ARKET ENTRY STRATEGIE

M. MURAT NALCI MERT BYKAKINCI TUE AYDNER HSEYN SAOLU

A market entry strategy is the planned method

of delivering goods or services to a target
market and distributing them there.

When an organization decides to enter an overseas

market, there are many enter options open to it.

These options vary with cost, risk and the

degree of control which can be exercised over
them.

ARKET ENTRY STRATEGIES

1. EXPORTING
2. LICENSING
3. FRANCHISING
4. JOINT VENTURING
5. CONTRACT MANUFACTURING
6. MERGERS & ACQUASITIONS
7. FULLY OWNED MANUFACTURING FACILITIES
8. COUNTER TRADE
9. TURNKEY CONTRACTS
10. THIRD COUNTRY LOCATION

THIRD COUNTRY
LOCATION

EXPORTING
Exporting is the most traditional and well
established form of operating in foreign markets.

Exporting can be defined as the marketing of

goods produced in one country into another.

ADVANTAGES OF
EXPORTING

DISADVANTAGES OF
EXPORTING

Home based manufacturing

Lack of control

Opportunity to learn foreign markets after the

enter

Initiatives of overseas agents

Reducing the potential risks of operating

overseas.

EXAMPLE OF EXPORTING FROM DOMESTIC MARKET

Export per 1 kg. in Turkey: $ 1.6
Export per 1 kg. in Japan: $ 3.5
Atak (Turkish Origin helicopter)
Export per 1 kilogram: $ 5000

ATAK Turkish Aerospace Industries

EXAMPLE OF EXPORTING FROM FOREIGN MARKETS

FRANCHISING

Players : Franchisor & Franchisee

Franchising is the practice of using another
firm's successful business model.
The franchisor's success depends on the success
of the franchisees

ADVANTAGES OF FRANCHISING

Freedom of Employment
Proven products & Services
Proven Trade Mark
Reduced Risk of Failure

LICENSING

It is quite similar to the "franchise" operation.

Licensing involves little expense and involvement
Coca Cola is an excellent example of licensing

ADVANTAGES OF
LICENCING
Good way to start in foreign operations
and open the door to low risk manufacturing
relationships
Linkage of parent and receiving partner
interests means both get most out of
marketing effort
Capital not tied up in foreign operation and
Options to buy into partner exist or
provision to take royalties in stock

DISADVANTAGES OF
LICENCING
Limited form of participation - to length of
agreement, specific product, process or
trademark.
Potential returns from marketing and
manufacturing may be lost.
Partner develops know-how and
so license is short.

JOINT VENTURES
Joint ventures can be defined as "an
enterprise in which two or more
investors share ownership and
control over property rights and
operation."

Collaboration for more than a

transitory period

A foreign investor showing an

interest in local company

A local firm acquiring an interest in

an existing foreign firm

By both the foreign and local

entrepreneurs jointly forming a
new enterprise

Two or more domestic corporations

in new business area

ADVANTAGES OF
JOINT VENTURES

Sharing the burden of investment

and risk

Cost reduction

Convenience of finding the

resource

Technology and competitive

advantage

Joint financial strength

Entry in some countries.

DISADVANTAGES O
JOINT VENTURES

Partners do not have full control

of management.

Partners may have different

views on expected benefits

EXAMPLES OF JOINT VENTURES

British Aerospace & Taiwan Aerosapace

COUNTER TRADE
Countertrade is a form of international trade in
which certain export and import transactions are
directly linked with each other and in which
import of goods are paid for by export of goods,
instead of Money payments.

Very common between the

communist countries

Foreign exchange problems in EastWest trade

Selling obsolete products

FORMS OF COUNTER
TRADE

Barter

Buy Back

Compensation Deal

Counter Purchase

ADVANTAGES OF
COUNTER TRADE
An alternative way to
finance export when other
ways are not avalable.

DISADVANTAGES OF
COUNTER TRADE

Marketing is limited

Difficult to set prices and

service quality

Inconsistency of delivery
and specification

Difficulty of revert to
currency trading

TURNKEY
CONTRACTS
Turnkey contracts are common in international
business in the supply, erection & commissioning
of plants

An agreement by the seller to supply a buyer

with a facility fully equipped

It can be used in fast-food franchising

Many turnkey contracts involve

government/public sector as buyer.

CONTRACT MANUFACTURING
Production of goods by one firm under the name of another firm

One of the most common practices in international business

ADVANTAGES OF
CONTRACT
MANUFACTURING

No risk of investing in
foreign country
Cost saving
Focus

DISADVANTAGES OF
CONTRACT
MANUFACTURING

Lack of Control

Outsourcing risks

Quality concerns

THIRD COUNTRY LOCATION

When there is no transaction between two countries, firm which wants to enter into the
market of other nation will have to operate from a third country base
t is not that common and beneficial

Friendly trade relations of the third party OR sometimes commercial reasons

MERGERS AND ACQUISITIONS

Also known as an expansion strategy
Powerful driver of globalization

A merger happens when two firms, often of about the same size, agree to go forward as a single
new company rather than remain separately owned and operated
When one company takes over another and clearly established itself as the new owner, the
purchase is called an acquisition

ADVANTAGES
OF M&A

DISADVANTAGES
OF M&A

Increasing the market power.

Legal expenses

Acquisition of Technology.

Cost of takeover

Optimum utilization of Resources.

Bad for consumers

Minimization of Risks.
Tax Benefits

Lecturer:

Prof. Dr. Asl Kkaslan Ekmeki

M. Murat Nalc
Mert Bykaknc
Tue Aydner
Hseyin Saolu