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1 – 10 of over 46000This study examines the importance of 25 barriers to market entry in industrial markets. A survey of 93 firms indicates that majority of business executives consider cost…
Abstract
This study examines the importance of 25 barriers to market entry in industrial markets. A survey of 93 firms indicates that majority of business executives consider cost advantages and capital requirements to enter markets as the two most important barriers to entry followed by incumbents having a superior production process, capital intensity of the market, and customer loyalty. The least important barriers perceived by the executives in the study are government licensing requirements, followed by heavy advertising. In addition, the study investigates the underlying dimensions of barriers to entry in industrial market through a factor analysis. The results indicate that there are four major underlying dimensions of entry barriers in industrial markets.
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The purpose of this paper is to present the application of the PSE model (perceived barriers to market entry; strategy competence; entry strategy) for market entry.
Abstract
Purpose
The purpose of this paper is to present the application of the PSE model (perceived barriers to market entry; strategy competence; entry strategy) for market entry.
Design/methodology/approach
The PSE model is presented and illustrated by Ericsson's entry into the mobile systems market in the USA. Advice on the application of the model is presented.
Findings
The case shows key lessons in entering an international market: the barriers as regards the necessity of adapting the technology to local standards, and the necessity of customer acceptance were perceived as particularly high; there was a high degree of relatedness with Ericsson's core competence, and substantial market experience was gained; and Ericsson preferred organic entry modes regarding its core products such as mobile telephony systems.
Research limitations/implications
The lessons may be subject to tests in broader studies.
Practical implications
In applying the PSE model, management would be advised to choose entry strategy and pay attention to entry barriers, business relatedness, and market experience.
Originality/value
The article turns a theoretical model into advice that is valuable for companies when they formulate international strategies. The case shows a practical model application.
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Contrary to the prevalent theory approaches that treat market selection and market entry mode selection as two related but essentially separate decisions, this paper argues that…
Abstract
Contrary to the prevalent theory approaches that treat market selection and market entry mode selection as two related but essentially separate decisions, this paper argues that these should most appropriately be looked on as two aspects of one decision process. It proposes that an exhaustive list of factors that can influence outcomes of such an integrated process be developed and argues that an inclusive spectrum of analysis would be able to accommodate all business contexts and most relevant business practice. It then presents a new market and market entry mode selection model (MEMS) which conforms to the proposed inclusive spectrum of the underlying decision process analysis.
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Fahri Karakaya and Peter Yannopoulos
The purpose of this study is to develop a conceptual framework for defensive strategy by integrating market entry modes and the typology of firms suggested by Day and Nedungandi…
Abstract
Purpose
The purpose of this study is to develop a conceptual framework for defensive strategy by integrating market entry modes and the typology of firms suggested by Day and Nedungandi, and to attempt to propose how local incumbent firms utilize their mental models in order to react against market entry of new competition in global markets.
Design/methodology/approach
The theoretical perspective adopted in the study is how mental models used by incumbent firms influence their reaction to market entry of new competition in developing defensive strategies to defend their markets.
Findings
Mental models of incumbent firms, categorized as self‐centered, competitor‐centered, customer‐oriented, and market‐driven firms, impact their reaction and the development of defensive marketing strategies against market entrants using a variety of market entry modes in global markets.
Originality/value
The paper presents an extensive review of the defensive marketing and mental models literature and shows how the way in which incumbent firms react to market entry of new competition contributes to understanding of incumbent reaction to market entry of new competition in global markets. Research directions for future research and managerial implications are also provided.
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Mikael Hilmersson, Martin Johanson, Heléne Lundberg and Stylianos Papaioannou
Few researchers and even fewer practitioners would deny that serendipitous events play a central role in the growth process of firms. However, most international marketing models…
Abstract
Purpose
Few researchers and even fewer practitioners would deny that serendipitous events play a central role in the growth process of firms. However, most international marketing models ignore the role of serendipity in the opportunity discovery process. The authors provide a nuanced view on international opportunities by developing the role of serendipitous opportunities in the foreign market entry process. The authors develop a model integrating the notions of serendipity, entrepreneurial logic, experiential knowledge and network knowledge redundancy. From the study’s model, the authors condense three sets of hypotheses on the relationships among experiential knowledge and entry strategy, network knowledge redundancy, entry strategy and serendipity.
Design/methodology/approach
The authors confront the study’s hypotheses with data collected on-site at 168 Swedish firms covering 234 opportunities, and to test the hypotheses, the authors ran ordinary least squares (OLS) regression tests in three steps.
Findings
The results of the study’s analysis reveal that experiential knowledge and network knowledge redundancy both lead to a logic based on rigid planning and systematic search, which in turn reduces the likelihood that serendipitous opportunities will be realized in the foreign market entry process.
Originality/value
This is the first study that develops a measure of opportunities that are the outcome of serendipitous events. In addition, the authors integrate network and learning theories and internationalization theory by establishing antecedents to, and outcomes of, the entry strategy.
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Sungwook Min, Namwoon Kim and Ge Zhan
The purpose of this study is to offer explanations of the wide variation in the impact of market size on new market entry decisions – i.e. its positive impact lessens because of…
Abstract
Purpose
The purpose of this study is to offer explanations of the wide variation in the impact of market size on new market entry decisions – i.e. its positive impact lessens because of unreliable predictability of market size on post-entry profit and entry motivations other than post-entry profit.
Design/methodology/approach
On the basis of the two explanations, this paper builds a contingency frame that the impact of market size on new market entry depends on entry-context-specific variables. It validates the contingency frame, empirically analyzing 219 parameter estimates of the impact of market size on market entry obtained from 41 existing empirical studies.
Findings
The meta-analysis results reveal that the entry-context-specific variables used in this study – niche market entry, high-tech market entry, entry by industry incumbent firms and the year of market entry – notably moderate the impact of market size on new market entry decisions, as the research frame suggests.
Research limitations/implications
This study examines the various literature and study outcomes in the areas of marketing, economics and strategy to elucidate whether and when market size is a critical driver of new market entry. In most cases, the greater the new market size, the greater is the propensity to enter the market. However, the contingency arguments stated in this paper suggest that firms may and do enter a new market even if the market size is not large at the time of entry.
Originality/value
This paper enhances the understanding of the relative importance of market size in market entry decisions, which depend on various entry contexts. It clarifies the direction and magnitude of the impact of such entry contexts.
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Notes that much is known in the academic literature about factors that may be influential in firms’ market entry timing decisions. Specifically, in response to a competitors’…
Abstract
Notes that much is known in the academic literature about factors that may be influential in firms’ market entry timing decisions. Specifically, in response to a competitors’ pioneering new product introduction, academic research finds many conditions that suggest a greater desirability of immediate market entry while many other conditions suggest a greater desirability of a delayed response. Reports the results of a survey and experiment where working managers and experienced MBA students were asked to evaluate the timing of market entry given a complex business scenario. The results show areas where there is a consensus among decision makers with the academic literature, as well as areas where views differ from that of the literature. Perverts and discusses insights gained into the decision making processes of managers for market entry timing decisions. The study can help managers in follower firms achieve greater success in formulating market entry timing strategies by reducing ambiguity in the timing implications of many internal and external conditions, as well as by drawing attention to potential action biases.
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Alexandros Fakos and Maria Merino
The purpose of this paper is to document the extensive heterogeneity in institutions within countries and investigate which institutional factors are the most relevant for…
Abstract
Purpose
The purpose of this paper is to document the extensive heterogeneity in institutions within countries and investigate which institutional factors are the most relevant for international brands.
Design/methodology/approach
The paper analyzes the entry patterns of three global fast-food franchise networks in 78 Mexican cities using discrete outcome models and ordered probit in particular. To summarize the quantitative importance of the results, the analysis includes also log-linear regressions with Heckman correction for the city observations without franchise presence.
Findings
Institutional factors are critical for an international franchisor in the decision to enter a new market. The most important institutional quality proxy for franchise entry is the rate of formal employment. The more the informal employment in a city, the lower the number of franchised stores and the lower the probability of brand presence in the city.
Research limitations/implications
Only three fast-food franchises are included in the paper, which limits the generalization of the results beyond the sector and Mexico. Another limitation of the methodology of this paper is that the authors estimate the effect of institutions on multinational franchise entry conditioning on market size. The issue here is that if institutions increase gross domestic product (GDP) per capita, then the demand for multinational franchises also increases. Such an effect cannot be captured if we condition on market size in our econometric models. This is particularly important for policy-makers aiming to quantify costs and benefits of reforms but not an important consideration for practitioners who might take institutions as given and are mainly interested in entry strategies that maximize profitability.
Practical implications
Institutional variables, and not only market factors, are critical to understand the entry decision of global franchisors in Mexico. In particular, the extent of informality is relevant in explaining the store location. It is necessary to understand how managers value the quality of institutions and which dimensions are most important for multinationals. In addition, the analysis should be conducted both at the national and sub-national level, given that within-country heterogeneity is prevalent in emerging markets.
Social implications
Cities must reinforce and communicate their institutional quality to attract foreign investment by franchises in particular.
Originality/value
We test several dimensions of institutional quality at the urban level as determinants of multinationals? decision to enter a city in a foreign market. We use novel administrative data at the municipality level and we employ econometric model that takes into account the discreetness of entry data and the fact that there are cities with no franchise presence. We control for sample selection, which comes from the zero number of stores in some city observations in the regressions.
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Byoungho Jin, Jae-Eun Chung, Heesoon Yang and So Won Jeong
Contrary to the mainstream born global (BG) perspective, some previous studies report the incremental expansion of BGs. In addition, the reasons behind BGs initiating specific…
Abstract
Purpose
Contrary to the mainstream born global (BG) perspective, some previous studies report the incremental expansion of BGs. In addition, the reasons behind BGs initiating specific steps, if any, and BGs’ entry market choices are still unknown or rather contrasting. This study views that such contrasting findings may be attributed to the contexts in which BGs operate. Within the context of consumer goods BGs, the purpose of this paper is to examine the entry market choices and post-entry growth patterns, and investigate the underlying reasons.
Design/methodology/approach
This study adopted in-depth historiographic case research from seven Korean BGs in the consumer goods sector that demonstrated success in internationalization. Multiple sources were used to gather data from each case. A total of 14 interviews, approximately two one-on-one interviews per firm, were the major means of data collection.
Findings
The findings revealed that first entry market choices among BGs functioned largely as attempts at emergent opportunities. However, after the first wave of entry into countries with available selling opportunities, entry market choice became a simultaneous pursuit of strategic markets and emergent selling opportunities. BGs focusing on image-oriented consumer goods appeared more strategic when entering the world’s leading markets to gain brand reputation. The analyses of internationalization processes revealed three patterns, which collectively implied that each move to the next stage came from a strategic decision to solve the problems related to survival and strategic visions for growth.
Originality/value
One contribution of this paper is the provision of empirical evidence for entry market choices among consumer goods BGs. The findings suggest that BGs’ entry market choices may not be a simple matter of simultaneous expansion to the world’s lead market. Instead, they may comprise more strategic decision. While previous studies have suggested such evolutionary or path-dependent internationalization processes, this study is among the first to reveal specific growth patterns and the possible reasons behind them.
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Jeryl Whitelock and David Jobber
A study of key decision makers in a sample of large international companies explored the non‐domestic market entry decision. A literature review revealed five broad external…
Abstract
A study of key decision makers in a sample of large international companies explored the non‐domestic market entry decision. A literature review revealed five broad external domains which held the potential to affect that decision. A series of statements was factor analysed to reveal ten more specific variables. An analysis of which variables discriminated between the decision to enter and not enter a new non‐domestic market demonstrated that geocultural/political similarity, developed economy, attractive market, good market information and governmental attitude significantly affected the decision. The findings supported a marketing‐strategy based theory of market entry.
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