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Research Assignment on

International Marketing

Sonal Bharadwaj Khasnavis

American Business Management & Technology College, Switzerland.

Submitted to: Dr. Sarfaraz Karim

Dated: January26, 2020

Assignment Topic

The agenda of the Discussion is to answer the following:

You are Marketing Manager in a new mobile company which is based in Finland. Now your

company wants to enter into an Asian Market. Suggest the various strategies and find the best

one.
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Abstract

Indentifying challenges and developing strategy for entering into Asian market for a

Finland based mobile phones manufacturing company.

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Introduction

Asia is every businessman’s dream. It is developing much faster than any other European or

American nations. Asia holds many profitable business prospects given its changing economic

scenario — the steady progressions of its countries are now leading more people to embrace

technology. Hence, there is a huge untapped potential in the developing Asian markets due to the

surplus of mobile devices, internet accessibility, and cloud technology.

Asia is a diverse community where preferences change every mile. The local customs and

traditions are so varied that businesses need to make a complete change in their marketing

strategy or partner with local businesses in order to secure a place in the Asian markets, hence

there are multiple challenges which a European company might face before entering into Asian

Market. What works for the US and European markets might not necessarily work for the Asian

markets.

Challenges in entering the Asian Market -

1. Deciding which country in Asia to Target: India, China, Indonesia, and Japan — all

these countries share very little in common from the language spoken to the food consumed.

In Asia, businesses have to use a step-by-step approach; taking one country at a time. Once

they familiarize themselves with one country, making a business mark on the second would

be more easy and comfortable.

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2. Every country is similar yet so diverse

As pointed out before, Asian countries seem similar to outsiders but are in fact vastly

different. Thus, businesses will have to sort out or alter their plans for each country based on

local preferences.

For example McDonald’s the fast-food giant famous for its non-vegetarian menus had to

insert vegetarian meals when it entered India.Culture is the defining point of making a good

entry into the Asian markets.

3. Intense Local Competition:

If you want to succeed in the Asian market you will have to deal with the stiff local

competition. Local businesses have flourished in their markets because they have a better

understanding of the local preferences.

An Uber would not work in a country like Indonesia simply because locals prefer the

two-wheeler ride here. That is because it is cheaper and easier to commute in the traffic

snarls than hitch a four-wheeler ride on the roads.

This is where local businesses come into play. They understand the local challenges

better and design their businesses around it.

4. Payment options

Asia is a place that uses cash as its main mode of payment. And because of that, many

businesses have failed to take off in Asian countries. Therefore, the wise thing to do is to

start accepting payments in cash. Remember that the card-only mode of payment would
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never work in Asia. Another challenge is that of online shopping. Till businesses start to

accept cash on delivery as a mode of payment, it will certainly find few takers in the

Asian market.

5. Political challenges

The governments in Asia are very particular when it comes to foreign investments.

Recently, many countries have tweaked their rules and regulations to be more inviting, of

which cyber and encryption laws are included. With the many cases of cyber data misuse,

the Asian governments demand that the customer databases be maintained in their

respective countries only. These new laws on data protection have to be adhered to. The

fake news issue on our social media platforms is another grave challenge that businesses

have to resolve before entering the Asian markets. This, in turn, requires sharing the

customer database with the local authorities so that they have full control to monitor

content closely.

Strategy for Entering into International Market

Once the company finds answers to above challenges it can find a suitable strategy to

enter into the target Asian market for selling mobile phones.

India alone is the 2nd largest mobile phone market and 3rd largest Smartphone market

across the world that makes it particularly attractive. There are over 200 brands vying for

250 million units a year mobile phone market.

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It refers to the different routes/modes that is undertaken to enter a foreign market. These modes

of entering international markets and their characteristics are shown in Table 1 "International-

Expansion Entry Modes". Shaker A. Zahra, R. Duane Ireland, and Michael A. Hitt,

“International Expansion by New Venture Firms: International Diversity, Mode of Market Entry,

Technological Learning, and Performance,” Academy of Management Journal 43, no. 5 (October

2000): 925–50. Each mode of market entry has advantages and disadvantages. Firms need to

evaluate their options to choose the entry mode that best suits their strategy and goals.

Exporting

Direct exporting is selling directly into the market you have chosen using in the first instance you

own resources. Many companies, once they have established a sales program turn to agents

and/or distributors to represent them further in that market. Agents and distributors work closely

with you in representing your interests. They become the face of your company and thus it is

important that your choice of agents and distributors is handled in much the same way you would

hire a key staff person.

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Table 1 International-Expansion Entry Modes

Type of Entry Advantages Disadvantages

Low control, low local knowledge,

Exporting Fast entry, low risk potential negative environmental

impact of transportation

Less control, licensee may become a

Licensing and competitor, legal and regulatory

Fast entry, low cost, low risk
Franchising environment (IP and contract law)

must be sound

Shared costs reduce Higher cost than exporting, licensing,

Partnering and
investment needed, reduced or franchising; integration problems
Strategic Alliance
risk, seen as local entity between two corporate cultures

Fast entry; known, established High cost, integration issues with

Acquisition
operations home office

Greenfield Venture Gain local market knowledge;

(Launch of a new, can be seen as insider who High cost, high risk due to unknowns,

wholly owned employs locals; maximum slow entry due to setup time

subsidiary) control
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Licensing & Franchising

Licensing is a relatively sophisticated arrangement where a firm transfers the rights to the use of

a product or service to another firm. It is a particularly useful strategy if the purchaser of the

license has a relatively large market share in the market you want to enter. Licenses can be for

marketing or production. licensing).

Franchising is a typical North American process for rapid market expansion but it is gaining

traction in other parts of the world. Franchising works well for firms that have a repeatable

business model (eg. food outlets) that can be easily transferred into other markets. Two caveats

are required when considering using the franchise model. The first is that your business model

should either be very unique or have strong brand recognition that can be utilized internationally

and secondly you may be creating your future competition in your franchisee.

Partnering & Strategic Alliance

Partnering is almost a necessity when entering foreign markets and in some parts of the world

(e.g. Asia) it may be required. Partnering can take a variety of forms from a simple co-marketing

arrangement to a sophisticated strategic alliance for manufacturing. Partnering is a particularly

useful strategy in those markets where the culture, both business and social, is substantively

different than your own as local partners bring local market knowledge, contacts and if chosen

wisely customers.

Joint ventures are a particular form of partnership that involves the creation of a third

independently managed company. It is the 1+1=3 process. Two companies agree to work

together in a particular market, either geographic or product, and create a third company to

undertake this. Risks and profits are normally shared equally. The best example of a joint venture

is Sony/Ericsson Cell Phone.

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Acquisition

In some markets buying an existing local company may be the most appropriate entry strategy.

This may be because the company has substantial market share, are a direct competitor to you or

due to government regulations this is the only option for your firm to enter the market. It is

certainly the most costly and determining the true value of a firm in a foreign market will require

substantial due diligence. On the plus side this entry strategy will immediately provide you the

status of being a local company and you will receive the benefits of local market knowledge, an

established customer base and be treated by the local government as a local firm.

Greenfield Investments

Greenfield investments require the greatest involvement in international business. A greenfield

investment is where you buy the land, build the facility and operate the business on an ongoing

basis in a foreign market. It is certainly the most costly and holds the highest risk but some

markets may require you to undertake the cost and risk due to government regulations,

transportation costs, and the ability to access technology or skilled labour.

Best Strategy for this project

As per my understanding for a European country to enter into Asian market the best strategy

would be partnering and strategic alliance. Joint venture occurs when an international company

enters in to an agreement with a local partner to develop a new entity and assets for a finite time

by contributing equity. 

The advantages of Joint ventures are

1) Risk diversification and allocation of risks between the partners

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2) Sharing of resources

3) It can be a means of reducing political and other investment risks 4) access to the distribution

network.

Conclusion

Market entry strategies can have a far-reaching impact on an organization’s global strategy.

Selecting the best entry strategy is a complex decision-making process and involves various

considerations. The importance of which aspects should be taken into closer consideration can

vary by the strategic goals of a company, by country, and even by industry. Which entry strategy

to choose highly depends on various strategic factors like ease of exit, speed of entry, cultural

distance, and competitive intensity? Under all conditions, there will be no ideal option. In all

cases, methods of market entry should be adjusted to the organization’s long-term strategies and

goals and should be based on future ambitions as well as on current resources and capabilities.

Companies do not only benefit from the advantages, but will also have to cope with

disadvantages of a chosen entry strategy. Therefore, compromises often have to be made when

going international. Ultimately, today’s organizations will have to remain flexible enough to

incorporate the high degree of dynamism in an ever-changing business environment.

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References:

1. Essays, UK. (November 2018). Strategies for Entering Foreign Markets. Retrieved from
https://www.ukessays.com/essays/marketing/reasons-and-stratagies-for-entering-foreign-
markets-marketing-essay.php?vref=1
2. https://www.slideshare.net/Bac007/marketing-strategy-for-launching-new-mobile-phones
3. https://saylordotorg.github.io/text_international-business/s12-03-international-expansion-
entry-.html
4. http://www.tradestart.ca/thinking-about-exporting
5. How to Take Your Company Global, https://www.entrepreneur.com/article/159252