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Posted: December 29th, 2022
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3. Identify the market entry type and discuss the advantages and risks associated with the choice.
There are several types of market entry strategies that organizations can use to enter a new market. Some common market entry types include:
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Export: exporting involves selling products or services to customers in another country. Advantages of exporting include the ability to test the waters in a new market without making a significant investment, and the ability to leverage existing production and distribution capabilities. Risks of exporting include the potential for difficulties in navigating different cultural and regulatory environments, and the risk of exchange rate fluctuations.
Licensing: licensing involves allowing another organization to use the company's intellectual property, such as patents, trademarks, or copyrights, in exchange for royalties or other fees. Advantages of licensing include the ability to generate revenue from existing intellectual property, and the ability to enter a new market without making a significant investment. Risks of licensing include the potential for loss of control over the use of the intellectual property, and the risk of losing the ability to license the intellectual property to other organizations.
Joint venture: a joint venture involves partnering with another organization to enter a new market. Advantages of a joint venture include the ability to share risk and resources with a partner, and the ability to leverage the partner's expertise and local knowledge. Risks of a joint venture include the potential for conflicts with the partner, and the risk of losing control over the venture.
Direct investment: direct investment involves establishing a new business in a foreign market, either through the acquisition of an existing business or the establishment of a new business from scratch. Advantages of direct investment include the ability to fully control the business and the potential for long-term growth. Risks of direct investment include the need to make a significant investment, and the risk of failure if the business does not succeed in the new market.
The choice of market entry type will depend on the specific circumstances and goals of the organization, as well as the characteristics of the target market. It is important for organizations to carefully consider the advantages and risks of different market entry types and to select the approach that best aligns with their goals and risk tolerance.
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