How can government policies and state of technology affect the strategy formation process for the firms entering a new market? …When an organisation has made a decision to enter an overseas market, there are a variety of options open to it.
Government policies and state of technology
When an organisation has made a decision to enter an overseas market, there are a variety of options open to it. These options vary with cost, risk and the degree of control which can be exercised over them. The simplest form of entry strategy is exporting using either a direct or indirect method. Such as an agent, in the case of the former, or countertrade, in the case of the latter. More complex forms include truly global operations which may involve joint ventures, or export processing zones. Having decided on the form of export strategy, decisions have to be made on the specific channels. Many agricultural products of a raw or commodity nature use agents, distributors or involve Government, whereas processed materials, whilst not excluding these, rely more heavily on more sophisticated forms of access. These will be expanded on later.
The chapter begins by looking at the concept of market entry strategies within the control of a chosen marketing mix. It then goes on to describe the different forms of entry strategy. It includes both direct and indirect exporting and foreign production, and the advantages and disadvantages connected with each method. The chapter gives specific details on “countertrade”, which is very prevalent in global marketing, and then concludes by looking at the special features of commodity trading with its “close coupling” between production and marketing.
An organisation wishing to “go international” faces three major issues:
i) Marketing – which countries, which segments, how to manage and implement marketing effort, how to enter – with intermediaries or directly, with what information?
ii) Sourcing – whether to obtain products, make or buy?
iii) Investment and control – joint venture, global partner, acquisition?
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