Transcript Lect6_Non Export Entry Mode

Lecture 6
Export Market Entry Strategies
Non-Export Mode
EXPORT MARKETING ENTRY
STRATEGIES
Entry mode
Target Country
Penetration
Marketing plan
Target Market
Penetration
Channel of distributions
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International Marketing
Channel of Distribution
A system composed of marketing
organizations that connect the manufacturer
to the final users of consumers of the
products in a foreign market.
Product
MANUF
CONSUMER

Border
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Elements of Entry Strategy
(Decision) We should decide:
 Objectives and goals in the target market
 Needed policies & resource allocations
 The choice of entry modes to penetrate the
market
 The control system to monitor performance
of the market
 A time schecule
Sales Appoach: just to sell and no need to stay
long
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Entry Modes

Entry mode is an institutional
arrangement necessary for the entry of
a company’s products, technology,
human & financial capital into a foreign
country/market.
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ALTERNATIVE APPROACHS TO FOREIGN MARKETS
Sales Approach
Entry Strategy Approach
Time Horizons
Short Run
Long Run (say, 3 to 5 years)
Target Markets
No systematic Selection
Selection based on analysis of market/
sales potential
Dominant Objective
Immediate Sales
Build permanent market position
Resource Commitment
Only enough to get
What is necessary to gain permanent
immediate sales
market position
No systematic choice
Systematic choice of most appropriate
Entry Mode
mode
New-Product
Development
Exclusively for home market
For both home and foreign markets
Product Adaptation
Only mandatory adaptations
Adaptation of domestic products to
(to meet legal/technical req.)
foreign buyer's preferences, incomes
of domestic products
and use conditions
No effort to control
Effort to control in support of market
Channels
objectives/goals
Price
Promotion
Determined by domestic full
Determined by demand, competition,
cost with some ad hoc adjustments
objectives and other marketing policies
to specific sales situations
as well as cost
Mainly confined to personal
Advertising, sales promotion, and
selling or left to middlemen
personel selling mix to achieve
market objectives/goals
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Chanels between nations

Exporting:
Licencing:
Contract Manufacturing:
(marketing by contractor)
Management Contracting:
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Manufacturing:
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Assembly Operations:
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Joint Venture:
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Simply & easy way. (Direct-indirect)
International expercing by licence agreement
Contracting 4 manufacturing. Toyotasa/Nike
Local investor + outside company
Money
know-how
Low risk
Manufacturing abroad. (by himself)
Goverment, competitive pressure, market
demands, restrictions, imports, cost, supplying
power.
Represents cross between exporting and
foreign manufacturing. Manufacturer exports
components & parts. Assembled in market
Forming new company for national interests.
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Channels within nations
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Distributors / Subsidiary
Wholesalers
Retailers
Consumers
Stores/malls
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Type of Entry Mode
(How far shall we expand?)
Target Market
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The nature, size & geographical distribution of customers.
The needs, requirements, & preferences of these customer.
The level of economic development of the market
Products
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Nature of the product
Unit volume + weight + bulk
Technical complexity.
Availability of Marketing Organization
Existing structure of distribution: YAYSAT (star)
Company Considerations
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Marketing management capability & know how
Newness of the company to international marketing activities
Size of the company & width of its product line
Financial strenght & ability to generate additional capital
CAC if needed
Govermental Policies
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General regulations
Discourage export
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How can we decide entry
strategy?
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Naive rule: Only one way usance entry
mode for each target. (Sadece
distributorler ile export yapacağız.)
Pragmatic rule: Use a workable entry
mode. For each workable. (Low risk rule) +
profitable ( en iyi olmayabilir)
The strategy rule: (Use right entry mode for
each markets) All entry modes are
evaluated systematicaly then choose the
best mode.
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NON – EXPORT ENTRY
MODES
There are 3 basic alternative ways that a
manufacturer can engage in overseas
production:
 A manufacturing plant can be
established
 Assembly operations can be set up
 A strategic alliance can be formed with
one or more Co.
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Manufacturing Facilities

Location
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Climate for foreign capital
(Political/economic/industry/dynamics/size/geographical
/tax).
Production Considerations (Lost/
personnel&labor/facilities/cost of power transport) Real
estate/cost of raw materials/capital equipment.
Special conditions (Industry conditions/competition).
Political Risk
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Transfer risk (Capital, payments, products, tech persons).
Operational risk (Policies, regulations, local op. Marketing,
production, financing, biz, focus)
Ownership-control risk (Inhibit ownership/control)
General instability risk (Future viabilility)
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2. Assembly Operations
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Manufacturer exports all or most of its
products in a “knocked-down”
condition. These parts are put together
to form the complete product.
Nigeria
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3. Strategic Alliances
a- Licencing
b- Contracting
c- Joint-Venture
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a- Licencing:
A company in one country (licensor) enters into a
contractual agreement with a company or person in
another country (licensee) whereby the licensee is
given the right to use something owned by the
licensor.
Contract
Licensor
Licensee
Giving right

Border
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Involves: Technology know how, manufacturing
process (patented&non-patented)
 Trade mark, brandname, logo
 Product/facility design
 Marketing knowledge&processes
 Other types of knowledge&trade secrets
 Initial payment (machinery)
 Annual minimum (min. guarantee)
 Annual percentage fee (royalty)
 Additional fee (initial payment prohibition). /New
plants.
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b- Contract Manufacturing:
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Technology transfer + direct
investment. (IBM, HP, DE produced by
SCI, solectron, menix).
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Management Contracting:
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The local investor provides the capital
for enterprise, while the international
marketer provides the necessary
know-how to manage the company.
(Hilton)
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c- Joint-Venture:
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Partnership in two sides – technical
and emotional.
Technical: Joining of technical
contributions
Emotional: Feeling of cooperative
effort.
A new company.
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