Foreign Market Entry and Diversification - Assignment Example

Overview Foreign market entry and diversification are considered to be the two most important aspects of an organization as the brand name and the success of the organization completely relies on proper planning and strategies that would lead them to be the prime leader in the foreign market as well as in the domestic market. The main objective of this paper is to provide a clear view on the different factors, strategies and the measures that a company i.e. XYZ should consider while deciding to diversify in foreign markets.

Argument for Diversification Market entry and diversification is considered to be the major decisions in an organizational life cycle, not because it includes investment of huge amount of money but failure to establish the determined objectives would lead in decreasing the goodwill of the company and would also result in great financial losses, which might again hamper its sustenance in the long-run. In the modern day context, international diversification, through foreign market entry has become a vital concern for many companies to obtain competitive advantages (Czinkota & Ronkainen, 2009).

XYZ operates in the highly competitive market environment of fast food and beverage industry, which exhibits the characteristics of a free entry and exit trend, increasing the threats of new entrants along with substitution effects and bargaining power of the consumers (KPMG, 2012). Additionally, it has also been viewed that the company faces the challenges of narrow market segmentation, wherein almost all the markets of its home country have been already penetrated by the company. In contrast, the prevailing market opportunities in the global platform remain untapped by the company in comparison to its competitors (Nagel, 2012).

It is thus suggestible that the company i.e. XYZ focuses on diversifying in the form of foreign market entry in order to enhance its competitive positing in the industry and assure its sustenance in the long-run. Strategy for Diversification It is very essential that any diversification strategy is planned or made after analyzing the trends that are followed in the targeted market, rendering due significance to the needs and requirements of the prime customers of the company in the foreign market environment.

Apart from focusing on the market trends and the buying behavior deciphered by the targeted consumer segment, XYZ also needs to assess the competitors’ motives and their strengths as well as weaknesses prior to enter a foreign market. Accordingly, due consideration must be provided to identify and analyze the strengths and weaknesses of the company in compare and contrast to that of its large competitors in the targeted foreign market. It will also be very essential for XYZ to conduct a thorough research on the market structure, political and economic climate as well as other external business factors, which might affect its performance in the foreign market.

It is based on these inferences that the company should decide upon reforming its marketing strategies and making requisite changes in its product line or targeted customer segment, when entering foreign market (Czinkota, & Ronkainen, 2009). Identifying and discussing the foreign market and the suitable strategies of the company On the basis of the recent economic