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relevant examples within your answer. You should use your knowledge gained
The key to successfully entering new foreign markets is choosing the market entry
strategies. There are plenty of ways to enter a market, and there are no strategies
which work for every type of markets. In addition, the most appropriate strategy just
can be identified after referring to many relevant factors which affect the economic
environment. According to Lana (2008), the elements determining the natures of the
besides, there are many aspects such as location nature, timing, logistic, HRM, etc.
New foreign market entry is a chance for companies to expand their business, so the
question for the situation is should they expand their business and how. In details,
there are many opportunities from a direct investment such as direct exporting to
Export is the most common method used by the organization to enter a new region
market. Carter (1997) described this traditional strategy as ‘the marketing of goods
produced in one country into another’, which mean the goods and/or service are
produced in the domestic market or in any other country before be delivering to host
markets. The export strategy considered as fast entry, it lets MNCs enter many
markets at the same time with the low capital investment required. In addition, there
are 2 types of export mode, which is direct export and indirect export. Furthermore,
and/or service taken by which firm to the importing firm based on the contractual
representatives, the business further in that market without taking ownership. Thus, it
is easier for organizations to adjust their plan or their strategies. Meanwhile, the
direct export method requires more negotiations and contracts, because the branch
delivery, and pricing policies, with the product being sold to agents and distributors’
(Akande and Khadka, 2018). The MNCs applying direct export mode can use a
1997, the Grain Marketing Board in Zimbabwe had been commercialized but still had
been controlled from a Government agency. Besides, the other agencies such as
with advertising, information flows and so on, or it may be active in exporting itself,
On the other hand, if a company with a little or no experience in the business foreign
market, indirect exporting sensible option for the first time entering a new market.
Because the export activities would be taken care of by intermediaries which might
be knowledgeable about the countries. For instance, the enterprises which are small
or medium do not own enough ability to afford to operate their business in another
market, then they have to approach their overseas customers aid on indirect exports
method (Peng and Meyer, 2016). To be more specific, with exporting indirectly
mode, producers do not face directly with the marker, the challenging in socio-
cultural conditions (Glowik, 2016). For instance, the winery factory choosing the
indirect export strategy would have a little or even no administer on the wine market.
This responsibility would belong to the intermediate who buying the wine, or the
specialist for the wineries who are also wholesaler in the host market (Fernández‐
Otherwise, to enter the new foreign country, there is a strategy called franchising
which is also non-FDI method as well as export way. Moreover, the franchising
model and licensing model are considered alike, but in franchising strategy, the host
firm must cover more aspect than just provide product, service or trademark (Peng
and Meyer, 2016). To be more specific, the franchise strategy divided into 2 forms by
Akande and Khadka (2018) which is Product and trade name franchising and
Business format “package” franchising. In detail, in the first case, the franchising
mode sells to another party in the foreign market the right to use the company brand
name and reputation and commercialize goods and/or services under that brand
(Akande and Khadka, 2018). Toyota, Pepsi or Shell are the brands applying the
product and trade name franchising in their business. On the other hand, the
Business format “package” franchising the franchisor gives intangible property such
as the business plan and the format of operation, provided intangible property such
as ‘trademark, copyrights, designs, and patents’ (Akande and Khadka, 2018). This
market entry format is usually applied by the fast food companies, for instance,
McDonald’s and Dunkin Donuts. There is a popular franchise market in Asia, which
is Indonesia according to Porral and Dopico research (2011), especially in the luxury
fashion industry
However, the franchisee applying the host company system and marketing
campaigns just for a concrete period of time depending on the contract between
parties and has to execute specified conditions. Moreover, franchising strategy has
its own advantages and also some disadvantages. Firstly, cooperating with
for the enterprise in decision whether or not become international. Salar and Salar
(2014) said that branding recognition forceful component in entering foreign markets
and having franchisees requires the perspective of the customer about the existence
of the company brand. Secondly, cooperating with the other parties help MNCs who
are more similar to the local market and customer behavior. Then exploiting their
knowledge about the local market, cultural sensitivity and also ability in doing
business from the other parties helps it is easier to penetrate the local market
(Glowik, 2016). Thirdly, because franchising method is considered as the low failure
rate so it is easy to find financial support from banks and either alike organizations
Additionally, before applying the franchising model, MNCs should also consider its
damaged during the doing business process. Because these parties are dependent
on each other, the franchiser has to continuous support the other party although the
incunabula already over or the property already transferred (Global Victoria, n.d.).
And also the franchisers have to follow their franchisees ‘because franchisees want
to convert their investments to the profit and franchisor wants to be a part of the
profit’ (Salar and Salar, 2014). For that reason, the conflict between parties easily
occurs when the business objects are missed or dispute in the target or profit,
committee (Glowik, 2016). In other respects, Holmes (2003) commented that the
cost of preparing the agreement, Uniform Franchise Offering Circulars (UFOCs) and
the related document would require noticeable spending. Furthermore, there are
different cost barrels in different states making the situation become more
complicated.
Otherwise, to enter a foreign market, there is a strategy called joint venture, which
had been applied by many big brands like Sony, Samsung, etc. In details, the joint
venture strategy means a company partners up with one or more other parties to
create a third independently company (Peng and Meyer, 2016). Besides, joint
popular strategy because of its nature (Chang et al., 2015), has its own benefits and
drawbacks. The first advantage in the business process is the profit, cost and also
risk are shared between parties, so the risk in investment financial is also reduced
for each enterprise (Peng and Meyer, 2016). Furthermore, because of the partners
up with local parties helping the home company has the opportunity to exploit the
local partner’s infrastructure and also their experience in the market (Akande and
Khadka, 2018). And also, according to Akande and Khadka, joint venture strategy
local they cooperate with, helping to have the greatest productivity and reduce cost.
In other respects, applying the joint venture mode requires the enterprise and the
becomes a barrier in many countries, for instance, the joint venture strategy is rarely
applied in China during 2009 period by mobile companies, because of the lack of
In conclusion, every type of market entry strategy has its own upside and downside.
To choose the most appropriate method, the enterprises must consider their
business scale, their capacity, the industry nature, the situation in the foreign market,
timing and speed, etc. Similarly, Peng and Meyer (2016) said that before deciding to
become international firms should match the many factors of the approaching new
market with their business objects. In addition, if the MNCs are not confident in their
ability, they shall consider following the indirect approaching by partner up which
another local enterprise to use their resource and lower risk and operating cost.
However, the direct approaching method such as direct export creates a great
chance to branding their companies name, and keep profit intact although the cost
Carter, S., (1997). Global agricultural marketing management. Food & Agriculture
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Akande, O. and Khadka, B., (2018). Market entry strategy: Case company-
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Porral, C.C. and Dopico, D.C., 2011. " Carolina Herrera" Internationalization
Salar, M. and Salar, O., 2014. Determining pros and cons of franchising by using
Global Victoria, (n.d.). Choose a market entry strategy. [online] Available at:
https://global.vic.gov.au/for-exporters/get-export-ready/choose-a-market-entry-
Chang, J., Bai, X. and Li, J.J., (2015). The influence of institutional forces on
Hendrikse, G., Tuunanen, M., Windsperger, J. and Cliquet, G. eds., (2008). Strategy
10.1061/(ASCE)CO.1943-7862.0000082.