International Market Entry Strategies

This assignment examines the complexities of international market entry strategies. It delves into different approaches, including partnerships versus sole ownership, influenced by factors such as cultural distance and institutional voids. The analysis also explores how governance structures impact foreign market entry decisions. A range of scholarly sources, alongside online resources, are utilized to provide a comprehensive understanding of this crucial aspect of global business.

MARKET ENTRY
PLANNING &SELECTION
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TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
TASK A...........................................................................................................................................3
1. Market Selection......................................................................................................................3
a) Selection of four countries where Pepper Mint can expand....................................................4
b) Criteria for selecting the countries ..........................................................................................4
c) Critically evaluating how the selected country perform against the criteria...........................5
TASK B...........................................................................................................................................7
a) Market entry and distribution strategy.....................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES ...............................................................................................................................9
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INTRODUCTION
Market entry strategy is well organized way of rendering product and services to a new
potential market and distributing out there. The international market provide wide range of
opportunities for enterprise to expand market share and attain growth and success. With the help
of foreign trade, company can attain global recognition and improve its efficiency. There are
wide range of methods through which enterprise can enter into foreign market. Therefore, major
market entry strategy that can be considered by organization like, direct foreign investment,
licensing, franchising, joint venture, outsourcing etc. in this report, various aspects of market
entry, planning and selection will be studied in the context of Pepper Smith Co (About Pepper
Smith, 2016). It is UK based confectionery company that is specialized in producing xylitol
based sweet products, chewing gums and mint that help in fighting with dental problems like
plaque etc. The company is already having foreign operations in many of the countries like,
Denmark, Finland, Norway, France, Belgium etc. In this report, evaluation regarding viable
market that can be entered by Pepper Smith will be provided. Thereafter, suitable market entry
strategy that can be used by entity will be explained.
TASK A
1. Market Selection
It has been identified that international market presents large number of profit making
and growth opportunities for business. With the help of international market entry, company can
provide its services to larger customer base. Foreign market entry is also important for enterprise
due to increasing rivalry in home country. In this respect, there are large number of chewing gum
brands in UK like, Clorets, Dentyne, Bubblicious, Stride etc (Caroli, Cucculelli and Pongelli,
2015 ). Since, its inception that Pepper Smith is planning to expand its market share by entering
into new market. The enterprise is intending to introduce new product named Tingz containing
xylitol which will be specifically for kids and young customers. Xylitol is healthy sugar
alternative made from fruit and vegetable extracts which also help in reducing tooth decay
problems etc. It also beneficial for customers suffering from disease like diabetes. Also, the
major ingredient of product, Xylitol holds no negative reviews from media and market sources
(Ahmad and Yusoff, 2015). The new product by Pepper Smith is unique concept that is
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introduced by it. It is important for corporation to select market which have maximum potential.
Therefore, Pepper Smith should select market which is expected to generate maximum revenue
for business. For this aspect, appropriate criteria should be considered by company. Such as,
country having maximum number of customer between age group 15 and above can be selected.
This is because maximum products offered by entity are consumed by this age group only
(Welch and McGonagle, 2013 ).
a) Selection of four countries where Pepper Mint can expand
The corporation can select countries like, Czech Republic, Denmark, Finland and France.
The major reason for selecting these countries is that Pepper Smith will not face much cultural
difference in these nations. The lack of cultural diversity will reduce the risk of failure due to
cultural gap and inefficiency in understanding the needs of market. In addition to this aspect,
with the implementation of Regional policy of EU, the members states can have free exchange of
goods and services (Kramarz and Skans, 2014). Therefore, Pepper Smith can have trade without
much legal barriers. With this aspect, company can also contribute in the development of EU
regions by generating maximum employment there etc. Likewise, various criteria can be selected
by company which will also help in identifying the strength and weakness of target nation.
b) Criteria for selecting the countries
 Favorable economic policy
First and foremost, Pepper Mint should select country having favorable economic policy.
This is because economic trends like, GDP, GNP, interest, bank rate, disposable income etc have
direct impact on the operations of company (Kaustia and Knüpfer, 2012).
 Size
The company should select nation having appropriate size. This is because, organization
will be able to make appropriate use of its resources and attaining economies of scale. The
potential customer that company want to reach must be present in the target nation.
 Minimum Cost of operation
Further, country having minimum possible cost of operations must be selected. In
addition to this aspect, country having cheap labor, raw material, availability of capital at low
interest can be selected. With this aspect, Pepper Smith will be able to reduce the operational
cost and increase the profits (Ang, Benischke and Doh, 2015).
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 Less Competition
The nation having less competitors can also be selected. This is because company will
have to face less rivalry which will facilitate it to charge more prices from its customer.
Company can also increase its sales and develop brand loyalty among buyers.
c) Critically evaluating how the selected country perform against the criteria
The major reasons for selecting the potential market, Finland, France, Czech Republic
and Denmark is due cultural similarity. Also, trade barriers are minimum therefore, Peppy Smith
can easily exchange its products and services across the regions. The company can save the extra
amount incurred on taxation, custom duties etc in case of expansion to any other region other
than EU (Leih and Teece, 2014).
The first and foremost preference to market entry will be given to France. The major
reason is that it economy is regarded as 6th largest as per nominal figures and 9th largest
according to purchasing power parity. Therefore, France holds subsequent position after
economy of UK; 5th largest one. The GDP of France as per 2013 is listed at 2.806 trillion USD.
The inflation of country is also negative with 0.7% and unemployment rising with 10%. The
bank rate of France is 0% in contrast to 0.5% of UK. Therefore, Pepper Smith can obtain funds
at easy interest rate and due to increasing unemployment company can provide more job
possibilities to local citizens and thus obtain funds at lower interest rate (Economic trends of
France, 2016). As per the economic variables, easy availability of labor it can be stated that
France is viable for Pepper Smith. Similarly, 62.8% individuals are between 15-64 which means
company have enough customer base for targeting (Ageing in France, 2012). There are many
company that provide chewing gum to customers in France like, Freedent Classique, Hollywood
Fresh, Wrigley's Airwaves etc. Only some of its product offered by Wrigley contain xylitol.
Therefore, Pepper Smith will have more opportunities in France.
Other than this, organization can consider the market of Czech Republic which is also
considered as highly progressive and developed industrialized economic system. The GDP of
nation is growing at 4.5% and GDP per capita at purchasing power parity is $29,925. The major
agriculture product of nation are sugar beets, potatoes etc. Therefore Xylitol can be easily
produced with less cost. The inflation of Czech Republic is 0.4% and unemployment falling from
5.9% at present. The interest rate of country is same as that of UK; 0.5%. Thereafter, the main
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criteria six of country is also favor of nation as it have 70.6% population between age group 15-
64 (Economy of Czech Republic, 2016). Thereafter, corporation will face rivalry from entities
like, Gumlink Confectionery, Wringley and Concord. The major company of Czech Republic,
Gumlink does not provide Xyliton products.
Further, Pepper Smith can enter into markets of Finland. It is among the most favorable
options available to company as it have mixed economy with per capita equal to that of France,
UK etc. The GDP growth is 0.5% and inflation negative at 0.1% and unemployment at 10%. The
interest rate is 1.66 % which is 1.16 % more as compared to that of UK. Therefore, borrowing
will be little costly as compared to that of UK (Finland Economy, 2016). However, the
additional cost incurred on interest can be offset by company by availing cheap labor and raw
material available in Finland. The 65.4% of population of between age group 15-64 years.
However, tough rivalry will be faced by Pepper Smith in Finland as the market is dominated by
Jenkki. It is operating from more than 60 years and also recognized for producing xylitol-
sweetened chewing gum around the globe. Other than this, there are rivals like, Fennobon, Clutor
group and Huhtamakigroup which is first entity to introduce xylitol chewing gum. The currency
of Finland is also Euro which means company will not have to face issues like fluctuation in
exchange rate affecting the international business.
At last, company can enter the markets of Denmark which also have mixed economy.
The GDP of country is ranked at $276 billion as per nominal fig and $ 222 billion as per
purchasing power parity. The growth rate in GDP is 0.5% and inflation is also at -0.1%. While
unemployment rate is 10.3% The currency of country is Danish Krone which means company
will have to exchange currency from Euro to DKK. The interest rate in Denmark is consistent at
0.45%. The total population of country is comprised of Danish citizen and immigrants from other
Western region. The age structure of Denmark is 18.1% individuals between 0-14 and 65.8%
between 15-64 (Economy of Denmark, 2016). Therefore, company will be able to provide its
services to target segment. The major sugar free gum producing company are Mondelez
Danmark ApS, Gumlink etc. Still these company does not hold much market dominance and
demand of mint and sugar free gums and sweet is declining. Therefore, Pepper Smith can enter
with its new product in Denmark market and attain larger market share and develop brand USP.
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Hence, it can be stated that company can enter the above market as they are more
appropriate as per the determined criteria. The rank order can be like as follows;
Country Rank order Reason
France 1 Favorable economic trends
Czech Republic 2 Maximum size, 70.6 target
population
Denmark 3 Less competition, favorable
economic trends.
Finland 4 Competition more however,
cost of operation is low.
TASK B
a) Market entry and distribution strategy
Market entry is viable strategy that help company in offering its products and services to
new market. It further showcase the different methods through which corporation can sell,
deliver and dispense its offering in other country. Since its inception from the provided case
study that, entrepreneur of Pepper Smith company have identified methods of entering into
foreign market; via distributor. The distributors will help company in reaching the famous dentist
of the selected market who will further recommend the products of Pepper Smith to target
customers (Laufs and Schwens, 2014). With this aspect company can generate recognition of
brand in target market. This is also viable approach because distributors have sound knowledge
of local market which can be used by the company. They can communicate to target customer
especially pharmacies, health food store, dietitians etc and explain how sugar free sweet, Tingz
offered by Pepper Smith is best product for wide range of buyers. For this aspect, commission
can be provided to specialist distributors. However, by including middle men company cannot
reach the target customers directly and thus it will increase the dependency of Pepper Smith on
its distributors. Other than this, company can also consider online sources which are also leading
and cost effective medium at present. In addition to this aspect, company can also collaborate
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with leading shopping site like amazon (Samiee, 2013). Since it has been identified from various
research that, more than 91% individuals at present prefer online platform for shopping.
Therefore, large number of audience can be targeted simultaneously. It will also facilitate brand
recognition as marketing through online medium is also convenient (Wang and et.al., 2015).
Thereafter, company will use online sources with collaboration with amazon which will enable
company to take opportunity to encourage existing customers of Amazon to purchase the
product offered by Pepper Smith. Therefore, online methods is more fast and convenient as
compared to 'bricks.'
CONCLUSION
Summing up the entire report, it can be concluded that with the help of market entry
strategy and proper planning company can expand its market share easily and attain fruitful
outcomes. Pepper Smith can enter the markets of France, Denmark, Finland and Czech Republic.
Th first priority will be given to France as its is most favorable and meet the maximum criteria
determined for market entry. The online mode of entry can be selected over bricks and mortar as
it involve less cost.
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REFERENCES
Books and Journal
Ahmad, N.E.Q. and Yusoff, N.M., 2015. The Effects of Xylitol on Body Weight Loss
Management and Lipid Profile on Diet-Induced Obesity Mice. Journal of Biosciences
and Medicines. 3(10). p.54.
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.
Caroli, M.G., Cucculelli, M. and Pongelli, C., 2015. Family Firms and Foreign Market Entry
Modes: The Role of Family Involvement. L'industria. 36(1). pp.93-110.
Kaustia, M. and Knüpfer, S., 2012. Peer performance and stock market entry. Journal of
Financial Economics. 104(2). pp.321-338.
Kramarz, F. and Skans, O.N., 2014. When strong ties are strong: Networks and youth labour
market entry. The Review of Economic Studies. p.rdt049.
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.
Leih, S. and Teece, D., 2014. Market Entry Strategies. Leih, S. Teece, D.(2014), Market entry
strategies, In D. Teece and M. Augier (eds). Palgrave Encyclopedia of Strategic
Management, London. UK: Palgrave Macmillan.
Samiee, S., 2013. International market-entry mode decisions: Cultural distance's role in
classifying partnerships versus sole ownership. Journal of Business Research. 66(5).
pp.659-661.
Wang, Z. and et.al., 2015, January. Governance Structure, Institutional Voids and Foreign
Market Entry. In Academy of Management Proceedings. Academy of Management.
Welch, E. and McGonagle, J., 2013. Contesting views: The visual economy of France and
Algeria. Oxford University Press.
Online
About Pepper Smith. 2016. [Online]. Available through: <http://www.peppersmith.co.uk//>.
Accessed on [16th May, 2016].
Ageing in France. 2012. [Online]. Available through:
<http://gerontologist.oxfordjournals.org/content/53/2/191.full>. Accessed on [16th
May, 2016].
Economic trends of France. 2016. [Online]. Available through:
<http://www.tradingeconomics.com/france/age-dependency-ratio-young-percent-of-
working-age-population-wb-data.html>. Accessed on [16th May, 2016].
Economy of Czech Republic. 2016. [Online]. Available through:
<http://www.heritage.org/index/country/czechrepublic>. Accessed on [16th May,
2016].
Economy of Denmark. 2016. [Online]. Available through:
<http://www.heritage.org/index/country/denmark>. Accessed on [16th May, 2016].
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