Market Entry Strategies

Introduction Market entry strategies refer to modes of accessing a share of clients en masse in a new environment. This paper will give an overview of different market entry options available and their extent of applicability in the Abu Dhabi National Hotels Company’s effort to enter the US market. It will also evaluate Abu Dhabi National Hotels Company by considering indirect market entry options in entering the US market. Market entry strategies Market entry strategies can be divided into two broad categories: indirect and direct market.In choosing either of these, one should have analyzed the company in context using various analytical tools. The analysis should focus on the companies’ strengths, weaknesses, opportunities available and threats that the company might be experiencing. It also involves accessing balancing of costs, control and risks. A company should be determined to operate internationally before choosing a market entry strategy. It should also be conv inced also understand that she is about to undertake a long term inflexible commitment whose withdraw would be costly.The results that these will deliver will determine, in the case of Abu Dhabi National Hotels Company, the best entry strategy (Jalan, 2004:234). Direct entry strategy. Exporting There are various modes of direct market entry. In the case, of Abu Dhabi Company exporting is not an option since it is a service delivery company. Besides, this strategy would result in reduced control and higher risks in investment. In addition, Abu Dhabi National has a higher asset base, therefore, can engage in a promising investment strategy (Jalan, 2004:234).Licensing and Franchising Licensing and franchising can be a viable alternative if the Company wishes to have minimal financial and control commitments. In licensing, Abu Dhabi National Hotels will purchase trading rights from a potential partner in the US. This means it may not retain its current trademarks and other intellectual property- it will outsource from the licenser. Licensing is whereby a local company grants a foreign company the right to use its intellectual property.In licensing, the Abu Dhabi Company will incur costs of purchase of third party rights of which it will operate under. Franchising is whereby; the Franchiser (parent company) grants a foreign company (franchisee) the right to do business in a prescribed way. In cases where a country restricts importation, licensing would be viable means of penetrating such a market for foreign investors (Jalan, 2004:235,236). Contract Manufacturing In search for a means to foreign markets, contract manufacturing may also be an alternative.In this strategy, a company operating multinational business will contract foreign companies to produce such goods while it retains the duty of marketing them. This would be unlikely option for Abu Dhabi National Hotels since it is a service based company (Jalan, 2004:235).. Management Contracting In Management cont racting, the international firm supplies management knowledge for another in the foreign country. The technical advisory firm may not be stakeholder of the said company. Its role is to manage without the risk of loss and benefit ownership.This would be beneficial entry tool for the Abu Dhabi because the local knowledge adaptable to the new environment there can be outsources locally (Jalan, 2004:235). Indirect market entry strategy Indirect Exporting In indirect market entry, indirect exporting is one of the alternatives. In this method, a company manufactures its goods and allows other companies to export these goods to foreign countries. The main concern here is since expertise is necessary in penetrating the new market a hired firm will do it in precision to promote its client.The firms sought after in this strategy are those with longtime the experience. This method also involves the lowest risk factor for companies with no foreign experience like in this case of Abu Dhabi Natio nal Hotels (Giligan1986:101, Zisa, 2008:12). Direct Exporting This mode of accessing the foreign market involves high costs in transporting and marketing. The firm here manufactures goods in one country and then incurs the cost of marketing them abroad. This may take place through sales by foreign distributors, sales agents, overseas sales subsidiaries (Chee and Harris 1998:294).Strategic Alliance Another alternative would turn out to be strategic alliance. In this strategy, the company would form an alliance with its potential competitors in the working environment. Conclusion The US is one of the world’s economic towers. Abu Dhabi National Hotel Company rationale can be justified by the fact that there is a potential market in America. The state also enjoys stable politics although currently there are uncertainties linked to the politics of this world military superpower.That is why franchising or licensing would be a likely method for the Abu Dhabi Hotel Company. Besides, strategic alliance and creation of mergers would cushion the Hotel Company from uncertainties in the foreign market. By fact, market entry strategies have a profound effect on how a firm may access a given market in the globe. They also influence the profits made and the risks that may turn out to threats in the future. Making such a concrete decision requires evaluation of the company’s current strengths, asset base, bargaining power and foreign business policies.With these at hand, a firm can make such a longtime commitment in the foreign market once the marketer has arrived at an appropriate entry strategy. (Gillespie et al, 2011:247,248) References Andexer Thomas (2008) Analysis and Evaluation of Market Entry Modes Into the Asia-Pacific Region. Norderstedt, GRIN Verlag Chee Harold, Harris Rod (1998), Global Marketing Strategy. London. Pitman Publishers Gillespie Kate, Jeannet Jean-Pierre, Hennessey H. David (2011) Global Marketing. Mason OH. Cengage Learning.Gilligan Coli n, Martin Hird, (1986) International Marketing: Strategy and Management Kent-Great Britain Mackays of Chatham Ltd. Jalan P. K. (2004) Industrial Sector Reforms In Globalization Era. New Delhi, Prabhat Kumar Sarma Tielmann Viktor (2010) Market Entry Strategies: International Marketing Management Norderstedt, GRIN Verlag Yoshino Michael Y. and Rangan Srinivasa U. (1995). Strategic Alliances: An Entrepreneurial Approach to Globalization Harvard, Harvard University Press Zisa Letizia (2010) Positioning and Opportunity Assessment Report with Main Focus on Germany, China USA, New Zealand. Norderstedt, GRIN Verlag. Market Entry Strategies Companies have a wide range of possibilities for market entry strategies; however, they need to choose the right one for each market, bearing in mind the particular circumstances (Johnston 1998:101). When making marketing decisions, the service exporter should keep in mind some universal characteristics of services that set them apart from goods: intangibility, degree of inseparability, human intensiveness, propriety knowledge, perishability, and heterogeneity (Reif 1997:19). Depending on the service, one particular quality may be more applicable than the others. The combination of services’ intangible characteristics, along with other qualities, expand both the possibilities and obstacles for international market entry strategies of service providers, and any market entry strategy must be accompanied by a clear understanding of what delineates the difference between a service and a goods export (Reif 1997:20). There are several proven market entry methods and channels that a service exporter can utilize without the resource commitment necessary for foreign direct investment. Every service provider must decide which method of market entry will provide the greatest chance of market penetration. According to Reif, a service firm’s success will depend on four factors such as alliances with local companies, the ability to protect intellectual property, advertising, and marketing strategies and access to financial resources. Also, what marketing venue the firm decides to take will ultimately depend upon its internal capacity and creativity drive, and tenacity of its overseas partners. Market entry methods consist of all the possible alternatives to developing a business presence in a foreign market. Three major market entry strategies available for the service provider are exporting, contractual agreements and foreign direct investment (Reif 1997:21). A business deciding to offer its product outside its domestic home market has various entry strategy options such as: exporting the product already produced for the home market; licensing the product idea or production supplies to a third party who operates across national boundaries or in overseas markets; franchising arrangements – such as McDonald’s outlets in many countries; joint venture between a domestic company and a foreign company or government, or strategic alliance to form partnerships across national boundaries; the use of trading companies, that provide links between buyers and sellers in different countries; or foreign direct investment – possibly including the acquisition of an established business – which is long term commitment to a non-domestic market and is resource-demanding (Dibbs 2004:220). The degree of commitment begins, as it were, with direct selling overseas (exporting), and ends with a complex business investment in foreign markets such as a production facility or international joint venture (Copper 1998: 322). According to Copper, firms will engage heavily in international business operations tend not to make distinction between home and overseas business, just like for example, Zeneca, the major UK pharmaceuticals producer, which makes this a plank of its mission statement. Regardless of a firm’s market entry decision, the particular strategy that drives a services firm must correspond with the legal framework for business that exist in a targeted country, and the requirements concerning the scope of practice and legal structure of business should be carefully examined (Reif 1997:21). Choice of market entry depends greatly on variable factors such as current regulatory policy and the extent of domestic competition. Relationships are going to become increasingly international with inter-firm cooperation spanning a multiplicity of cultures, languages, and outlooks, thus, the international marketing in the future will almost need more competencies in communication and relationship management than even in the immediate past. List of References Cooper, C. L., & Argyris, C.   (1998). The Concise Blackwell Encyclopedia of Management. New York: Blackwell Publishing. Dibb, S., & Simkin, L. (2004). Marketing Briefs: A Revision and Study Guide. New York: Butterworth-Heinemann. Johnston, S., & Beaton, H.   (1998). Foundations of International Marketing. London: Thomson Learning EMEA. Reif, J., Ditterich, K. M., Larsen, M. G., & Ostrea, R. A.   (1997). Services–the Export of the 21st Century: A Guidebook for US Service Exporters. New York: World Trade Press. Stone, M. A., McCall, J. B.   (2004). International Strategic Marketing: A European Perspective. New York: Routledge.