International Marketing Diploma - Market Entry strategies

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• published: 02 Dec 2014
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http://www.myfreecoursesonline.com/marketing/international-market-entry-strategies SLIDE1 Welcome back to the second part of Module3 where we study market entry strategies SLIDE2 Now that we know what the main entry strategies are, we need to know how to select the best strategy for entering a new country. Remember, each country poses unique risks and rewards and it always pays to do your homework Our objectives are: To look at a theoretical framework that will guide us to make the best entry mode decision; To use the China Luxury market report of an example of how the framework is applied; and to finalise an entry strategy by taking into consideration various factors. It is recommended that by now you will have red the China Luxury report which accompanies this course. If not, please pause the video and do that first. SLIDE3 Companies have to consider BOTH internal and external criteria before deciding which entry mode they will follow. For example, if the GrandPa who owns family run business refuses to sell Franchises in other countries, the company is restricted to hierarchical entry modes. OR, if a country such as India or Brazil does not allow 100% foreign ownership, the LAW would prohibit hierarchical entry modes and require another approach. Internal criteria is COMPANY SPECIFIC and does not depend on the new market itself; External criteria depends in the ENVIRONMENT of the new country. The process will typically start with a PESTEL analysis of the new country (please refer back to the earlier module where we covered PESTEL). The next step would be a POLITICAL risk analysis for which we may use news articles and other reliable research sources. We will THEN consider the Market SIZE and GROWTH RATE, the GOVERNMENT’s level of openness and the COMPETITIVE environment: The degree of competitive rivalry will certainly impact our entry decision. Weighing up the balance of all these factors, will allow the company to reach a decision. In most cases we will seek advice from a law firm IN the new country, or a multi-national law firm in our own country. SLIDE4 As we can see from the China Luxury market report, both INTERNAL and EXTERNAL criteria is taken into consideration. We will no proceed by looking at the EXTERNAL criteria. SLIDE5 The report starts by considering Political intentions and policy making: Research indicates that China is known for protectionism in order to boost its own economy. In the case of luxury brands, import taxes are SO high that CHINESE citizens spend nearly $50 billion annually on luxury goods in Europe to avoid those taxes. We also see that there is a RISK: Where China may be forced to respond to EU solar sanctions through counter sanctions on EU luxury brands. The Chinese government conveyed this in the press. SLIDE6 We continue with Political intentions and policy making Any analyst will understand that that China is a close ally of Russia. The CAUSE and EFFECT relationship in news analysis can be helpful. The analyst will THEN ASK the question: Is it the intention of western governments to eventually impose sanctions on China, as it did with Russia? If the answer is YES, What EFFECT will this have on western luxury brands which exist in China? The more positive news is that China aims to clamp down on counterfeit goods, and that Luxury consumers now have a preference for original products SLIDE7 The next step is to evaluate the ECONOMIC structure and analyze INTERNAL growth patterns: China’s middle-class growth is transforming the nation. By 2022 the upper middle class will have grown at 22.4%, with the poor and mass middle class shrinking SLIDE8 We also find that The geographic center of the middle-class is shifting from the coastal regions to inland China, representing new opportunities in tier 2 cities. This finding will have ENORMOUS impact on our choice of CITIES if we open in China http://youtu.be/GA9mY8hEGDM