1. Opportunity Identification and Country Selection

2. Objectives of Market Entry
Foreign Market Entry
Firm Specific
Characteristics
Objectives of Market Entry
Product
Selection
Country
Selection
Mode of Entry
Strategy and
Time of Entry

3. 1. Firm Specific Characteristics
Firm Specific Characteristics Provide the Lens to Assess the Foreign Market Entry Decision. Product Selection, Country Selection, Mode of Entry, Strategy, and Timing All Depend on Firm Specific Characteristics. To Define the Firm
Specific Characteristics a Situation Analysis is Required!

4. 2. Objectives of Market Entry
2.1 Production Focused
- Cost Advantages
 Economies of Scale
 Global Sourcing
 Labor Cost
 Cost to Protect Environment
 Taxes
Knowledge Transfer
Potential for Innovation
Access to Skilled Labor

5. 2. Objectives of Market Entry (Cont.)
Porter’s Diamond
Firm strategy, structure and rivalry
Factor conditions
Demand conditions
Related and supporting industries

6. 2. Objectives of Market Entry (Cont.)
Innovation and Competition
“Companies gain advantage against the world’s best competitors because of pressure and challenge. They benefit from having strong domestic rivals, aggressive home based suppliers, and demanding local customers”
Michael Porter

7. “Without Coke, Pepsi would have a tough time being an
original and lively competitor…..And on the other side of the fence, I’m sure the folks at Coke would say that nothing contributes as much to the present day success of the Coca-Cola Company than…Pepsi”
Roger Enrico
Ex-CEO of Pepsi Cola

8. 2. Objectives of Market Entry (Cont.)
Innovation and Economic Clusters
Clusters are geographic concentrations of interconnected
companies and institutions in a particular field.
- Clusters increase competition and cooperation
Clusters increase communication between companies and employees. Clusters decrease transaction cost by establishing trust.
Clusters increase productivity. Clusters offer access to skilled labor, local suppliers, and public institutions
Clusters offer a high potential for innovation. Companies in clusters are close to competition, customers, and public institutions. Employees might feel peer pressure.

9. 2. Objectives of Market Entry (Cont.)
Innovation and Economic Clusters
Strategic Implications:
Choosing location not only based on input cost. Consideration of Potential for Innovation is a critical factor for long term success.

10. 2. Objectives of Market Entry (Cont.)
2.2 Market Focused
-Capturing new Markets
- Diversification
- Brand name Leverage
- Economies of Scope
- Access to Know How and Qualified Employees
2.3. Competition Focused
- First Mover Advantage
- Preemptive Strike
- Learning in Leading Markets
- First - Mover (Dis)Advantage

11. “If you are going to be the world’s best furnishing
company, you have to show you can succeed in
America, because there is so much to learn here.”
Goran Carstedt
Head of Marketing IKEA

12. 3. Country Selection

13. 3. Country Selection 1. Region Identification
Potential candidates are identified
using easily available statistical
data.
2. Preliminary
Screening
Involves rating the identified
countries on macro level
indicators, such as political
stability, geographic distance and
economic
c development.
3. In -
depth Screening
Analyzes data specific to the
industry and product markets and
segments. Analyses of Market
Attractiveness
4. Final Selection
Company objectives are brought
to bear for a match.

14. 3. Country Selection (cont.)
Analysis of Market Attractiveness
 Size
 Growth
 Competition
 Trade Barriers
 Analysis of Political Risk
 Currency
 Infrastructure
 Capital Requirements
 Production Cost
 Taxes
Economic Freedom Index
Market Potential Index

15. General Data Resources
Michigan State CIBER international business information repository:
U.S. Commercial Service - Export assistance arm of the Department of Commerce
Available through UNLV Library Electronic Collections
Global Market Information Database

16. 4. Mode of Entry
 Exporting
 Licensing
 Strategic Alliance
 Joint Venture
 M&A
 Direct Investment

17. Considerations affecting mode of entry
4. Mode of Entry (Cont.)
Considerations affecting mode of entry
Local Factors
Legal requirements
Cultural distance vs. relevant MNE experience
Customers
Human resources
Distribution chain/supply chain
Political risk/value of connections

18. Considerations affecting mode of entry
4. Mode of Entry (Cont.)
Considerations affecting mode of entry
Nature of the Product
Importance of control of brand, product leakquality, etc.
Importance of technical knowledge
vs. relevant local expertise
Danger of leakage of critical technology

19. Considerations affecting mode of entry
4. Mode of Entry (Cont.)
Considerations affecting mode of entry
Strategic considerations
Risk tolerance vs relative size of project
Importance of learning from the market
Important to demonstrate commitment?

20. 5. Strategy and Time of Entry
- Domestic Market Extension
- Multinational
Global
Market Concentration versus Market Spreading

21. 5. Strategy and Time of Entry (Cont.)
Market Spreading versus Market Concentration:
Market Concentration
 High Penetration
 High Control
 Knowledge of Market
Conditions
 Economies of Scale
 Economies of Information
 Steep Learning Curve
Market Spreading
 Low Penetration
 Low Control
 Little Effort in Single Markets
 Target Market Does not
Reflect National Borders
 Diversification

22. 5. Strategy and Time of Entry (Cont.)
Profit and Risk in International Markets
Operating Profit
Risk
Domestic Operations Only
International Experience