Market Entry Strategies

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Market Entry Strategies
business and legal aspects
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The common process of internationalization often
leads to ineffective decisions
Idea
How to enter
Contacts, meetings Fairs, tradeshows,.
Offers, negotiations, Contracts,..
Delivery, turnover, ..
Gut-level concept
possibilities
Where to enter
For SMEs the decision how to enter which market
is often based on the simplicity and speed of
possibilities
But Is it the right market for the product or
would there be a better one? Is it the right way
to enter the market or would there be a better
one? Is it the right product to internationalize
or would there be a better one?
time
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On a foreign market you always are a start-up
Technology, Core competence Employees,
Organization Contractors Knowledge of
clients Market, competitors Facts Law,
Jurisdiction, Politics Society, Language
I know home market
I-Plan
Market entry strategy
I know foreign
Want / have to know
Lack of experience Real Risk
Lack of information/ preparation
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More time for preparation brings a more
effective decision
Idea
Gut-level concept
Own research
3rd party research
Contacts, meetings Fairs, tradeshows,..
Offers, negotiations, Contracts,..
Delivery, turnover, ..
Interest
Research
Activation
Activity
The market entry decision should be based on an
internationalization plan
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Prepare for international business in 8 steps

• Prepare Company
• Product Selection
• Market Selection
• Market Entry Strategy
• Marketing Entry
• Personnel
• Risk Management

Is my company ready for international
business? Culture Capacity Life Cycle
Organization
Focus on core competence Less is more focused
sortiment check on ability to go international
On which market are the best conditions for the
selected products? Find usable criterias to select
How is the most effective way - in the mid range
- to bring my products on the market?
How shall the product be perceived on the
market?How is the most effective mixture between
price, distribution and promotion?
Who are the local people and the home people we
can build the international business on?
How can I see and avoid the deadly risks?
EBT, CF, 3y Balances, Project Plan
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Different entry strategies
Affiliate
Joint Venture gt 50
high
Joint Venture lt 50
shareholding lt 25 / 33
Sales Representative
Investment
Direct Export
More Risk More Fun
Indirect Export
Franchising
low
Management Capacity
Licensing
Profit share
low
high
Operative Influence
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Different entry strategies
Affiliate
Joint Venture gt 50
high
Direct Invest
Joint Venture lt 50
Shareholding lt 25/33
Sales Representative
Investment
Direct Export
Export
Indirect Export
Franchising
low
License
Licensing
low
high
Operative Influence
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Business Aspects key questions

• A. Conditions on local market (remember Market
  Selection done!)
• Is there a high localization need for the product
  (marketing)?
• Is there a high localization need for the product
  (costs)?
• How different ist the local environment?
• (Ressources, Payment, Laws, Society, trade
  usages,..)
• How price relevant are transport costs or
  tariffs?
• How high is the exchange rate risk?
• others

Low medium - high
Own company rating
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Business Aspects key questions

• B. Conditions in the company
• How strategically important is the country?
• How fast is local sucess necessary/planned?
• How high is the technological copying risk?
• How important ist the brand?
• How is the profit/risk Quota planned?
• How much management capacity shall be used?
• How important is flexibility in business?
• How often are there shortages in production?

The questions have different importance to each
company rate also the importance to your
company (ABC System)
Own company rating
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1. Licensing
Own company rating
A. Market Conditions
Licensing
Large difference company/market to entry strategy
Medium difference company/market to entry
strategy
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1. Licensing
Own company rating
B. Company Conditions
Licensing
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1. Licensing legal aspects

• Protection of intellectual property rights
  (registration of patents, trademarks etc.)
• Know How Documentation
• Licence Agreement setting out rights and
  obligations of licensor and licensee
• Penalties (infringements of IP rights)
• Choice of law
• Enforcement of rights (arbitration)

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2. Export
Own company rating
A. Market Conditions
Export
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2. Export
Own company rating
B. Company Conditions
Export


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2. Export legal aspects

• Agreements on the supply and delivery of goods
• Supply agreements as a contribution to clear
  guidance
• and service orientation in favour of buyer
• Supply Chain Management
• Clear determination of terms and conditions of
  seller and buyer
• Restrictions on representations, warranties
  and covenants
• Product liability
• Choice of law
• Enforcement of rights (arbitration)

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3. Direct Investment
Own company rating
A. Market Conditions
Direct Investment
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1. Direct Investment
Own company rating
B. Company Conditions
Direct Investment
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3. Direct Investment legal aspects

• Legal structure to reflect consent between
  parties
• Tailored to meet expectations
• Secure position of parties in different
  scenarios
• Majority / minority positions
• 50 50 Joint Venture
• Clear determination of contributions financial
  and others
• Representations and warranties
• Option rights
• Drag along and tag along rights, pre-emption
  rights
• Choice of law
• Enforcement of rights (arbitration)

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