Factors Influencing International Market Entry

This assignment delves into the crucial factors that shape international market entry strategies for businesses. It examines the influence of various elements such as political risk, cultural distance, governance quality, and uncertainty on firms' choices regarding how to enter foreign markets. The provided text encompasses diverse perspectives and research studies related to market selection, entry mode choice, and the impact of external factors on multinational enterprises (MNEs) operating in international markets.

What are the most effective entry modes
that international companies should select
and implement to Turkish market?

Effective Entry Modes to Turkish Market
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Contents
Introduction:.....................................................................................................................3
Introduction of Turkish Market:.......................................................................................5
Entry Modes:....................................................................................................................7
Exporting:...................................................................................................................11
Licensing and franchising:.........................................................................................12
Joint venture:..............................................................................................................16
Acquisition ...............................................................................................................18
Greenfield Venture:....................................................................................................19
Entry Mode in Turkish Market:......................................................................................21
The case 1: Acquisition .................................................................................................25
The case 2: Strategic alliance.........................................................................................26
Compare and contrast between the two entry modes.....................................................28
The effectiveness of the entry modes.............................................................................29
Recommendation and Conclusion:.................................................................................31
References:.....................................................................................................................35

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1. Introduction
2. Literature Review
2.1. Globalization
2.2. International Market Dynamics and The Rise of Multinational Companies
2.3. Approaches for International Entry Modes
2.3.1. Internalization Theory
2.3.2. Eclectic Theory
2.4. Types of Entry Modes
2.4.1. Exporting
2.4.2. Licensing and Franchising
2.4.3. Strategic Alliances
2.4.4. Partnership
2.4.5. Acquisition
2.4.6. Joint Venture
2.4.7. Greenfield Venture
3. Project and Analysis
3.1. Scope of the Analysis
3.2. Research Problem
3.3. Turkish Market Dynamics
3.4. Entry Modes into the Turkish market
3.5. Case Analysis
3.5.1. Case 1 : Acquisition, Mahindra and Erkunt Traktör
3.5.2. Case 2 : Strategic Alliance, Visma Retail and Kesit Bilişim
3.6. Effectiveness of Entry Modes
3.7. Findings and Discussion
4. Conclusion

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Introduction:
We are living in the era of globalization which changes rapidly and it is a human
nature to live with such phenomena. Globalization could be seen as a continuous process
which helps the organization or individuals to make new ideas, competition, practices,
identities, movements and values. Globalization could lead to different situations which
depend on the individual and organization perspective. The topic of entry mode has been
discussed through many researchers in their article and they describe that it is significant for
the companies to diversify their market so that the profitability of company could enhance
and the customer base could also be wider.
The researchers describe – çok fazla “describe” kelimesi kullanmışsın, eş
anlamlılarını da kullan - that there are various ways for a company to enter into the
international market and offer its product and services to the foreign clients. This process
enhances the goodwill of the company in international market. It has also been analyzed that
entry mode of manufacturing company becomes quite easy now days but still the entry of
service companies are less in comparison of manufacturing companies (Brouthers and
Hennart, 2007). Entry mode must be investigated properly before entering into a market so
that the best decision could be made by the company about the market and entry mode in the
market.
This report has been analyzed to investigate over the international market entry mode.
It has been found through this report that there are many ways for a company to enter into
international market to diversify its market and to enhance its operations as well as sales of
the company. In the era of globalization, it becomes mandatory for every company to
enhance its operations and diversify its market globally (Tihanyi, Griffith and Russell, 2005).

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The report describes about the entry in Turkish market of other country’s company.
In this report every aspect related to Turkish market and entry in Turkish market has been
analyzed. Firstly, Turkish market has been studied and found that there are many risks in
Turkish market as the country is still trying to become a part of European union and the
policies and rules and regulations of turkey is far different from other European countries. It
has also been analyzed that company suffers many risk such as terrorist attack and less
flexibility in the market.
Further, we explain the user about the mode of effective entry in international market
such as exporting, franchising, licensing, strategic alliances, partnership, acquisition, joint
venture, Greenfield venture etc. Moreover, the risk and benefit of every effective entry mode
has been analyzed so that the best entry mode could be decided. It has been analyzed that
every entry mode is different and have different risk perspective and benefits. International
market has become significant. And in case of Turkish market, the country is welcoming the
foreign countries from heart to come into the market and explore the Turkish market.
International markets have different strategy for every business to enter into the
international market and give their service or products to the foreign clients. It has been
analyzed through this report that companies are isolated due to many factors such as trade
barriers, trade distances, culture and time. A company must enter into the international
market for advancement of technology, decrease storage cost, decrease transport cost,
identification of new segment and less need about customized product as existed companies
have almost similar products.
Further, the effective entry mode in Turkish market has been analyzed such as
exporting, franchising, licensing, strategic alliances, partnership, acquisition, joint venture,
Greenfield venture etc. it has been found that which market mode is suitable in Turkish
market and how it would help the international companies to set up their business in turkey

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and enjoy the growth. It has been analyzed that every entry mode is different and have
different risk perspective and benefits. International market has become significant.
Then, the report represents two cases that shows two different entry modes which has
been chosen by two different international company in entering to Turkish market.
At lastly, this report project/study (lütfen hepsini değiştir) gives a concise explanation
explains about the recommendation given to the international companies to enter into the
Turkish market and enhance the business. It explains – peşpeşe hep aynı kelimeleri
kullanmamaya çalış - the international companies that which market mode is suitable in
Turkish market and how it would help the international companies to set up their business in
turkey and enjoy the growth. Finally, conclusion of the study has been given to make it more
clearly to the user about the study and the decisions and recommendation which has been
taken whiles this study. The conclusion part describes the user about the whole report in
summary.
Globalization:
Globalization refers to the process which emphasizes upon the interaction among the
individuals, government and the organizations of different countries by the means of
international trade and investment in the foreign countries (Hirst, Thompson and Bromley,
2015). This involves the increase in the flow and interchange of international currency,
thoughts, ideas and culture across the nations. Globalization enables the organizations to
operate on the international scale and develop greater global influence. The amount of
globalization largely influences the amount of international trade and the level of cultural
exchange among the countries. Globalization involves the economic integration of the
international markets as well as the integration of socio- cultural values and norms.

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Introduction of Turkish Market:
Turkish market has been studied and found that there are many risks in Turkish
market as the country is still trying to become a part of European union and the policies and
rules and regulations of turkey is far different from other European countries. It has also been
analyzed that company suffers many risk such as terrorist attack and less flexibility in the
market.
Still many significant are there due to which international companies see an
opportunity in the market. Many barriers are also there to hamper entrance into the Turkish
market but it could be resolved quickly and with a little bit knowledge about the Turkey
conceptual framework, contacts and language assistance. Any strategy of market entry in
Turkey should initiate with a careful understanding of the benefits and cost to doing business
in Turkish market (Forlani, Parthasarathy and Keaveney, 2008).
An international company must consider their own resources, business experience
abroad, long-term business strategy and previous export before entering the Turkish market.
For most of the international companies, describeion in Turkey through distributor, liaison
office, partner or Turkish agent would be a significant key in terms of success. Even though
it’s not required for the local partners that they could offer knowledge and understanding of
the regulatory framework in Turkish market, valuable business contacts and language
assistance (Dow and Larimo, 2009). With the development of the company, companies could
open many subsidiaries and could also make more investments locally to increase their
market share and value of the business.
In Turkey, the U.S. Commercial Service has various programs and services offered to
help American businesses and other businesses in instituting an existence in this market and
managing and developing suitable links. Experienced Staffed with Specialists in commercial

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services with many years in sector expertise and industry, the Commercial Service team of
other countries in Turkey could tailor the business approach for the right audience, and offer
recommendation on the business strategy in Turkey (Canabal and White, 2008).
Thus it could be said that with many issues and risk in the market of Turkey still it is
the best option to enter and diversify the market by international companies as still many
significant are there due to which international companies see an opportunity in the market.
Many barriers are also there to hamper entrance into the Turkish market but it could be
resolved quickly and with a little bit knowledge about the Turkey conceptual framework,
contacts and language assistance.
Entry Modes:
Today, in the era of globalization, with various opportunities as well as huge
competition, it is good for the international companies to enter into new market so that the
business could be enhanced. Entry mode in international market or foreign market is basically
an arrangement among the institutions which make it possible for the organization to enter
into the foreign market with new technology, management, human skills, advancement or
other resources (Blomstermo, Deo Sharma and Sallis, 2006). Basically, whenever a company
thinks about diversifying its market into foreign market than it is because of economic
advantages or some other advantages that could make them more popular among the clients
and the share price of the company could also enhance. It is a crucial decision for the
companies to decide that whether they should enter into the new market or if yes than what
would be the effective mode to enter into the market. It has been found that entry mode get
affected with many variables such as environmental variable, strategic variable, transaction
variable or other specific variables.

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Environmental variable includes the things like variables which are related to location
familiarity, country risk, competitive conditions and the demand which exists in the host
country market. The planned variables are those which must be adapted by company to enter
into the foreign market or enhance the sales of new product. These similarities between the
countries and there variables become less important due to the time factor. The transactions
variable and other specific variables pressure the firm’s importance in a particular manner
and explain the competitive advantage (Rasheed, 2005). Decision about the entry mode
implements the current state, stability, access to resources, companies past experiences and
target market structure of company. It has been stated that for a service firm, traditional way
to enter into a new market is to go behind their manufacturing clients so that with the
products services could also be supplied easily which are served into domestic market.
But currently many changes has been occurred into the market and found that there
are various other ways for the service firm to enter into new market. The expansion has
stimulated onward and that has created service businesses less dependent on local business
operations to globalize the company due to new advancement and technologies for electronic
trade (Slangen and Van Tulder, 2009). Even, the service sector is known as an imperative
part of the international economy, the article paper and researches on service market in
international context is quite limited. It has been questioned in these concepts, practices and
theories from the strategies of entry mode from a production perspective are appropriate to
the service industry. The previous research which has already been done advice that the
companies which are involved in service sector is less intensive in terms of capital
moderately to companies which are involved in manufacturing business but it also varies in
service industry (Cui and Jiang, 2009).
Two major theories are there on international entry mode i.e. internalizations and
eclectic theory. These theories have been considered due to their well known aspects and they

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are best known theory. They also have empirical support. Theory of internalization is the
same theory as theory of transaction cost. The internationalization theory is based upon
industrial organization. This theory assumes the changes of resources among companies,
perfect competition and homogeneous which includes the transferability in a perfect manner
of know-how among the partners and the firms (Tihanyi, Griffith and Russell, 2005). The
advantage of internalization theory is a contractual risk which controls the overseas partner
all the way through foreign direct investment which is more precious than a local firm’s
licensing. Internalization theory has been questioned since it is not suitable to contrast FDI
with selling overseas (Dincer, Tatoglu and Glaister, 2006).
The eclectic theory has been developed because of inadequacy in the theory of
internationalization which focuses on ownership, location and advantages over
internalization. The advantage of ownership refers to assisting the overseas firm to defeat the
weakness of opposition against local companies. The country risk and market potential which
makes it advantageous to perform business in foreign market. (Aydin and Acikmese, 2007).
In addition this is not good since it do not be familiar with planned deliberation like
capability improvement. Except this theory also does not elucidate that why 2 companies
with similar possession, location advantages and internalization might not decide the same
mode of entry (Brouthers, Brouthers and Werner, 2008). This theory which is based upon
recourses explains the industry and the firm as competitive advantages sources (Kirişçi,
2009). This theory recognizes the information that the wherewithals are heterogeneous across
industry and firms and it is affected imperfectly due to mobility.
Many articles and studies about foreign entry modes which are already existed has
been studied and identified that several variables are there that could have a consequence on
the choice on which entry mode to decide (Tsarouhas, 2009). Entry modes could be
distinguished by control level, commitment level, resource level and risk involvement level.

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The control is the particular and most important factor which decides both returns and risk of
the presentation of investment globally and the frictions amount in the sellers and buyers
relationship (Brouthers and Hennart, 2007). They describe control as the ability of firm to
pressure the various administration systems the association have if they could make a control
over this than they would have the aptitude to develop their competitive situation and exploit
returns on assets of the firm (Koc and Altinay, 2007).
The subsidiaries which are wholly owned have a good control level which is the
highest whereas the lowest control level is owned by licensing. Commitment of resources is
explained as fallowed. It consist the attachment of assets for particular use which is either
difficult or fixed to change without implementing large costs. It has been said that service
perspective control means that timely supply of goods and quality service and goods to
international clients (Çetin and Oguz, 2007). Companies that desire to go into a new market
have a range of entry modes. They could be alienated in to 3 groups.
The 1st part is entering into new markets throughout the modes of export and that
consist of direct and indirect sending abroad, direct branch subsidiary, direct
agent/distribution and other channels (Dow, and Larimo, 2009). The 2nd part is contractual
entry modes which includes technical agreements, service contracts, licensing,
construction/turnkey contracts, franchising, management contracts, co-production contracts
and other. The 3rd part is investment entry mode which includes sole venture: new
establishment, acquisition, joint venture: new establishment/acquisition (Cui and Jiang,
2009).
Literature review:
Factors affecting entry modes:

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According to Laufs and Schwens (2014), there are a few factors that largely affect the
decisions of the organization related to the entry modes. The following are the factors that
determine the entry mode:
 Cost of entry: The expenses involved in entering a foreign market is the major factor
that influences the decision of the organizations related to the mode of entry.
 Risk associated with the entry mode: The amount of risks associated with entering a
foreign market determines the choice of the entry mode. For instance, franchising is
less risky as compared to investing the entire capital in setting up a business in the
foreign country.
 Size of the foreign market: The present size of the market and the projected size of
the potential foreign market influence the choice of the entry mode by the
organizations.
 Political, economic and environmental conditions of the target country: Political
stability, satisfactory economic conditions and positive environment of a country
positively influences the choice of the entry mode by the organizations.
 Availability of resources: The availability of resources with the company in terms of
the availability of capital, manpower, technology, marketing and advertising skills
and production skills largely determine the choice of the foreign market.
Impact of globalization on entry modes:
According to Andreu, Claver and Quer (2017), globalization has encouraged several
organizations to establish their global presence by entering the foreign markets. With the
increase in the globalization, the restrictions on the entry modes have reduced considerably.
The Governments of several countries have limited the restrictions on the entry of foreign
organizations and have made their laws flexible to encourage foreign investments and
international trade.

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Exporting:
Exporting is a common term which is used when an individual talks about selling the
goods and services in overseas market. Export is one of the most common and easy options to
enter into new market. It has been stated that export modes concludes indirect entry, direct
branch subsidiary, direct agent/distribution and other. Bradley (2005) has spoken in general
terms about exporting as it is the quickest method and also it is the easiest method of entering
into a new foreign market. Initially this approach has been used to increase knowledge and
understanding of new market when a corporation decides about the entry mode than they also
choose the level of commitment, resources and risk involvement so that the proper and
strategic planning could be done (Morschett, Schramm-Klein and Swoboda, 2010).
Exporting:
It has been said that a low assurance of Low investment and resources choice takes
place in exporting. Exporting has the disadvantages such as little control over firm and low
profit return (Buğra and Keyder, 2006). After entering into new market and gaining the
knowledge and understanding about the needs of host country, companies could try to boost
their presents through applying the new strategy and planning (Termin, 2013). Exporting
could be a part of gamut to enhance the commitment to internationalization.
Direct exporting:
Direct exporting happens when the goods are sold by producer directly to the buyer or
importer situated in an overseas country. In this type of entry form, very modest or no
information about the overseas market is desirable from the producer’s point of view. Three
advantages are there of this entry form, the first one is partially or completely control over the
overseas market sketch, the second one is marketing effort consideration on the producer’s

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product line (Cizre and Yeldan, 2005). Third advantages of this entrying mode are quicker
feedbacks, knowledge from the target market which could help the clients to adapt the
product of the company faster. The last advantage of direct exporting is better fortification of
patents, trademarks, goodwill and other insubstantial property (Aydin and Özer, 2005). One
obligation for this entrance form is that the exporter wants to discover the process and
credentials of export consignments and the worldwide payments planning for being able to
use this mode.
This mode is directly connected to the many direct agent/distribution, entry strategies
and direct branch subsidiary. Direct subsidiary of branch needs an equity venture in the
institutions of marketing which are located in the host country. Because this entry mode
means that the manufacturer has it’s possess in marketing units which operates in new
country. Further, it also explains this process but under diverse names, as overseas branch of
sales (Blomstermo, Deo Sharma and Sallis, 2006). Direct agent or distribution exporting is
explained as when the person as mediator in the overseas country manages all the marketing
strategies and planning for the producer.
Licensing and franchising:
Licensing has described as an intangible asset which could be transferred. Licensing is
not a subject of import boundaries. This method is used when a company offers its licensing
to others companies to use in a foreign market with advancement and technology that they
want, for a royalty or fee (Nielsen and Nielsen, 2011). This licensing from contains one brand
name or an arrangement of access to a patents, brand name, manufacturing process
technology, operations expertise and trade secrets. A firm who gets able to use the license
and becomes licensing partners could gain admittance in an overseas market with very little
investment cost and it also obtains the information and market knowledge from institutes and

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experienced local firm. This licensing mode of entry in overseas market is positive when the
preferred market has limited FDI and import. There are two methods of licensing agreements
which are a future technology license and current technology license. The main differences
between these two methods are that in the future technology license, current and future
technology advancements are considered whereas in current technology advancement, only
current technology could be considered.
Contract Manufacturing:
Contract manufacturing is also a way to enter into a new market. This entry mode is
basically a cross among the investments and licensing entry mode. A company makes a
contract with another firm which is situated in foreign market to manufacture or assemble the
products although still they have the accountability for distribution and marketing of the
goods (López-Duarte and Vidal-Suárez, 2010). This mode of entry into a foreign market
needs the investment of talent, time and cash. It also offers quick entry into the foreign
market. Conversely, it also has prospective as frightening problems like: preparation for the
possible competitor which have entrée to know-how and offers the high quality products to
the clients, additionally, over the earnings from the production house is transport to the
contractor (Hortaçsu and McAdams, 2010).
Partnership and Strategic Alliances:
There is another method to enter into the foreign market is with the help of a strategic
alliance with host country’s firm. Strategic alliance contains an agreement which bases upon
many contracts between two or more companies instructing that the concerned parties would
assist in a convinced way for a definite time to accomplish a common target. To decide if the
association approach is appropriate for the company, the company must choose that what

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significance the associate could carry to the business enterprise in conditions of both tangible
aspects and intangible aspects (Andiç, Yurt and Baltacıoğlu, 2012).
The partnering advantages with a local company are that the company in host country
possibly understands the methods of doing business, market and local culture in a better way.
Especially, partners are important if they have a reputable, recognized brand name in the host
country or have great existing associations with clientele that the company might need to
admittance such as XYZ Company has formed a planned alliance with ABC to expand
businesses in Turkish market. In the association, a company could decide to co-brand with
the company in host country’s name so that it can leverage company’s reputation in host
country for the products and services (Sanchez-Peinado and Pla-Barber, 2006). Xerox has
launched policies of strategic alliances to enhance the sales in budding markets such as
Europe, Brazil and India.
This mode of entry into foreign market is also beneficial for small commercial
companies that might be too little to create the desirable investments for entering into foreign
market (Epstein, 2005). Further, some countries are required to make the partner to a local
company if they need to enter into the foreign market such as in Saudi Arabia, other foreign
companies are needed to make strategic alliances with a local firm according to Saudi
Arabia’s law. This obligation is ordinary in Eastern countries (middle). Even exclusive of this
regulation, a local company or partner always helps overseas companies in bridging the
dissimilarities that or else doing the business in foreign country is impossible. For example,
Walmart has failed many times around a decade to successfully develop its business
operations in Mexico till the time it established a strong partner locally with related business
standards (Hortaçsu and McAdams, 2010).
On the other hand, the disadvantages of partnering are direct control lack and the
prospect that the goals of partner would differ from the company’s goal. It has described that

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in the case of US Company, they are eager to step into the Indian market: they said that this
would quickly negotiated regulations and terms and would complete the arrangements with
the help of local partners, Certain documents which are required while stepping into foreign
market, however, like industrial license, capital issues permit, foreign collaboration
agreements, machinery and equipment imported licenses etc. Trying to accelerate the
approval of governmental about these items, the US Company has agreed to recognize a
lesser royalty fee than initially predetermined. After all of it, the project of us coampnies has
not been expedited greatly and the royalty fee has been reduced lower from the firm’s profit
by roughly half a million dollars for life time agreement (Görür et al, 2011).
For avoiding these issues, company could shape one internationally incorporated team
to supervise its coalitions in rising markets. Having devoted players permits company to
invest in development and training of the managers that how they could manage the
multifaceted relationships which is involved in coalition (Brouthers and Hennart, 2007). The
team goes behind a reliable model by sharing and using the best practices for association’s
benefits.
Joint venture:
Joint venture is another method to enter into a new market to achieve the goal of the
business. It is a strategic partnership, contractual among many separated business
organizations to follow an operational chance together. The associates in an organization
joint venture have to contribute resources and capital in swap over for an equity venture and
allocate in any consequential profits. In the case of nonentity joint venture, equity holders
need not to contribution the resources and capital to figure a new entity.)
For seeing that how an equity joint venture works, example of Egyptian company is the
best. It describes that joint venture in a better manner. It has been founded that his company

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of jam has taken the advantages of excess fruit products of Egypt’s. It has been initially
approached that a jam company of French, Vitrac, wanted to enter into a contract of joint
venture with a new founded company, Vitrac Egypt. The Egyptian has been supplied the fruit
in the markets while the another company of French has supplied the know-how and
advanced technology for manufacturing jams.
Further, it has been analyzed that exporting to the United States, Australia and in the
Middle East, the French company, Vitrac has began to exporting its products to Japan. Japan
sales results of Japan describes that there is a huge demand of blueberry jam. For meeting the
demand of Jam customer in the country, company has come up with an interesting entwine.
Company used the advance technique to meet all the demand of the customer. Company
started importing blueberries from Canada. Thus, the company, Vitrac was importing the
blueberries from Canada, company was producing the jam from blueberries in Egypt, and
finally it exported it to Japan (Morschett Schramm-Klein and Swoboda, 2010).
By using the manufacturing known how of French company, Abdel Nour, the Egyptian
company had initiated an new opportunity and supply chain to step into new foreign markets
with it, so that the reach of the company could enhance and it would directly make an impact
over the sales of the company. The contract and partnership fit was quite good among both
Egyptian and French company. The joint venture of both companies has continued for three
years and then the company situated at French had sold its shares to other company, Abdel
Nour, and the Egyptian company, Vitrac made a company with 100 percent shares and
operated only in Egypt (Sakarya, Eckman and Hyllegard, 2007). The French company, Abdel
Nour’s, has reached to $22 million in terms of sales and it was the leader in jam market
industry in Egypt before it was bought by Swiss company.
Joint ventures possess both risks and benefits for the organizations which are involved.
The main step of joint venture is to find out the best and the right partner for venture ship.

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The partnership must not only be good according to the business terms but it must also be
good according to the management practices and cultural perspective (Güler and Alpaslan,
2009).
Secondly, the partner from host country may increase the technology and know-how
perspective for producing their own competitive services or goods to compete with the
multinational companies. Currently, the same is happing in china market. For manufacturing
the cars in China, other companies from foreign countries should come into a contract of joint
ventures with automakers of china so that the technology could be shared with the other
company (Demirbag, Tatoglu and Glaister, 2008). Once the contract finishes, nevertheless,
the company from host country might use the knowledge which has been gained from the
partner company to compete with its competitors.
Acquisition
Acquisition is a transaction basically in which a firm takes a control over another firm
by buying its stock or exchanging its own stock by their stock, or, in private firm case, by
paying purchase price amount to the owner. In our progressively smoother world, cross-
border acquirements have risen radically (Akman and Yilmaz, 2008). In current time, cross-
border acquirements have made up over 60% of all acquirements has completed worldwide.
Acquisitions are attractive because they provide the corporation quick and established
admittance to a latest market. Though, they are luxurious, so only the big companies give a
thought about the acquisitions. In the recent year, the strength of the company has been
changed and this directly impacted over the business of the country. High interest rate in the
still developing countries has enhanced the currency of the country in relations with euro and
dollars (Gökgöz and Atmaca, 2012). It has been found if a company from strong country
signs an acquisition agreement with less strong country than the acquisition become cheaper.

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It has been said that the main reason behind failing the merger is lot of money as premium
amount. But if a country’s currency is strong than it could be able to bargain. (Çetin and
Oguz, 2007).
While a firm chooses that whether the acquisition entry mode must be opted or not than
firm is needed to analyze the strategy, laws and other regulations in the host country such as
China has many boundaries on foreign possession though even the United States, a
developed-world country has laws which addresses acquisitions (Aydin and Özer, 2005).
It is a good mode to enter into foreign market. Acquisition offers a good entry strategy
which could be used when scale is required that is a special case in many industries such as
wireless telecommunications. It also helps a company when entire industry is consolidating.
However, acquisitions are quite risky. By analyzing many research paper and articles, it has
been found that between 40 60 percent of entire acquisitions not succeed to enlarge the
acquired company’s market value by more than invested amount (Canabal and White, 2008).
Greenfield Venture:
Sometimes companies might want to have a direct presence and operate directly in the
foreign market so the companies could choose this option. Greenfield venture is also known
as own subsidiary venture. For achieving the goal of not entering into the foreign market
directly, company could even establish a new, totally owned subsidiary or company also have
an option to buy the already existing company in foreign market to be in that market. Many
companies found it easy to purchase their early partners or early partners for being into the
foreign market as VitracEgypt, the joint venture of French and Egyptian company has done.
Other companies might buy a local supplier or company for making a direct control over the
supply. It is the type of vertical integration (Sakarya, Eckman and Hyllegard, 2007).

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It requires the highest commitment for establishing or buying an owned subsidiary
totally as a part of the international company, because the company could assume entire risks
such as financial risk, currency risk, economic risk, and political risk (Demirbag,
McGuinness and Altay, 2010).
It has been found that few companies select to buy an already presented company in the
host country absolute as a method to acquire into an overseas market rapidly. While making
an acquisition contract, the main importance is of due diligence. It does not only impact over
the financial side but it also makes an impact over the country’s culture side and business
practices of the host country (Çetin and Oguz, 2007) It has been found that currently the
Russia’s annual disposable income has been exceeded than other BRIC countries which are
Brazil, India, and China. Russia is too big for many major companies and thus they ignore
this country as a market. Though, this country also has a character of red tape and corruption
by even its officers with high ranks. An economic advisor Mr. Arkady Dvorkovich suggested
that investors must choose the entry mode and country wisely as which area of host country
would be targeted first and which area or stsate of the country is not good for the business.
Corruption of the country must also be analyzed as it makes less flat to the world because it
weaken the feasibility of lawful vehicles, like licensing (Chen, 2008).
It has been found that culture is worst element of a country and before entering into the
market and buying nay company of the country, Guest Company must analyze the aspects of
the company thoroughly. This would help the company to reduce the cost and time and it
would also help the company to choose the best country to enter and diversify the market.
Taxes of the company are also important factor which must be considered by the
company before buying the companies in that country. This would help the company to
reduce the cost and time and it would also help the company to choose the best country to
enter and diversify the market (Puck, Holtbrügge and Mohr, 2009). If a business get able to

Effective Entry Modes to Turkish Market
22
reduce the extra and higher tax rates then it would be quite easy for the country to enter and
diversify the market into host country.
But this further analyzes and short cuts to reduce the cost and save the company from
taxes could impact badly over the shareholder of the company and a negative message would
be delivered in the market about the company.
Entry Mode in Turkish Market:
As discussed earlier, that there are many risks in Turkish market as the country is still
trying to become a part of European union and the policies and rules and regulations of
turkey is far different from other European countries. It has also been analyzed that company
suffers many risk such as terrorist attack and less flexibility in the market (Andiç, Yurt, and
Baltacıoğlu, 2012).
Even still many noteworthy are there due to which international companies see an
opportunity in the Turkish market. They also found many barriers in the Turkish market to
hamper the entrance into the Turkish market but it could be resolved quickly and with a little
bit knowledge about the Turkey conceptual framework, contacts and language assistance.
Any strategy of market entry in Turkey should initiate with a careful understanding of the
benefits and cost to doing business in Turkish market (Demirbag, Tatoglu and Glaister,
2007).
An international company must consider their own resources, business experience
abroad, long-term business strategy and previous export before entering the Turkish market.
For most of the international companies, describeion in Turkey through distributor, liaison
office, partner or Turkish agent would be a significant key in terms of success. Even though
it’s not required for the local partners that they could offer knowledge and understanding of

Effective Entry Modes to Turkish Market
23
the regulatory framework in Turkish market, valuable business contacts and language
assistance (López-Duarte and Vidal-Suárez, 2010). With the development of the company,
companies could open many subsidiaries and could also make more investments locally to
increase their market share and value of the business.
In Turkey, the U.S. Commercial Service has various programs and services offered to
help American businesses and other businesses in instituting an existence in this market and
managing and developing suitable links (Ozorhon, Dikmen and Birgonul, 2006). Experienced
Staffed with Specialists in commercial services with many years in sector expertise and
industry, the Commercial Service team of other countries in Turkey could tailor the business
approach for the right audience, and offer recommendation on the business strategy in Turkey
(Petrou, 2009).
Further, in summary it could be said that when a company decides that which mode of
entry must be opted than companies do analyze over the following two key questions:
Firstly, how much resources of company, company is ready to commit with new
market? For it, it has been found that it is better for the company to devote less resources as
the fewer the resources such as expertise, money and time would be, the easier and better it
would be for the company to enter into an overseas market with a contractual basis with the
help of management contracts, licensing, franchising, acquisitions, joint venture, Greenfield
venture or turnkey projects (Demirbag, Tatoglu and Glaister, 2009).
Secondly, company must analyze that how much control does the company need to
make it with itself? If a company wants more control over the overseas business than it is
better for the company to switch the idea of establishing by the idea of purchasing a wholly
owned subsidiary or use the mode of joint venture with cautiously described responsibilities
and accountabilities among the partner companies.

Effective Entry Modes to Turkish Market
24
In spite of the entry strategy a company pot to enter into the Turkish market, numerous
factors are quite significant. These are as follows:
Cultural and linguistic differences:
Culture and linguistic differences describe that cultural differences and linguistic
differences among the partners and companies affect entire associations and communications
within the business, with the government, and with the customers. It is critical to understand
the local culture of companies to get success.
Quality and training of employees and local contractors:
Quality and training of employees and local contractors describe that it is important for
a company to evaluate the skill sets and capabilities of their labor so that no issues regarding
the skills could be faced by the company and then company must determine that whether
local staff is enough competent to get success (Tsang, 2005).
Political and economic issues:
Political and economic issues play an important role while choosing the best way for
entering into the Turkish market. Policy could be changed regularly and it is needed by the
company to decide that how much investment they’re eager to formulate, how much earnings
of theirs could be repatriated and what factors are required to make this investment (Anil, I.,
Tatoglu and Ozkasap, 2014).
Experience of partner’s company:
Experience of the partner company is quite significant for the company to choose the
best entry method to get into the Turkish market. Analyzing over the understanding and skills

Effective Entry Modes to Turkish Market
25
and experience of the partner company in Turkish market with the knowledge about dealing
with the clients, production etc are investigated deeply to make a decision about entry mode.
It has been found that a company which is seeking to step into the Turkish market
must have to follow the below steps: Company must investigate over the Turkish market carefully and must identify the
culture and practices if the country. Company must understand the exclusive industry and their working style and must
maintain regulatory relationships with other companies and industry in the Turkish
market. Company must take the help of internet to analyze and communicate with suitable
overseas trade corporations in Turkish market or with the embassy of the turkey. Each
embassy decides different rules and regulations for trading and commercial counter.
Such as the turkey government has US Embassy which assists the US companies on
dealing and helps them to enter into the market by providing them training and other
facilities (Anil, Tatoglu and Ozkasap, 2014).
These possessions are finest for smaller organizations. Larger organizations with more
resources and money usually appoint top experts to do the above research for them and help
them to set up their business in Turkish market. Big companies are also capable to maintain a
large size group to do the above task for them and analyze the efficiency report for them
(Ellis, 2008).
Below we are going to show you two cases where the international companies has
selected different entry modes to Turkish market:

Effective Entry Modes to Turkish Market
26
The case 1: Acquisition
The report enumerates the steps that was taken by the company in order to hold
smooth functioning in the foreign markets. The strategies that is being implemented by the
business entities are based on the PESTEL (PESTEL’in açılımını yazman ve teoriden biraz
daha bahsetmen gerekir) that is used by the same in order to determine the society, the
environment and the adaptability of the region relating to their products.
PESTEL analysis refers to the process of analysis wherein the external factors that
affect the functioning of an organization or a country on a whole, are identified and analyzed.
This involves identifying the political conditions of the country and also analyzing the
political condition of the country wherein an individual, an organization or an industry is
located. The analysis also involves identifying and evaluating the economic conditions of a
country, which has huge impact on the individuals and organizations of a country. The social
conditions of a nation are also identified and analyzed (Xu, Hitt and Miller 2017). The
technological advancement, environmental conditions and the legal system of the country are
also identified and analyzed in order to determine the market acquisition techniques.
Market acquisition is one of the techniques that was considered in order to enter a
market in the foreign grounds. Market acquisition refers to the company’s decision of buying
the resident company of the nation in order to access the market of the nation. It helps in
bringing in improvements in the organizational structure and expanding the scope of the
business. The concerned company, Mahindra and Mahindra Ltd, (italic yazman gerekmez,
kılavuza bak) acquired over the market of the Erkunt Traktor Sanayii AS, which is a Turkish
tractor manufacturing company. It has helped Mahindra to make their entry into the Turkish
markets with ease. It took an investment around Rs 800 crore to undertake the steps that are
being undertaken by the concerned company in order to acquire over the market (Laufs &

Effective Entry Modes to Turkish Market
27
Schwens, 2014). Moreover, the chosen firm has been helped by such acquisition in terms of
replacing its marketing as well as business activities. The acquisition has resulted to the
growth of the company in the market, which is again an important phenomenon that is
required to be noticed in the market entry mode.
The decision that the company undertook in order to acquire the market of the
company in the Turkish market has helped in the expansion and the diversification of the
range of tractors and the two wheelers in the market. It has helped the company in adhering to
the requirements of the varied consumers based on their varied preferences and concerns. The
diversity has helped Mahindra in expanding its scope in the market and gain over a huge
market structure based on their product portfolio. It has helped the organization in bringing in
changes in the structure that supports their progress.
Mahindra undertook a contract with Erkunt Traktor so as to acquire 100% of the
market shares of the later company, and additionally at least 80% of the shares that is being
held by the host company. The company aims at selling tractors to the global markets. The
considerable increase in the sales of the company can be enumerated through the annual
reports that the company produces and publishes in their website. According to the annual
report, the company has sold 4700 tractors while earning revenue of some 314 million
Turkish Lira. According to an analyst the company is drawing 20% of the revenue through its
exports and therefore is planning a sustainable market strategy (Raff, Ryan & Stähler, 2012).
The consideration that the firm undertook is related to its considerable growth in the sector
and the international markets. The market entry strategy that they implemented has helped the
them in framing the sustainable organizational culture. On the other hand, the requirements of
the consumers are also taken care of by the organization in order to gain the stability in the
market structure (Maekelburger, Schwens & Kabst, 2012).

Effective Entry Modes to Turkish Market
28
The case 2: Strategic alliance
The market entry strategy that is being undertaken by the Visma Retail, Norway has
helped the same in establishing itself in the markets of Turkey. It has helped the company in
making the considerable changes in the market structure of the nation. The step that is being
undertaken by the company is based on the allocation of the resources and their services in
order to provide the IT solutions to their guest companies worldwide (Ang, Benischke &
Doh, 2015). The most important step that is being considered by the organization is based on
the resources of the company to which they would assist. The company with which they have
taken the alliance is a Turkey based company, named Kesit Bilişim. The most important step
that is being undertaken during the alliance is the mutual growth of the specific business firm
through their interdependence on one another. It helps in building the trust between the
companies and therefore helps in the mutual progress of the companies in the global markets.
Visma has undertaken the partnership in order to help the host company progress in the
market and thereby help the company in making their progress through the probable
adherence to the needs of the consumers. The company undertakes consultancy functions in
order to help the host companies in judging the demand of the consumers and thereby make
changes in the organizational system in order to improve their retail trade in the markets
(Brouthers, 2013). In order to adhere the requirements of the people, Visma modified the
system within the firm which further led the same to gain prosperity (Hohenthal, Johanson &
Johanson, 2014). Therefore, the company takes steps to support the host company in solving
the issues that is faced in order to make its progress more lucid.
The major task that is being undertaken by Visma is to make the host company aware
of the changes that are required to be undertaken. Through their consultancy, they earn a

Effective Entry Modes to Turkish Market
29
revenue for themselves. However, the profits that are being raised by the concerned
organization is not being shared by the Visma. Therefore, it affected the growth of Visma in
the market and constrained their efforts of expanding their markets to the other countries. The
services and the assistance that are being enumerated by the company are being rewarded
through money and no portion of the profit is being shared by the firm. It affected the
possibility of the comapny in order to make its progress in the market (Murray, Ju & Gao,
2012).
Compare and contrast between the two entry modes
The market entry modes used by Mahindra and Visma determine the success of these
two companies in the targeted market in terms of their business activities. The return on the
investments policies and strategies of these firms are based on the functions of the same (De
Villa, Rajwani & Lawton, 2015). The market entry strategies determine the growth and the
expansion of the organization based on the market structure. Therefore, careful consideration
must be taken while selecting the market entry strategy. The strategies help in determining
the positive and the negative impacts of the market on the company and thereby help in
judging the situation of the business firms in the market (Brouthers, 2013). One of the most
vital strategies used by these business entities are based on the resource planning procedures.
It helps the organization in having a constant modification based on the change of the
requirements of the people (Holtbrügge & Baron, 2013).
He market entry strategies of Mahindra is described towards the change management
by the company in the Turkish market. The vital factor that affects the availability of the
products in the market is being assured by the acquisition. Therefore, the progress made by
Mahindra has helped them in the expansion of their business beyond the borders. The
consideration that is being made by the organization is based on the complete control over the

Effective Entry Modes to Turkish Market
30
market (Musso & Francioni, 2014). Therefore, it helps the chosen company in manipulating
the market devices as per the requirements of the same. The resourcefulness of the
company’s marketing activities has led the company to consider the effective market entry
strategies. The company after the acquisition has taken steps that have helped the
organization in developing their skills as per the requirements of the people. The market entry
mode has helped the business entity in securing its base on the nationality (Sandberg, 2013).
In addition, it has helped the firm in making use of the brand name of the organization that
Mahindra has acquired. Moreover, it has received a steady market for conducting the trade. In
short, the entry strategies as well as the acquisition has ensured the progress of the firm in the
new market.
On the other hand, the other company, Visma retails have undertaken strategies that
have helped the host firm in bingeing in changes in its organizational structure. In order to
meet the demand and requirements of the people in both the new and existing market, the
company has made remarkable progress in the strategic marketing and business activities
(Hilmersson & Jansson, 2012). Along with this, the consultancy service id one of the vital
strategy adopted by Visma in term of delivering service to the people as well as of the aspect
of change in the market. The changes that are being undertaken by the firm did not
actually facilitate their growth in the market. Moreover, their functions have not affected the
market with the growth and progress of the organization. In order to bring about the
organizational change the company depended upon the requirements of the change in its
structural context.
The effectiveness of the entry modes
The entry modes that are being adopted by the firms determine their progress in the
market, based on their organizational goals. The steps that are being used by the company

Effective Entry Modes to Turkish Market
31
and the investments that the organization undertook are based on its requirement in order to
expand its business in the foreign markets. Mahindra has adopted the acquisition, through
which the company could delve into the large market of Turkey and most probably make an
entry into the international markets. The effectiveness of the entry modes is based on the
criteria of the inevitable attempts of the firm to make its progress. The increase in the sales of
the business entity to 20% proves the reliability of the entry mode and the effects that the
entry mode bore for the firm. The most important step that is being exercised by the
organization is based on its requirement of bringing about the change in the market structure
and thereby acquire the brand name. In order to hold a successful market in Turkey, the
decision of the firm has helped in the undertaking of the business more proficiently. It has
helped in the growth of the company (Schuster & Holtbrügge, 2012).
On the other hand, the flaw in the undertaking of the entry mode by the other
company is based on their strategic alliance. They undertook the strategic alliance, which has
enabled the mutual growth of both the organizations at the same time. Visma is supporting
the mutual growth of the business firms in order to make the considerable progress in the
market (Ripollés, Blesac & Monferrer, 2012). The changes that are being practiced based on
the organizational structure are due to the important changes that are required to be taken in
the systems in order to support the market. The most crucial changes that are being planned
by the firms is based on the demands of the consumers for the products that seems to be more
feasible. Visma helps in the development of the products and makes the company aware of
the needs and the requirements of the consumers through the development of a sound ERP
system which has further helped in the growth of the host company. However, Visma did not
earn any return on the investments other than the consultancy charge. It affected the growth
of Visma in the competitive markets of Turkey.

Effective Entry Modes to Turkish Market
32
Therefore, from the above analysis it can be stated that Mahindra has undertaken the
best market entry devices, which has helped in acquiring the market of Turkey. The most
important step that is being undertaken by the company is based on the increase of the
productivity of the organization, which has helped the same in bringing in the changes in the
market. The steps that are being taken by the companies have helped the same in bringing in
the changes in the market. The most vital change that the company undertakes is based on the
entry to the Turkish markets, which is 3 times larger than the markets in which they have
been operating. Therefore, the scope for expansion that is being exercised by the organization
has helped the same in evolving the culture of the firm in the international markets. The
analysis helps in the comparative understanding of the efficiency of the measures that are
being used by the organizations while undertaking an entry mode.
Recommendation and Conclusion:
Exporting is the sale of products and services in foreign countries that are sourced or
made in the home country. Importing refers to buying goods and services from foreign
sources and bringing them back into the home country.
Companies export because it’s the easiest way to participate in global trade, it’s a less
costly investment than the other entry strategies, and it’s much easier to simply stop
exporting than it is to extricate oneself from the other entry modes. The benefits of exporting
include access to new markets and revenues as well as lower manufacturing costs due to
higher manufacturing volumes.

Effective Entry Modes to Turkish Market
33
Contractual forms of entry (i.e., licensing and franchising) have lower up-front costs
than investment modes do. It’s also easier for the company to extricate itself from the
situation if the results aren’t favorable. On the other hand, investment modes (joint ventures
and wholly owned subsidiaries) may bring the company higher returns and a deeper
knowledge of the country.
Companies makes a contract of contract manufacturing because this mode offers them a
way to participate in global trade, it’s a costly investment than the other entry strategies and
it’s much easier for the company to use this mode to direct enter into in the Turkish market. It
is to extricate oneself from the other entry modes. The benefits of contract manufacturing
include admittance to new markets and revenues with low flexibility and higher profits.
The form of the entry mode is partnership and strategic alliances. This mode has high
costs than other entry modes. It’s an easiest method for the company to directly enter into the
Turkish market and extract itself from the situation where the results are not in the favor of
the company. The benefits of partnership and strategic alliances include admittance to new
markets and revenues with low flexibility and law interaction of middleman.
Companies make a contract of joint venture because it’s the safest way to participate in
global trade, its little costly investment than the other entry strategies, this entry mode has
huge risks and benefits too. The benefits of joint venture include access to new markets and
revenues as well as with less marketing cost and high flexibility. Although some risk situated
with this entry mode is high risk and marketing cost.
Companies make a contract of Greenfield venture because it’s the safest way to
participate in global trade, its huge costly investment than the other entry strategies, this entry
mode has huge risks and benefits too. The benefits of Greenfield venture include access to

Effective Entry Modes to Turkish Market
34
new markets and revenues. Although some risk situated with this entry mode is high risk, less
flexibility and high marketing cost.
Thus through this analysis it is suggested to the companies who wants to enter into the
Turkish market to analyze every entry mode according to their Company Goals, Resources,
Size of the company, Competition, Remittance, Product, Middleman Characteristics, Number
of markets, Market Feedback, Environmental characteristic, Control, Marketing cost,
International Market Learning, Profits, Investment, Flexibility, Foreign Problems, Risk etc.
Though this companies could easily analysis that which entry mode is best for them to
analyze and enter into the Turkey market. It has also been analyzed through this report that
every entry mode is different with each other and offers the different benefits and risk to the
customers. Thus a company must analyze the mode and then take the decision about entry
mode to enter into the Turkish market.
Thus it could be said that this report would help the companies on a huge level to
choose the mode to enter into the Turkish market and enjoy the benefits of Turkish markets.
Therefore, from the above analysis it can be stated that Mahindra has undertaken the
best market entry devices, which has helped in acquiring the market of Turkey.The most
important step that is being undertaken by the company is based on the increase of the
productivity of the organization, which has helped the same in bringing in the changes in the
market. The steps that are being taken by the companies have helped the same in bringing in
the changes in the market. The most vital change that the company undertakes is based on the
entry to the Turkish markets, which is 3 times larger than the markets in which they have
been operating. Therefore, the scope for expansion that is being exercised by the organization
has helped the same in evolving the culture of the firm in the international markets. The

Effective Entry Modes to Turkish Market
35
analysis helps in the comparative understanding of the efficiency of the measures that are
being used by the organizations while undertaking an entry mode.

Effective Entry Modes to Turkish Market
36
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