Factors Influencing Entry Mode Choice

This portfolio discusses the various factors that influence the entry mode choice for a UK organization entering a foreign market. It explores internal and external factors, such as stakeholder interest, resources, political and economic factors, competition, and availability of resources.

GLOBAL MARKETING

TABLE OF CONTENT
PORTFOLIO ENTRY 1: DEVLOPING GLOBAL MARKETING CONCEPT ...........................1
TASK 1............................................................................................................................................1
Introduction .................................................................................................................................1
1. 'Development of global marketing concept'.............................................................................1
2. Discussion from literature perspective ....................................................................................1
3. Example from real business world ..........................................................................................2
Conclusion ..................................................................................................................................2
REFERENCES ...............................................................................................................................2
PORTFOLIO ENTRY 2: MERGING BRIC MARKETS ..............................................................3
TASK 2............................................................................................................................................3
Introduction .................................................................................................................................3
A. Background of BRIC Country (India)....................................................................................3
B. Political risks ..........................................................................................................................3
C. Barriers between UK and India ..............................................................................................3
D. Economic environment ..........................................................................................................4
E. Evaluation of Missguided retailer: A UK based multi channel retailer .................................4
Conclusion ..................................................................................................................................4
REFERENCES ...............................................................................................................................4
PORTFOLIO ENTRY 3: FACTORS INFLUENCING ENTRY MODE CHOICE ......................5
Introduction .................................................................................................................................5
TESCO: British multinational retailer ........................................................................................5
Factors influencing decision to enter in foreign market .............................................................5
Conclusion ..................................................................................................................................6
REFERENCES ...............................................................................................................................6
PORTFOLIO ENTRY 4: ENTRY METHOD- FRANCHISE .......................................................7
Introduction .................................................................................................................................7
Stella McCartney Ltd .................................................................................................................7
Suitable market for franchising....................................................................................................7
Pros and cons of franchising .......................................................................................................7

Benefits for Stella McCartney ....................................................................................................8
Conclusion ..................................................................................................................................8
REFERENCES ...............................................................................................................................8

PORTFOLIO ENTRY 1: DEVLOPING GLOBAL MARKETING
CONCEPT
TASK 1
Introduction
Global marketing aims at expanding business and marketing activities throughout the
world. The portfolio will discuss the development of global marketing and the factors and
concepts which drive this development.
1. 'Development of global marketing concept'
Technology and easy access to resources is one of the important factor which helps
organisations to develop global markets effectively. The use of advanced technological resources
such as social media, digital communication and information tools has made it possible for the
companies to expand their business across globe. Apart from the technology, improved supply
and distribution network has also increased demands from customers. Thus customer need vast
choices from not only local suppliers but international brands as well. In order to achieve
marketing objectives organisations, EPRG model is also helpful (Mosca, 2016) . For instance
some companies uses poly centrism approach to recruit employees of host country while in
ethnocentric approach only suitable candidates meeting international standards are hired
irrespective of nationality. Improved learning resources, technology has allowed companies to
employ any of the factor described in EPRG model to enhance their success in global market.
With changing preferences of customers most of the organiations find it easy to adopt
ehtnocentric approach in which organisations use domestic market techniques to international
market as well without any modification. For example organisations such as KFC uses same
tactics for marketing, brand symbols and promotion in domestic as well as international market.
It helps organisation to develop global marketing concept at low cost and with effective value
outcomes by standardised products and services.
2. Discussion from literature perspective
According to Binz and Truffer, (2017) customer demands and preferences are changing
and encouraging companies to market their services globally. However this would have been
impossible to develop these international market without advancement in technology,
communication network and distribution channels. In the same context De Mooij, (2018) stated
that for achieving competitive advantage organisations are not only emphasising on products and
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services but are also giving equal priority to services and customer experience. Due to this reason
recruitment and operational activities are supported by suitability of EPRG model and
operational management techniques which improves quality and customer experience. As per
the view of Alon and et.al., (2016) some organisations maintains standard criteria in terms of
their logo, brand features and products to lead in global market but their strategic tactics may
vary as per the local needs of customers or target market.
3. Example from real business world
The development of strong position in global market is supported by various techniques.
For instance KFC is one of the leading food service provider operating in nearly all parts of the
world. However while managing its human resources it uses polycentric approach so that its
customer services and interaction can be improved as per the needs of its target customers. The
various changes which takes place at global level also act as key factors in influencing its
marketing techniques (Mosca, 2016) . For instance with rapid and increasing trend of online food
services KFC also provides online distribution and promotional strategy to improve its brand
value in global markets. Though its promotion strategies varies as per the local taste of customers
but it ensure that its product differentiation does not influence its standardised brand value or
reputation.
Conclusion
It can be concluded that global markets are developing at very rapid pace and this
development need must be identified by businesses effectively. Development of this marketing
aspect is essential to retain the survival in competitive market.
REFERENCES
Books and Journals
Binz, C. and Truffer, B., 2017. Global Innovation Systems—A conceptual framework for
innovation dynamics in transnational contexts. Research Policy. 46(7). pp.1284-1298.
De Mooij, M., 2018. Global marketing and advertising: Understanding cultural paradoxes.
SAGE Publications Limited.
Alon, I. and et.al., 2016. Global marketing: contemporary theory, practice, and cases.
Routledge.
Mosca, F. ed., 2016. Global marketing strategies for the promotion of luxury goods. IGI Global.
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PORTFOLIO ENTRY 2: MERGING BRIC MARKETS
TASK 2
Introduction
UK companies can enhance their profitability and global presence by merging with BRIC
markets such as India, Russia and China. The portfolio will analyze the merger of UK
organization with Indian market and associated barriers.
A. Background of BRIC Country (India)
India is known to be one of the most rapidly developing South Asian country with rich
historical, cultural and natural resources. The country is also famous for its rich arts and culture,
tradition as well as diversity. India holds second position in terms of population with mostly
young people. Thus country holds good position in terms of providing an emerging market for
foreign investors and companies (Kang, Na and Kim, 2018). With increasing popularity on globe
due to tourism, natural resources and fast pace development country is flourished with significant
number of international brands as well as strong local competitors.
B. Political risks
The organizations planning to enter in Indian market may face several political risks
which can influence the profitability to great extent. The key political risks in India includes
changes in government composition, war declarations, endemic corruptions as well as currency
related actions. For example the country recently experienced demonetization against currency
changes which influenced operational activities of local as well as international service
providers. Another critical political risk factors in India are foreign direct investment regulations,
legal complexities of supply agreements and nationalization issues affecting direct sales of the
organization.
C. Barriers between UK and India
The biggest non tariff issue faced by UK company is that India has lengthy process of
getting permits for foreign investors and retailers. There are various restrictions in terms of
scope, taxation for foreign retailers in India which is known to be significant trade barriers for
UK organizations (Matos, Oquendo and Trompieri, 2015). The UK organizations also
experiences issues such as state specific regulations, discriminatory taxation policies and long
delays in public procurement is considered as major barrier which influences the easy trade
between UK and Indian market.
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D. Economic environment
India is known to be one of the fastest growing economy in the world. In terms of
purchasing power parity it stands at third place in the world and it ranked sixth in terms of
market exchange rate. This makes Indian market as one of the most brightest choice among
foreign companies to enter. The effective regulations and state intervention has also protected
economy from rest of the world especially during the time of recession (Frolova and et.al.,
2018). The country has good proportion of labor force which makes it easy for the businesses to
assure the resource and labor availability.
E. Evaluation of Missguided retailer: A UK based multi channel retailer
Missguided is clothing retailer based in UK which is planning to enter in Indian market.
The Indian market can have both pros and cons for the company. For instance as compare to
other Asian BRIC nations such as China, India has younger population and thus company will
have more opportunity to serve its target population which is 16-35 years females. At present in
terms of competition company will have moderate level threat from foreign organizations.
However the social and cultural diversity, FDI related debates and social conflicts may not prove
to be beneficial for company to gain desirable profits.
Evaluation of results: Merger with BRIC market can be profitable for the organisation. BRIC
markets have great potential in terms of purchasing power. Thus by using appropriate
international marketing strategies. Though in such markets also local and international
competition can be of significant extent but organizations must understand the diversity and
variation in such international markets. It will help them to establish their dominance by means
of mergers or acquisitions. This type of mergers or international expansion can be more
beneficial for the small and medium enterprise (SMEs). In international markets SMEs can enter
to expand their business with low competition. They may also get legislative and taxation
benefits in BRIC market on behalf of their size (Matos, Oquendo and Trompieri, 2015).
Conclusion
It can be concluded that for exploring the growth opportunities in BRIC markets the
merger must also consider political risks, economic environment and trade barriers into
consideration.
REFERENCES
Books and Journals
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Kang, Y.H., Na, K. and Kim, Y.S., 2018. Labor Productivity In Emerging Markets: Evidence
From Brazil, China, India, And Russia (BRIC). Journal of Applied Business Research
(JABR). 34(2). pp.325-338.
Matos, P., Oquendo, R. and Trompieri, N., 2015. Integration and contagion of BRIC financial
markets. NCF Researching Paper Series. (02). pp.2-22.
Frolova, E.E. and et.al., 2018. General approaches to the market structure control in BRICS
countries. Journal of Advanced Research in Law and Economics. 9(1 (31)). pp.96-106.
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PORTFOLIO ENTRY 3: FACTORS INFLUENCING ENTRY MODE
CHOICE
Introduction
The portfolio will discuss the various aspects which are required to be considered by a
UK organization while entering into a foreign market.
TESCO: British multinational retailer
Tesco is one of the leading retailer based in UK which provides it services in various
parts of the world. The organization deals in grocery, clothing and diversified services and
products such as books, electronics, toys, financial and telecom services as well as furniture.
However the decisions to enter in new foreign market is influenced by variety of factors which
are as follows.
Factors influencing decision to enter in foreign market
The influential factors can be classified into two broad categories namely internal and
external factors.
Internal factors: The decision to enter in new market depends upon factors such as interest of
stakeholders, employees and existing resources. For instance some foreign market may involve
high risk and Tesco may not have necessary resources to take that risk. It is also possible that
potential investors or organization may not consider any particular foreign market beneficial for
the company and thus can withdraw their strategy to enter into new market.
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Illustration 1: Factors influencing entry mode decisions

(Source: Gregory, 2016)
External factors: The external factors includes a vast range of barriers or promoters influencing
the decision of Tesco. The two primary factors for international markets are political and
economic. The developing countries such as India, China have stable economy and wider market
to serve thus supporting legislative and taxation policies for foreign retailers can make it easy
choice for organization to enter into new markets. Similarly social and technological factors are
also important to be considered while making decisions related to new markets (Benito, Petersen
and Welch, 2015). For example the culture or social classification in some markets may not
prefer certain products or services of organization. In such situations it may be risky for Tesco to
invest in such markets because most of the target customers may not prefer the product.
Tesco is largely based on online retailing with few physical stores. Thus before making
entry strategy it also consider that if host country and destination has appropriate technology for
its operational and business activities. Another important factor is competition. In the new
market Tesco may face tough competition form other international brands as well as well
established local brands which are first priorities of customers. Thus on many cases company
adopt franchising as entry strategy (Roberts, 2018) . In such situations the availability of suitable
option for franchising partners which can meet the requirements of Tesco is also crucial factor.
The availability of resources such as skilled and unskilled labor at low cost, legal
complexities, taxation policies, rivalry threats and easiness in terms of entry methods like
franchising, agreements can also encourage Tesco to improve or amend its entry strategy and
plans. The political stability in the host country and trade related barriers also influence the
organizational decisions (Hernández and Nieto, 2015) . For instance If Tesco desire to enter in
India then huge market potential can be a positive factor for Indian market but in India
organization may not find any suitable partner for franchising. Thus if company plans to adopt
only franchising approach then India may not become suitable choice for it.
Conclusion
It can be concluded that analysis of above factors help organization to assess the
potential risk and profitability in the target market so that it can make accurate decisions
regarding suitability of foreign markets.
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REFERENCES
Books and Journals
Benito, G.R., Petersen, B. and Welch, L.S., 2015. Towards more realistic conceptualisations of
foreign operation modes. In International Business Strategy (pp. 246-265). Routledge.
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.
Roberts, J., 2018. Multinational business service firms: development of multinational
organization structures in the UK business service sector. Routledge.
Online
Gregory,. D., 2016. Managing brand over geographic boundaries and market segments.
[Online]. Accessed through <https://slideplayer.com/slide/9250504/>
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PORTFOLIO ENTRY 4: ENTRY METHOD- FRANCHISE
Introduction
Franchising is one of the most popular entry method to minimize the risk factors in
international market. The report will discuss the various aspects associated with franchising.
Stella McCartney Ltd
Stella McCartney Ltd deals in women's accessories such as bags, organic skin care
products, lingerie, beauty products, shoes and fragrances. The organization is based in UK and is
listed among top and leading fashion houses.
Suitable market for franchising
The provides its products to various countries but in new markets it has not achieved
desired level of success. Thus company may plan to enter in Indian market with franchising
option. Through this approach Stella McCartney can allow its Indian franchisee to use its
existing business models and right and authority to sell its brand products and services. The
franchising with popular and well established local Indian brand can help service provider to
easily penetrate in the new market with minimum risk factor.
Pros and cons of franchising
With franchising option there are various advantages and disadvantages such as:
Benefits: Since organizations are not much aware of new market the franchising option can help
them greatly to access talented human resources (Kacker and et.al., 2016). The collaborative
working will also reduce the risk of failure as franchisee partner is well aware of the market
needs, loopholes and requirements. It is also effective way to receive expansion capital without
much investment (Vicari, 2016).
Disadvantage: With franchising organization has less or very limited control over managers or
employees. Thus company may not work independently in its own direction (Madanoglu, Alon
and Shoham, 2017) The difference in perception can also lead conflicts which can be challenging
to resolve and can even have adverse impact. Another disadvantage related to franchising is
innovation challenge (Rosado-Serrano, Paul and Dikova, 2018) . Since organization work in
collaboration with other it may not freely introduce innovations in its services.
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Benefits for Stella McCartney
Stella McCartney may not have strong control over Indian market independently in the
initial stages of entry. Thus the franchising will help organization to easily make people aware of
its brand. With local support it becomes more easy for customers to trust the services and
products of foreign service providers. The existing reputation and brand value of franchisee will
help Stella McCartney to quickly establish itself in Indian market.
Conclusion
It can be concluded that franchising can be effective choice for the organization to enter
in new market but it must be reviewed as per the targeted market as well as customer segments.
REFERENCES
Books and Journals
Kacker, M. and et.al., 2016. How firm strategies impact size of partner‐based retail networks:
Evidence from franchising. Journal of Small Business Management. 54(2). pp.506-531.
Vicari, A., 2016. The international expansion of fashion retailers through franchising networks:
goldenpoint case study(Bachelor's thesis, Università Ca'Foscari Venezia).
Madanoglu, M., Alon, I. and Shoham, A., 2017. Push and pull factors in international
franchising. International Marketing Review. 34(1). pp.29-45.
Rosado-Serrano, A., Paul, J. and Dikova, D., 2018. International franchising: A literature review
and research agenda. Journal of Business Research. 85. pp.238-257.
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