International Business Management International Market Entry Strategies - Example

Title: International Business Management – International Market Entry Strategies Name: Instructor: Course: Date: Abstract International business management is the ability for companies to control their various business activities in more than one country. For an organisation to be known as an international company, it is supposed to manage its business operation in other nations successfully improving the economy of both nations. In relation to international business management, the organisation has to be able to come up with excellent ways that they may use in entering into the international market. It is to this that international market entry strategy gains its importance in the subject of international business management. The paper critically evaluates Choice of Foreign Market Entry Mode article by Agarwal & Ramaswami in relation to the topic on study. This will give the positive evaluation, negative evaluation, assumptions in the article, limitations in the article together with how relevant the ideas discussed in the article to the current requirement in the UAE international market. Introduction International business management is the ability for organisation to sustain its operation across nations. This involves operating business activities in more than one market with an aim of improving the global economic status. In business studies, the subject has been broken down into further topics to enhance its understanding in the society. Some of these topics includes; political behaviour in the market, cross culture, international communication and international market entry strategies among others. For organisation to be involved in international business it has to come up with better international market entry strategy to enable it participate in global business. To this, we can then say that market entry strategies are the plans that any businesses put into practice to enable enter the market allowing them to participate in international business activities such as imports and exports of goods across nations. Change in technology over years; have resulted to high competition in international market, thus forcing the marketing departments of different business organisations to come up with different market entry strategies to facilitate their attainment of consumers need in other nations. Some marketing organisations have shifted from sectional operating organization i.e. consumer’s view point to a more holistic administration philosophy of organizations together with their distribution and needs of the clients in the region. This has made it to call for more knowledgeable skills at the marketing department in organizations resulting to the need for the establishment of international marketing management that will educate the scholar on the ways of managing their organizational marketing affairs wisely at the right time. Thus, enabling the management of the organisation to be educated on various strategies that they organization can use to enter an international market. According to Agarwal & Ramaswami article on Choice of Foreign Market Entry Mode they discuss on the major aspects of business that may affect the choice of market entry of an organisation into the international market (Agarwal & Ramaswami 1992). They illustrate how business ownership may affect the choice of market entry as well as its location from the international market. Other than that, they also give the major types of market entry strategies that are implemented in our today organisations. Therefore, the paper is entitled to look at the international market entry strategies as one of topic within international business management. With this, it will evaluate what the writer of Choice of Foreign Market Entry Mode article says about international market entry, giving positive and negative thinking towards the article as well as illustrating what the article did not discuss and assumptions that writer made towards the topic of the article. Having discussed all that, the paper will go on to look at the ways in which the concepts in the article relate to the current requirements in the United Arabs Emirates. This will concentrate more on how the type of organisation within UAE dictates the type of market entry strategy to be used by any organisation. Positive Evaluation of the Article According to the authors of the article it is clear that different feature in organisations dictates the choice of international market entry strategy to be implemented. To begin with, the ownership of an organisation dictates the mode of market entry to be used in international business market (Agarwal & Ramaswami 1992). For instance, they say that, the lower the level of ownership of an organisation, the low-risk mode they have to be involved in while entering into international market. This dictates that, low ability for an organisation will prevent them from accessing major details worldwide thus minimising their ability to attain better market opportunities. With this, they have to collaborate with other organisations in foreign nations so that they may dedicate all the selling of their product to the other home organisation leaving them with export duties of the product to the international market. The nature and type of organisation also tend to dictate the choice of market entry strategy to be implemented in an organisation (Agarwal & Ramaswami 1992). This can be in term of the structure of the organisation, the level of technology within the organisation and the type of product that the organisation produces to the market. In relation to the type of structure of organisation, small and middle enterprise organisation will tend to chose indirect export entry strategy as their mode of entry into international market. This will force them to identify an agent of who will be entitled with their sell and distribution of their products in the new market internationally. This is because the turn over at the organisation is normally below the limit expected at the state in which they exist. In relation to the type of product or service that the organisation offers to the market, manufacturing organisations such as Blue Bird Garment Company and Coca Company may opt to undertake the product production mode of entry into the market. In this case, the organisation, decides on installing their machinery in other countries where they can obtain cheap raw material and cheap labour tom attain the availability of the product into the market at low production cost. This is to the fact that, the organisation will be able to access the requirement for product production in the new market easily other than exporting the finished product to the other nation. This is seen as strategy to minimise the production cost of a given product in an organisation, thus increasing on their profit which in return improves the economic status of the organisation home country as well as their foreign nation economy. Such organisations can also exercise indirect export entry mode in that they identify an agent in a given country and use them to sell their product in the market. This mode of market entry have been practiced by most of the vehicles manufacturing firms that they tend to identify an organization in other countries to sell their products from other than exporting them directly from their company in Japan. The level of technology at the organisation dictates the choice of international market entry strategy (Agarwal & Ramaswami 1992). Better technology allows the organisation to come up with more effective strategy allowing them to meet the demand and needs of their consumers in the new market effectively. The location of the international market also affects the choice of market entry strategy to be used (Agarwal & Ramaswami 1992). Long distance location calls for more effective strategy to be used in relation to short distance international business. This is to the idea that, with long disease, the organisation has to establish appropriate market entry that will facilitate them gain their clients demand in a more effective manner without having to be present in the market all the time. For instance, the use of product production mode of entry among manufacturing industry in united states operating in sub-Saharan Africa countries, tend to be more effective in relation to the distance that is required for their transportation of the finished goods and raw material of the products. Other than the factors that detect the choice of market entry into international business market, the authors also pointed out the key types of market entry strategies. These are; exporting, sole venture, licensing, licensing and joint venture (Agarwal & Ramaswami 1992). Negative Evaluation of the Article Regardless of the positive aspect that the article contributes to the international business environment, the articles have some negative aspects to the society. In reference to the article, the author uses normative decision theory in the choice of international market entry strategy for an organisation (Agarwal & Ramaswami 1992). This gives the businesses environment a very negative aspect, this is to the idea that business people will tend to concentrate on the new market and forget about the productivity of the organisation in their home country market. In return decrease the economic status of the home country while increasing the economic status of the foreign country. While illustrating the elements affecting the choice of market entry strategy into international market, the author did not give example of organisation which could enhance understanding of the reader on the concept being passed across. On listing the factors that affects the choice of market entry strategies in international market, the author had limited factors that do not give clear understanding of international business management in the market. Some of the factors left out include; countries political aspect, corporate culture in relation to the organisation, environmental aspects of the new market, legal system and language factor among others. Assumptions in the Article The authors assumed that the readers of the article are familiar with details about the main types of market entry. The article did not give more details on the market entry that organisation may be involved in to educate the reader on the strategy. At the same time, the author assumed that nations have same mode of business operation. This is evident in the text as there were no exact examples illustrated to indicate the what type of ownership they were reefing to. Limitations in the Article The article was limited to only four strategies of market entry (Agarwal & Ramaswami 1992). Other than exporting, licensing, joint venture and sole venture there are other market entry strategies such as product production mode of market entry, which calls for the organisation to carry out their whole process of product production from the country other than transporting the finished goods. In this case, the organisation installs their machinery in the foreign country so that they can cut down the cost of labour and raw material needed for the product production. There is also the strategic alliances market entry where by two organisations from different countries market collaborates so that they can tale the advantage of the market in both countries. In this strategy, the organisation tries to exchange goods and services and sell in their own country as they own thus benefiting their own business as well as the business of the other organisation. Other than giving more market entry strategies, the article also did not give the different type of exporting market entry. As it is clear in international business environment, different organisations tend to export their goods differently in regard to their structure and ability to be involved in export exercises in the country. There are two main types of export market entry strategy; indirect export entry strategy and direct export entry strategy. In direct export entry strategy, the manufacturers are involved in open promotion and selling of their products and services in the international markets without any fear of the rules and regulations in the new market. In this strategy, the goods and services are usually sold openly to the customers in international market, allowing their sales representatives to advertise their products with limited responsibilities to the products that they advertise to the market. In this case, the suppliers are the ones entitled to ensure that the products are enough in the market and meet the demands of the consumers in the market. For an organisation to participate in this market entry strategy, they are expected to be familiar with the new market in which they intend to enter into. In this, it implies that, one has to familiar with the character of the consumer behaviours towards the goods so that he may come up with appropriate policy to implement of its advertisement of the product in the market. With indirect export entry strategy also known as the use of middlemen, an organization enter into international market through the use of agents in the other country of who sign contract with the manufacturers of the goods to be selling for them the product in different market worldwide. One has to consider most elements while deciding on the type of agent or dealer that they will associate with in their business. Article Concepts in Relation to Current Requirements in the UAE The concepts discussed in the article relates closely to the requirements in UAE. UAE have come up with excellent business opportunities to attract more foreign organisation into their business market. For organisation to attain international market in UAE it has to provide strong product in the market, this is in relation to the ownership of the organisation as discussed in the article as a factor to determine the type of market entry to be implemented (Agarwal & Ramaswami 1992). Strong ownership of organisation such as public organisation, gives the organisation high ability to be more productive in the market thus increasing their level of production. This is to the fact that the organisation home governed are always in position to support the organisation in case of any financial problem thus giving them continues ability to produce. Just as the nature of the organisation dictates the type of international market entry chosen for an organisation, it also plays a key role in current requirement in the UAE market. For any business to enter the UAE international market,. It has to be able to develop a comprehensive market entry strategy to enable them attain their targeted consumers in the market. With better established organisation, it provides the management with important factors and information enabling them to come up with concrete market entry strategy that the organisation may use to reach their clients the new market. At the same time, the nature of the organisation also dictates the level of distribution and sales network for the organisation’s product in the market. To attain reach to UAE international market, the organisation has to poses strong distribution and sales network for their product in the market, thus calling for the better organisational nature. Dubai being one of the international UAE market poses humongous import revenue. This calls for above $14billion turn over annually to qualify any organisation into their market. In regard to this, the nature of organisation discussed as element to choice of market entry also acts as a requirement to the UAE market. Here, the small business enterprises will not be in position to entire into the market as their annual turn over is usually lower than the expected limit and thus giving more chance to manufacturing firms globally. None the less, the organisation has to be able to attain their requirements to qualify them into the market. First, the organisation has to be able to fine tune their product for the UAE together with Middle East market, the organisation has to leverage their competitive advantage in the market, the organisation has to be come up with excellent market entry to facilitate them enter in the market using the correct market entry strategy, they have to develop and establish sales cannels and lastly the organisation has to be able to generate sales, administer good relationship in business and support better marketing strategies in the market. These have been the main requirement for any organisation to involve themselves with UAE countries in business. Conclusion In conclusion, it is clear that the article focused more on the factors that affects the choice of market entry strategy for any organisation without giving details on the types of market entry strategies that the organisation have to choose from. This will educate the management of any organisation on what to focus on while selecting their market entry strategy but will not give them information on how the market entry strategy operates. It has also been evident that, the factors affecting the choice of international market entry strategy contributes to the requirements of the organisation in attaining their entry into UAE international market. Recommendation Therefore, the paper recommends to the author to include some basic definitions of the market entry strategies that they mentioned in the article to educate the reader on ways in which the market entry strategy works. Secondly, they have to give more factors that dictate the choice of market entry strategy into international market, this is viewed to help the reader understand other topic discussed in international business management such as culture, language use among others. Provision of examples of organisations have to be includes in the article to increase understanding ability of the reader. With reflect of organisation in existence, it tends to gives better understanding of other concepts that the article pass across. Work Cited: Agarwal, S. & Ramaswami, S. (1992) Choice of Foreign Market Entry Mode Impact of Ownership, Location and Internalization Factors, Journal of International Business Studies, Vol. 23 Issue 3 Read More