Foreign Market Entry Mode Strategies

The provided document is an assignment on foreign market entry modes. It discusses various approaches to carrying out business operations in a foreign market effectively, including the consideration of economic indicators, political risks, and cultural background. The assignment references several books and journals that explore the interactions of institutions on foreign market entry mode, the moderating effect of the political environment, and the choice of foreign market entry modes. It also discusses the role of resources and industrial driving forces in shaping entry mode decisions.

Analyse foreign market entry
modes for a company of your
choice.

Table of Contents
INTRODUCTION...........................................................................................................................1
Main body...................................................................................................................................1
Analysis of different stability modes to be used by Binatone.....................................................1
Market entry modes.....................................................................................................................2
Factors of growth and development............................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
With the globalisation of the market on the higher and significant level, the companies
now aims to expand their business operations on a wider basis. The foreign market penetration
and entering into the new nation is becoming the major requirement of a company (Ang,
Benischke and Doh, 2015). The report will lay emphasis on the market penetration strategy that
will be taken in consideration by the UK based mobile phone firm, Binatone to enter into a
newer mobile phone market in India. This report will analyse all the entry modes, that are been
taken in consideration by the cited business firm to enter into a newer market. Apart from this,
various theories are been taken in consideration by the cited firm to gain a better insight about
the factors affecting market penetration in a new country. Also, the various sort of business
factors to carry out the business operations in the targeted company is been taken in effective
consideration (Laufs and Schwens, 2014).
Main body
Analysis of different stability modes to be used by Binatone
Binatone is one of the leading electronic and mobile phone manufacturer in UK. It is the
leading business firm that works in the mobile phone, electronics and telecommunication
industry. On the other hand, India is one of the biggest economy in world and the fastest growing
nation. In recent years, it has been emerged as one of the major consumer and manufacturer of
the mobile phones and has seen a tremendous growth in telecommunication sector. Thus, all this
factors have made India as one of the major country to have the potential market for the mobile
phones of cited business firm. In such case, Binatone can penetrate and emerge as one of the
major option for the customers in Indian market. To enter into the market, the firm will see
through the better handling of the different entry modes that will help the firm to meet its
operational and financial goals in the market (De Villa, Rajwani and Lawton, 2015).
Binatone would consider the various measures that will be taken in the organisation that
will help in better growth and development of the organisation in the foreign market of India.
The utilization of the different sort of the market penetration measures that will be undertaken by
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the firm will help business entity which will help the business organisation to handle a wide
range of operations. The adoption and following of different sort of entry modes will help the
firm to gain a better sustainability and stability in a foreign market. The effective analysis and
adaption of the wide range of business entry modes will help the firm to achieve its targeted
goals and handle a wide range of business operations in firm. The effective handling of the
strategic entry modes will help mobile phone firm to develop a high level of productivity and
revenue generation in a foreign market (Laufs, Bembom and Schwens, 2016).
The entry mode is a form of strategy or business function that will help the cited
organisation to meet the strategic requirements of the firm and handle the different business
operations which will help the business organisation to meet the operational requirement of
customers. The entry mode style will help Binatone to develop a strategic approach to enter and
establish in foreign market of India. The different business strategies that are been developed by
the firm will help the business organisation to handle the trade organisation in a better and
significant manner (Pongelli, Caroli and Cucculelli, 2016).
Market entry modes
Some major foreign market entry modes are as follows:
 Export: It is the practice of selling the goods and services that are been produced in one
country into the market of another country. For instance, Binatone will produce or
manufacture the mobile phones in UK and export them in Indian market for selling to the
customers. It is basically of two types: Direct and Indirect. The direct approach uses the
approach of capitalization of the economies. The production is focused in the home
country, while the products are been sent out for selling. It is the best approach when the
product volume is low (Gubik and Karajz, 2014). It also involves the processes like
fulfilling the foreign demands like domestic orders by the means of distributors or sales
representatives. In the indirect export, the company don't have the control over the
products in international market. It involves the approach of having export trading
companies (ETC) or Export merchants who will promote and sell the finished goods or
services, manufactured by the cited firm. The major advantage of using the export
approach is that it helps to keep a check on the foreign market. It also helps the firm to
have a better handling of the different sort of relationship with its buyers to protect its
intellectual property like patents or trademarks (Johanson and Mattsson, 2015). Also, it
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supports effective setting of R & D departments and develop effective marketing and
sales strategies. Although, the major drawback of this approach is that it require regular
investments to maintain the resource and personal changes in organisation. Also, the no
control over the market in indirect export approach will impact the sales. Apart from this,
the incorrect selection of export partners and strategy may hider the performance of
organisation in foreign market.
 Licensing: It involves the usage of the international trade licence, allowing the foreign
firms to enter and sell their products and services in the specific market or the country.
For instance, Binatone accessing the licence from the trade authority or government to
carry out the manufacturing and selling of its mobile phones in Indian market. In this
approach, the owner of the firm is been granted permission to get the access to the
resources and rights in the host countries, including the patents and trademarks. The
approach of licensing helps in gaining the better introduction of the latest and updated
technology in host nation and develop the skills of local labour. The extent of the licence
is present up to the extent of understanding and knowledge of the host country towards
that technology and product quality of the licensor. This involve the selection of the right
business partners to function in the market and avoid any sort of competition (Wulff,
2015). The major advantage of this approach is that it helps the firm to generate extra
revenue by implementing the latest technology and skill sets. Besides this, it will help the
cited business entity to access the new market in host country, leading to its expansion
without high risk factors. Other than this, the political risk is also minimum in this
approach. The major disadvantage is it generate low revenue as compared to any other
modes of entry and the loss of quality standards can lead to decrease in the sales and
business efficiencies.
 Strategic alliances: it is a form of agreement that is been made between the different
firms like sharing of technology and resources, developing joint ventures and have a
minority equality participation. This entry mode s generally practised in industrialized
nations, help in focusing on the creation of better quality of products and services and is
created for short duration. For example, Binatone collaborating with a local technical
firm to carry out its business operations and meet the needs and demands of the users in
foreign market in a better way. It is one of the popular form of entry modes used by the
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organisation to enter into the foreign market (Hennart and Slangen, 2015). The major
advantage of this approach is that it helps in the better exchanging and developing of
technologies, keeping in mind the local as well as the foreign customer base of cited
business firm. This will include the better development and utilization of the R & D
department of Binatone and create the better products and services using the innovation.
Other than this, the collaboration approach will help the firm to meet the global
competition. Also, this will help in better scaling of the economy of host nation and
reduce the risk factors to be faced by the business organisation. But the major
disadvantage related to this approach is that the exchange of resources may lead to the
contract or alliance to get forged up and reduce the benefit for both firms. Besides this, it
creates a situation of dominance of one firm over the other. It may create a threatening
condition for the less powerful firm in the alliance. Also, the technology or the
knowledge that is been gained in the firm can be used against each other, impacting the
performance, trust level and sales of both the collaborating firms. This has the major risk
of developing unequal business relationship (Naidoo and Wu, 2014).
 FDI: It stands for “Foreign Direct Investment”. It is the approach in which the firm or the
industrial sector gets the high amount of the foreign investment in the country, through
various sectors. This approach helps the host country to increase the foreign currency
reserve with the government and improve the trade relations with other countries. It can
be implemented in the firm through various ways such as establishing a new branch in
host country, acquiring the controlling share of an existing mobile phone firm in country
and participate with other firm to develop better product and services. This approach has
been quite controversial in certain countries for its direct approach and very low
involvement of government in decision making but has the big advantage to generate
high amount of revenue and investment in foreign country (Wulff, 2015). It helps in the
development of better collaboration with the local firms and thus, will help Binatone to
develop a better trade relation with India and manufacture and sell its mobile phones in
Indian market. Although, the investment acquisition process will require the approval
from Security Exchange Board of India. This approach helps the foreign organisation to
have a technical and financial collaboration with and Indian firm in same market sector.
Also, as per the laws, the recipient firm for the FDI has to take the permission and
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clearance from the RBI and local government to carry out the production and selling
operation's in Indian market.
Thus, it can be analysed from the research that the different entry modes of penetrating
the foreign market has certain advantage or disadvantage that can impact the overall operations
of the business organisation in the foreign market. Thus, it can be said that the entry modes like
exporting or licensing is quite appropriate for Binatone as compared to the strategic alliance and
FDI. This approaches will lay a significant impact on overall functionality of the business firm.
Other than this, it will take following measures in deep consideration (Hernández and Nieto,
2015).
Factors of growth and development
The major factors of the growth and development that are been taken in consideration are
as follows:
 Economic indicators: Market penetration approach or entry modes like Export and
Licensing will be developed by the firm, after taking in consideration the various sort of
economic indicator factors like GDP growth rate, inflation rate, Balance of trade and
annual growth rate. Binatone will look after these measures before developing a strategy
to enter into the Indian market in order to ensure better handling of the wide range of
business operations. The entry modes approaches like Exporting, licensing or FDI will
create a positive condition for the business firm by contributing in the growth and
development of the better economic indicators and economy of host-country, by the firm
(Naidoo and Wu, 2014). These approaches or entry modes will contribute in better
development and rise in productivity of foreign business firm. Also, the rise in income
and economic stability of people in country has paved a better path for the firm to carry
out the business operations in a better way.
 Country risk/ Political risk: Binatone has to look after the political or national risk
factors like opposition from political or social group etc. These approach is been taken in
consideration by the foreign business firm before entering in the host country. Other than
this, the approaches like exporting, licensing and FDI are highly susceptible to get
impacted by the political and national issues. This will not only impact the growth and
development of cited business firm in foreign market but also can impact its brand equity
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(Gubik and Karajz, 2014). Thus, before investing in India in form of export or FDI, the
mobile phone firm will look after the proper rectification of such impacting factors.
 Culture: the countries culture will also lay a very deep and significant impact on the
overall functioning of Binatone in Indian market. The Indian market culture is quite open
and liberal to adopt the latest and highly advance technical products and services, the
mobile phone firm has very emerging market to sell its products and services (Johanson
and Mattsson, 2015). The cited firm can utilize the approach of intermingling the
innovation and cultural factors to develop the better products and services, keeping in
mind the different sort of cultural obligations and measures. The firm can utilize the
factors like using Indian languages to make the UI of its mobile phone or provide the
customer support services in local region. This will help the firm to increase the goodwill
and gain a better customer satisfaction level.
CONCLUSION
Thus, from the above analysis it can be said that the different entry modes can be utilized
by UK based Mobile phone firm, Binatone. The approaches like Exporting, Licensing to carry
out the trade in Indian market, developing strategic alliances with local technical firms and
involving the FDI will help the cited business firm to carry out its business operations in a very
effective way. Besides this, the consideration of these approaches with different factors like
economic indicators of country, assessment of political risks and cultural background will help
mobile phone firm to develop a better strategy before entering in foreign market.
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REFERENCES
Books and journals
Ang, S.H., Benischke, M.H. and Doh, J.P., 2015. The interactions of institutions on foreign
market entry mode. Strategic Management Journal. 36(10). pp.1536-1553.
De Villa, M.A., Rajwani, T. and Lawton, T., 2015. Market entry modes in a multipolar world:
Untangling the moderating effect of the political environment. International Business
Review. 24(3). pp.419-429.
Gubik, A.S. and Karajz, S., 2014. The Choice of Foreign Market Entry Modes: The Role of
Resources and Industrial Driving Forces. Entrepreneurial Business and Economics
Review. 2(1). pp.49-63.
Hennart, J.F. and Slangen, A.H., 2015. Yes, we really do need more entry mode studies! A
commentary on Shaver. Journal of International Business Studies. 46(1). pp.114-122.
Hernández, V. and Nieto, M.J., 2015. The effect of the magnitude and direction of institutional
distance on the choice of international entry modes. Journal of World Business, 50(1),
pp.122-132.
Johanson, J. and Mattsson, L.G., 2015. Internationalisation in industrial systems—a network
approach. In Knowledge, Networks and Power (pp. 111-132). Palgrave Macmillan,
London.
Laufs, K. and Schwens, C., 2014. Foreign market entry mode choice of small and medium-sized
enterprises: A systematic review and future research agenda. International Business
Review. 23(6). pp.1109-1126.
Laufs, K., Bembom, M. and Schwens, C., 2016. CEO characteristics and SME foreign market
entry mode choice: The moderating effect of firm’s geographic experience and host-
country political risk. International Marketing Review. 33(2). pp.246-275.
Naidoo, V. and Wu, T., 2014. Innovations in marketing of higher education: Foreign market
entry mode of not-for-profit universities. Journal of Business & Industrial
Marketing. 29(6). pp.546-558.
Pongelli, C., Caroli, M.G. and Cucculelli, M., 2016. Family business going abroad: the effect of
family ownership on foreign market entry mode decisions. Small Business
Economics. 47(3). pp.787-801.
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Wulff, J.N., 2015. Interpreting results from the multinomial logit model: Demonstrated by
foreign market entry. Organizational Research Methods. 18(2). pp.300-325.
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