International Business Strategies and Market Entry Modes
Global Proactive Reasons for Economies of Scale
- Resource access and cost savings, such as economic arbitrage
- Incentives from the target country
- Growth opportunities in mature markets
Disadvantages
- The liability of foreignness
- Loss of reputation
- Loss of intellectual property
Global Strategy
A global strategy involves selling products and using similar marketing techniques worldwide. Upstream and support activities remain concentrated at the home country headquarters, unlike the transnational strategy, where
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International Market Entry Strategies
Exporting
This is the first method firms use to enter a foreign market.
Advantages:
- Relatively low cost
- Firms may achieve experience curve economies
Disadvantages:
- Lower-cost manufacturing locations may exist elsewhere
- High transport costs and tariff barriers
- Potential issues with foreign agents
Turnkey Projects
These involve a contractor that agrees to handle every detail of a project for a foreign client, including the training of operating personnel. When the contract
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Cultural Distance
- Attention: Cultural differences significantly impact consumer preferences, attitudes towards alcohol consumption, and social norms related to drinking. Therefore, it is essential to pay specific attention to cultural distance when expanding internationally. Understanding local cultures and adapting marketing strategies, product formulations, and branding to fit cultural preferences can enhance market acceptance and brand relevance.
- Why: Ignoring cultural differences can lead to misunderstandings,