University Marketing: Market Entry Strategy for Russia

This report analyzes various market entry strategies for the Russian market, considering factors like tariff rates, product adaptation, and costs. It evaluates direct exporting, greenfield investments, licensing, and franchising, highlighting their advantages and disadvantages. Direct exporting is recommended due to its direct control over operations and profitability, eliminating intermediaries. The report also examines the impact of globalization on Russia, including its emerging market status within BRICS, past market challenges, and the forces shaping international management practices. The analysis informs companies about the issues and challenges they may face when entering the Russian market, emphasizing elements that facilitate business abroad.

Running head: MARKETING ENTRY STRATEGY
MARKETING ENTRY STRATEGY
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1MARKETING ENTRY STRATEGY
Question 2: Market entry strategies
There are various methods of entering into a foreign market. There are various factors
that are needed to be taken into consideration while implementing a marketing entry strategy
such as the tariff rates, degree of adaption of the product or service in the particular country of
expansion, cost of business operations execution, transportation cost, marketing costs and
infrastructure costs.
Direct exporting
Direct exporting is one of the most common methods of entering in the foreign market. It
involves selling the products and services directly into the foreign Market. The business
organization can directly offer the products and services in Russia rather than involving a third
party distributor (Chung & Enderwick, 2013). This is the most convenient method of entering a
new market, as the company can directly deal with the consumers in Russia. The company can
have direct control over the transactions, operations, and profitability of the business
organization. However, the company will be held responsible and accountable for the entire
business activity. In case there is a loss, the organization has to bear it by itself (De Villa,
Rajwani & Lawton, 2015).
Greenfield investments
Greenfield investment is similar to foreign direct investment, where the business organization
operates in a foreign country. However, this requires greater involvement of the business
organization in the operations and functions of the business (De Villa, Rajwani & Lawton,
2015). It requires buying a space in Russia, build facility, and carry out its functions on an
ongoing business in Russia. This strategy of business expansion is highly expensive and requires

2MARKETING ENTRY STRATEGY
huge amount of investment (De Villa, Rajwani & Lawton, 2015). Moreover, the business
organization also needs to comply with complicated Russian government regulations and other
legal procedures. This is also time constraining activity and holds greater risks due to increased
transportation cost, technological costs, and labor costs.
Licensing and Franchising
Licensing enables the business organization to transfer its rights to other local firms to sell their
products and services in the target country (Musso & Francioni, 2014). This strategy is highly
effective, if the licensor has better knowledge and insights about the local market and have a
large market share. Franchising is a kind of contractual agreement between the franchisee and
the franchisor in order to sell the products and services for a small amount of profit or
commission. The franchisee sells the products and services through the outlets. However, the
company needs to form alliance with the local business traders who have knowledge regarding
the local community (Musso & Francioni, 2014). This is a high risk investment as the company
is dependent on the licensee or the franchisee.
Considering the merits and demerits of alternate market entry strategies, direct exporting
is considering appropriate for the business organization (Musso & Francioni, 2014). Direct
exporting is profitable for the company as it eliminates all forms of intermediaries. The company
can have direct control over the operations and transactions of the business organization. They
can direct deal with the consumers and ensure efficient and effective customer response (Gubik
& Karajz, 2014). While on the other hand, other market entry strategies will require the business
organization to depend entirely on the intermediaries and the profits will be reduced.

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References
Chung, H. F., & Enderwick, P. (2013). An investigation of market entry strategy selection:
Exporting vs foreign direct investment modes—a home-host country scenario. Asia
Pacific Journal of Management, 18(4), 443-460.
De Villa, M. A., Rajwani, T., & Lawton, T. (2015). Market entry modes in a multipolar world:
Untangling the moderating effect of the political environment. International Business
Review, 24(3), 419-429.
Gubik, A. S., & Karajz, S. (2014). The Choice of Foreign Market Entry Modes–The Role of
Resources and Industrial Driving Forces. Entrepreneurial Business and Economics
Review, 2(1).
Musso, F., & Francioni, B. (2014). International strategy for SMEs: Criteria for foreign markets
and entry modes selection. Journal of Small Business and Enterprise Development.