Running Head: ENTRY INTO A FOREIGN MARKET Name: Tutor: Course: Date: Commercial organizations undertaking business activities within contemporary economic environments have a tendency to undergo expansion at one point or another. Expansion takes place in two aspects…
This desire for expansion outside initial business setups seeks to enhance production and supply of goods to more potential consumers. Increase in consumer population translates into a corresponding increase in revenue generation. This means that international corporations wanted to increase their customer base; hence established business facilities within international markets. Tielmann (2010) says that despite the fact that most business environments are present within a free market settings, other factors still play a significant role in starting and developing production and sales activities within such settings. Therefore, business organizations wishing to expand into new markets should adopt appropriate strategies in order to achieve marketing success. From a practical perspective, entry into a new market needs systematic approaches depending on the internal and external factors surrounding the company. Typical internal factors include a company’s efficiency in management, availability of resources for expansion and the culture of its business operations. On the other hand, external factors include those elements lying outside the control of company’s management. According to Erkan (2011), these include social, political and economic factors prevailing within the new market. The nature of internal and external factors acknowledged above could either smoothen or toughen a company’s entry into a new market. In the context of marketing terminologies, effects on the environment could narrow down to aspects of risk, cost and magnitude of control that an organization experiences upon entering a market segment. In the process of determining as to whether entry into a new market will be successful, company managers select appropriate strategies that will produce the best desired outcomes. Upon thorough analysis, some organizations may decide to use indirect market entry, which involves export of manufactured products into the new markets using existing supply channels. On the other hand, a product manufacture may use direct entry method by a partnership with agents already present within a new market environment. In this regard, the operational thesis statement postulates that Myanmar oil industry is a potential market for Cameron’s production equipment. Institutional Strengths and Risks Having appreciated the theoretical framework of new market entry, we will conduct a real life analysis on Cameron International Corporation. This organization has successfully entered other new market in the past. Erkan (2011) says that currently, Cameron International Corporation is undertaking its business operations in approximately 100 countries around the globe. Its expansion strategies have yielded fruits; hence there is a growing desire to venture into other virgin territories. This time, Cameron International Corporation has identified Myanmar, a reforming South Asian nation formerly known as Burma, as its target market. In the year 2010, the company posted a profit of approximately $ 500 million. This profit resulted mainly from its operation within the US market. Cameron Corporation deals with production and supply of equipment used in oil and gas productions around the globe. In this case, the organization decided to venture into the South Asian nation in subject since Myanmar has prospectus profile in terms of oil and gas resources. In the past, the nation had a dented history of human ...
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“Entry into Foreign Market Essay Example | Topics and Well Written Essays - 1500 Words”, n.d. https://studentshare.net/business/93149-entry-into-foreign-market.
Audit of the Foreign Market’s Environment.
The market environment in Hong Kong can be analyzed using PESTEL analysis to describe the various macro-economical factors influencing and impacting upon the business environment. Firms get widely affected by the external environmental factors acting on them which consequently influence their business directions and strategies.
In this respect, the familiarity with the service market with respect to the private and luxury transport segments provides the company with necessary assessment for the diversification in the country and abroad (Lovelock & Wirtz, 2009). In view of the magnitude of diversification component when compared with the main business, a strategic approach must ensue in balancing sustainability of the existing business wing and oversee development of the new wing.
Cameron International Corporation provides flow equipment along with equipment in pressure control for both sea oil and land rigs. The company ventured towards FDI dealings with Brazilian companies which tends to manufactures items for the “Brazilian oil and gas” industry and thus support expansion strategy in the respective market.
The company will be in a position to enhance or improve the rivalry of the entire industry. In case the company is successful, its value will improve in the long run. It is important for the company to create value through unrelated or related products given the revenues might be increased and the costs of operation minimized in line with the business level strategies.
In this context, it is observed that Cameron International plans to penetrate further into the markets of Myanmar. The company already has a minor presence in the markets of Myanmar and plans to expand further through effective marketing strategies. There are various institutional and risk factors that would pose a problem.
Cameron International Corporation’s involvement in the Myanmar market shall face direct market barriers since it seeks to diversify its investments through capital-intensive programs to enter the market instead of practicing other entry mechanisms. Currently, the corporation’s involvement in the Myanmar market is often prone to direct barriers to market entry since the country is recuperating from economic crises caused by the lengthened period of sanctions imposed by other economies since early 1990s (Duncan, 2009).
There are two types of diversification depending on whether there is any relationship between new and old business of the company .The reason that companies are diversified is the search for synergies or a reduction in the overall business risk. Diversification is one of four marketing strategies defined in the Ansoff matrix.
Gradually the brand Corona expanded to 150 countries worldwide with the strength of quality and image. Modelo acquired some other beer businesses in order to achieve consolidation in the industry and compete with the rivals who were very big. The
These relationships are not just confined to only neighboring countries rather the scope has been increased now. This globalization is not just limited to the countries or economies rather the companies and even individual persons are also affected by this
With the liberalization of trade markets and emerged opportunities for international business development, many companies have faced with a challenge of deciding the best foreign market entry strategy for a host country/countries/region(s). Foreign market entry strategy is a comprehensive theme, which is influenced by three major groups of factors.
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