leading car
manufacturer in India, with a wide range of popular models.
Mahindra & Mahindra Renault Limited: Mahindra & Mahindra Renault
Limited was a joint venture between Mahindra & Mahindra, an Indian
automotive manufacturer, and Renault, a French automobile company. The
joint venture focused on manufacturing and selling Renault-branded
vehicles in India. Although the joint venture was dissolved in 2010, it played
a significant role in expanding Renault's presence in the Indian market.
EXAMPLES OF SUCCESSFUL JOINT

VENTURES
Tata Starbucks Private Limited, formerly known as Tata Starbucks
Limited, is a 50:50 joint venture company, owned by Tata Consumer
Products and Starbucks Corporation, that owns and manages
Starbucks outlets in India. The outlets are branded Starbucks "A Tata
Alliance". India.

04 IB Unit 3 SEM 5

Uploaded by

Copyright:

Available Formats

04 IB Unit 3 SEM 5

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

04 IB Unit 3 SEM 5

Uploaded by

Copyright:

Available Formats

INTERNATIONAL

Market Research and Understanding: Organizations need to thoroughly research and

Basic challenges faced before entering

Competition and Market Saturation: International markets are often highly

Basic challenges faced before entering

Basic challenges faced before entering

FACTORS TO BE CONSIDERED FOR

Shared Management and Decision-Making: The management and decision-making

KEY FEATURES OF A JOINT VENTURE

KEY FEATURES OF A JOINT VENTURE

EXAMPLES OF SUCCESSFUL JOINT

You might also like

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.