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Market entry strategies

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					Market entry strategies and
   territorial expansion
Internationalization occurs ...
• Internationalization occurs when the firm
  expands its R and D, production, selling
  and other business activities into
  international markets.
             Inward/outward
           internationalization
• A natural way of internationalizing would be first
  to get involved in inward activities (imports) and
  thereafter in outward activities (export).
• Relations and knowledge gathered from import
  activities could thus be used when the firm
  engages in export activities.
Natural way of development...
  1. Marketing, sales
    2. and services                    1. Buying
     3. Production                 2. at foreign market
                          import


              export



      Marketing, sales,
  Services at foreign market
      Market entry strategies

Once the firm has chosen target market
abroad, the question arises as to the best
way to enter those markets.
Classification of market entry modes:
• Export mode – 100 % externalizing (low
  control, low risk, high flexibility)
• Intermediate modes (contractual modes)
  (shared control and risk, split ownership)
• Hierarchical modes (investment modes) –
  100 % internalizing (high control, high risk,
  low flexibility)
      Kraft Foods Inc´s (2011)
• NEW DELHI/MUMBAI: As the world’s second
  biggest processed foods company, Illinois-based
  Kraft Foods Inc’s $18.9 billion takeover of British
  confectionery maker Cadbury is finalised after a
  protracted boardroom battle, Kraft Foods’ finally
  gets a clean sweep of the only big emerging
  market it did not yet have a presence in, India.
•   Cadbury India came under the Kraft Foods fold after the US-based firm
    acquired British candy maker, Cadbury Plc for $19.6 billion in January
    this year.
    Asked if Cadbury India will be selling more products from Kraft
    portfolio, Kripalu said: "As of now we are still focusing on our core
    confectionery business."
    He, however, said integration process is still going on in terms of
    synergising distribution channels of Cadbury and Kraft in India .
    Commenting on the overall plans of Cadbury India, he said: "Capacity
    is a challenge for us, as we look to drive up volumes. We need to
    expand it and we will be doing it significantly."
    He said the expansions will take place at the company's existing six
    facilities in India but declined to share details such as investments
    and envisaged additional output.
    Cadbury sells chocolate brands, including Cadbury Dairy Milk, 5 Star
    and Perk, along with snacks Cadbury Bytes and health drink Bournvita
    among others in India.
              Starting to manufacture
                  TANG in INDIA
•   NEW DELHI: Cadbury India on Thursday said it will start local
    manufacturing of parent Kraft Foods' orange drink Tang , while it will also
    embark on a capacity expansion for its confectionery products.
    "We will start local manufacturing of Tang in India. We are rejuvenating it
    and we will start producing it within this fiscal," Cadbury India Managing
    Director Anand Kripalu told reporters in Delhi on the sidelines of a CII
    event.
    He said Tang, which has been imported from Thailand to serve the Indian
    market so far, will be produced at Kraft's Hyderabad plant.
    "It is a legacy plant of Kraft in Hyderabad, which has not been utilised. We
    will start manufacturing there," he said.
•   Asked if Cadbury India will be selling more products from Kraft
    portfolio, Kripalu said: "As of now we are still focusing on our core
    confectionery business."
    He, however, said integration process is still going on in terms of
    synergising distribution channels of Cadbury and Kraft in India .
    Commenting on the overall plans of Cadbury India, he said: "Capacity
    is a challenge for us, as we look to drive up volumes. We need to
    expand it and we will be doing it significantly."
    He said the expansions will take place at the company's existing six
    facilities in India but declined to share details such as investments
    and envisaged additional output.
    Cadbury sells chocolate brands, including Cadbury Dairy Milk, 5 Star
    and Perk, along with snacks Cadbury Bytes and health drink Bournvita
    among others in India.
         Group assignment
• What kind of specific marketing information
  the international company needs to know to
  design its marketing program for Indian market?
  Define it according to 4 marketing tools –
  product (demand and supply), price, place,
  promotion.

• What to consider at the selection of a
  suitable intermediary – business partner at
  the foreign market?
         Group assignment
• Identify opportunities and threats for INDIA
  from being involved in the process of
  internationalization and globalization.
• Identify the factors of attractiveness of INDIA
  for foreing direct investors and foreign
  businesses operating.
• What kind of specific marketing information
  the international company needs to know to
  design its marketing program for Indian market?
  Define it according to 4 marketing tools –
  product, price, place, promotion
    Factors influencing the choice
            of entry mode

• Internal factors:
  - firm size, international experience, product/services
• External factors:
  – socio-cultural distance between home country and
    host country
  – Country risk/demand uncertainty
  – Market size and growth
  – Direct and indirect trade barriers
  – Intensity of competition, small number of relevant
    intermediaries available
      Indirect export modes
• Indirect export occurs when the exporting
  manufacturer uses independent
  organizations located in the producer´s
  country
       Direct export modes
• direct export occurs when a manufacturer
  or exporter sells directly to an importer or
  buyer located in a foreign market area.
Choice of intermediary



     The selection of a suitable
 intermediary can be a problematic
             procedure.
         What to consider?

				
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posted:9/30/2011
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