Chapter 10: International Market Entry Strategies

Question 1

Phases of international marketing Involvement

No direct foreign marketing

Answer 1

No active cultivation of customers outside national
boundaries takes place, although products may
reach foreign markets

Question 2

Phases of International Marketing Involvement

Infrequent foreign marketing

Answer 2

• Temporary surpluses result in infrequent overseas
marketing
• Little or no change in company organization or
product lines

Question 3

Phases of International Marketing Involvement

Regular foreign marketing

Answer 3

• Firm has permanent productive capacity to produce goods to be marketed on a continuing basis in foreign markets
• Firm begins to be dependent on foreign profits

Question 4

Phases of International Marketing Involvement

International marketing

Answer 4

•Firm becomes an international or multinational marketing firm dependent on foreign revenues

Question 5

Phases of International Marketing Involvement

Global marketing

Answer 5

• Firm develops an overall strategy and image to maximize returns through some global standardization of its business activities

Question 6

Market Entry Objectives:

Answer 6

Psychic distance
Market seeking
Efficiency seeking
Resource seeking

Question 7

Psychic distance:

Answer 7

Market is considered distant due to psychological barriers

Question 8

Market seeking:

Answer 8

Companies that venture into new countries become international because they are looking for new markets, actively seeking customers worldwide.

Question 9

Efficiency seeking:

Answer 9

Firms want to enter countries/markets where they can achieve efficiency in different ways

Question 10

Resource seeking:

Answer 10

Firms try to enter countries to get access to raw materials or other inputs for cost reduction

Question 11

What helps the company in market opportunity assessment?

Answer 11

• To screen the market in relation to it’s objectives overall strategy, and the country’s economic, cultural and legal environment
• To assess whether the market is economically attractive or not
• To make an advanced in-depth analysis of market opportunity for its particular product

Question 12

Proactive market selection:

Answer 12

Actively and systematically selecting a market

Question 13

Reactive market selection:

Answer 13

Selecting a market at random or without a systematic analysis

Question 14

What does the Boston Consulting Group (BCG) use to maximise the long-term profit and growth of a firm?

Answer 14

• Country attractiveness

* Competitive strength of the company

Question 15

What are some country attractiveness traits?

Answer 15

Market growth
Market size
Competitive conditions
Market uncontrollables

Question 16

What are some competitive strength traits of a company?

Answer 16

market share
Marketing ability and capacity
Product and positioning fit
quality of distribution services

Question 17

Market entry strategies

Exporting:

Answer 17

• Easiest and most common approach as the risks of financial loss can be minimized
• Piggybacking: The company sells its products abroad using another company’s distribution facilities

Question 18

Marketing entry strategies

Licensing:

Answer 18

•Patent rights: Only the owner of the rights can use the particular product technology

Question 19

Market Entry strategies

Franchising:

Answer 19

• Permits flexibility in dealing with local market conditions and provides the parent firm with some degree of control
• Types -Master franchise, joint venture, and licensing

Question 20

Market entry strategies

Strategic international alliances:

Answer 20

• Synergistic relationship that achieves a common goal where both parties benefit
• Strategic alliance: Two companies cooperate for a certain purpose

Question 21

Market entry strategies

Joint ventures:

Answer 21

• Partnership of two or more firms that have joined

forces to create a separate legal entity

Question 22

What are some characteristics of joint ventures?

Answer 22

• Partners share in the management
• Partnerships are between legally incorporated
entities and not between individuals
• Equity positions are held by each of the partners

Question 23

Market Entry strategies

Consortia:

Answer 23

• Involve a large number of participants

* Frequently operate in a market in which none of the participants is currently active

Question 24

Market entry strategies

Manufacturing:

Answer 24

•Also called a wholly-owned subsidiary within a foreign country

Question 25

reasons to choose manufacturing as a market entry strategy?

Answer 25

• To avoid high import taxes
• To reduce the high costs of transportation to market
• To gain access to raw materials
• Means of gaining market entry
• To capitalise on low-cost labour

Question 26

Market entry strategies

Countertrade:

Answer 26

•Ties the export to an undertaking from the seller to purchase products from the buyer or a third party in the buyer’s country

Question 27

reasons to choose countertrading as a market entry strategy?

Answer 27

• Promotion of local exports
• Saving scarce foreign exchange
• Balancing trade flows
• Ensuring guaranteed supplies

Question 28

What are the stages of going abroad?

Answer 28

• No regular export
• Export via representatives
• Joint ventures
• Sales subsidiary
• Production/manufacturing subsidiary