If I were the CEO of a multi-national corporation to consider a market entry mode strategy, there would mostly be the most important question that would come up into my mind is which market entry mode strategy will give my company higher profitability and larger market share. There are lot of market entry mode strategies like direct exporting, indirect exporting, licensing, franchising, wholly owned companies, joint venture, strategic alliance etc. however, before choosing the market mode strategy, I would definitely consider the market’s existing conditions that will back me to boost up my company’s bottom line.
The first question that would come up is what is the condition of the economic factors of the country that my company has to deal with?
It is very clear that for every market entry strategy mode, ...view middle of the document...
The income levels of the country’s residence are a significant factor to set up a price of my product and forecasting my probable profit margins. I will consider exchange rate, trade barriers, tax, tariff & excise duty as the key economic factors and also consider the government controls over these factors to ensure better profitability.
The second question that would come up is what is the market competition?
Competition is surely a major issue as a born business phase. I must consider the market competition of my products and services along with what is the chance of capturing the market shares and by what percentage or how much. In order to select any market entry mode strategy, being a CEO I will consider competition because a market entry mode strategy will be a big factor to capture market shares. Different market entry mode strategy has different levels of influences among market shares. For example, only by exporting, this might be easy to increase profitability but it’s not confirmed to capture market share significantly. Therefore, in order to capture considerable market shares and compete to ensure my company’s strong bottom line, I will have to choose which market entry mode strategy I am going to apply.
The final question that would come up is what are the political and environmental conditions?
In today’s business world, especially for MNCs, political and environmental issues are largely important than previous. Now-a-days, political and environmental instability of a country causes lot of damages to a company’s overall performance. For example, countries like Iran, Iraq or even Pakistan should not be a considerable choice for direct foreign investment as a market entry mode for its instable political conditions.
I think as the CEO of a MNC, these three questions would come up into top of my mind which I would look for answers like these.