Market Entry Strategy Flashcards
What are the basic options of Market entry?
Market entry involves:
1. Placement of new product on existing or new market
2. Placement of existing product on new market
3. Establishing new organization
What are the key phases of Market Entry Process?
Set of decisions, actions and reaction that firstly create and subsequently use market entry, in the manner that maximizes advantages of entry and minimizes its costs.
Entrepreneurial market entry strategy involves three key phases:
1. Creating opportunities for market entry
2. Using entry
3. Feedback to repeat the first phase
What are the sources of competitive advantage (Resources)?
Resources (machines and technology, financial capital and professional staff) are the source of competitive advantage.
For that purpose, the resource should be:
1. Valuable – provides for utilizing opportunities, neutralizing threats and offering products or services valued by buyers.
2. Rare – if a small number of competitors owns it or if competitors do not own it at all.
3. Non-replicable – if replication of resource set is difficult or expensive for a potential competitor.
What is Knowledge and what are the types of knowledge?
Foundation of entrepreneurial resource that is valuable, rare and non- replicable is knowledge,
being valuable on its own.
Knowledge is built through experience, collected through time and kept in the mind of entrepreneur and collective awareness of management and employees.
Market knowledge – information, technology, capacities and skills of entrepreneur, helping him to understand market and buyers.
Technology knowledge - information, technology, capacities and skills of entrepreneur, enabling him to comprehend creation of new knowledge.
What are the errors of commission and omission?
Error of commission – decision to pursue this new entry opportunity, only to find out later that the entrepreneur had overestimated his or her ability to create demand and/or to protect the technology.
Error of omission - decision not to act on the new entry opportunity, only to find out later that the entrepreneur had underestimated his or her ability to create customer demand and/or to protect the technology.
What are the first entry strategy advantages?
Being an initiator (the first one in the market) brings an array of potential advantages that can improve performance. These advantages are:
1. Cost management advantage
2. Lower degree of competition
3. Assurance of important (supply) channels
4. Better position to satisfy buyers
5. Possibility to increase expertise
Entrepreneurs must decide if advantages brought by initiator’s position outweigh disadvantages.
This estimate depends on:
1. Environment stability– key success factors, demand independence, technology independence,
2. Capacity to educate buyers– buyer’s uncertainty if the product will operate in line with their expectations
3. Capacities to set up barriers for copying– time advantage, loyalty, legal protection, contracts with suppliers
What are the definition of a Risk reduction strategy and what are the types?
Market entry brings significant risk for the entrepreneur, regarding possibility and quantity of loss, which may lead to failure.
Risk of loss partially originates from entrepreneur’s uncertainty regarding market demand, technology development and unpredictable moves by competition.
It is possible to use various strategies alleviating some of these uncertainties, thus decreasing
risks. The strategies are: market span strategy and imitation strategy
What are the Market Span and imitations strategies?
Market span is selection of buyers to whom the entrepreneur will market new product and service, together with the method of doing so.
Narrow span strategy offers smaller variety of products to smaller number of buyer groups, to satisfy a certain need.
Wide span strategy offers broader variety of products on multiple various market segments, by determining which products are the most profitable.
