2 Orientation: relevant literature, case organisation and research questions
This section provides an overview of literature relating to international market entry strategies (section 2.1), followed by background information on PA as the case organisation (section 2.2). Finally research questions to be addressed are presented (section 2.3).
2.1 Literature review: international market entry strategies
The strategy for a company involves a set of actions taken by management to achieve superior profitability over competitors to ensure long term growth and success for the benefit of all stakeholders. Strategy is concerned with competing differently from rivals and achieving a sustainable competitive advantage. There are a number of different strategies companies can pursue, however this …show more content…
Franchising • Many of the same advantages as licensing, however more suitable for service and retail organisations in gaining a foreign presence
• Franchisee bears the costs and risks of operating in the foreign country • Difficulty in maintaining quality control ensuring the franchise business model is adhered to
Table 2: Advantages and disadvantages of each market entry mode (continued)
Market entry mode Advantages Disadvantages
Acquisition • Enable the company to maintain control of foreign operations
• Quicker to execute than a greenfield venture
• Less risky to acquire valuable strategic assets such as brand loyalty, customer relationships, trade-marks, distribution and production systems than to build from the ground up • Can be difficult to integrate the acquired companies processes and culture with the acquiring company
• High failure rate (50% to 83% fail)
• High capital cost in acquiring the company
Greenfield venture • Complete control of the operations
• Higher returns • Costly capital investment with high risk
• Require significant company resources
• Do not work well in countries with little protection for foreign investors
• Slowest entry route into the foreign
This section provides an overview of literature relating to international market entry strategies (section 2.1), followed by background information on PA as the case organisation (section 2.2). Finally research questions to be addressed are presented (section 2.3).
2.1 Literature review: international market entry strategies
The strategy for a company involves a set of actions taken by management to achieve superior profitability over competitors to ensure long term growth and success for the benefit of all stakeholders. Strategy is concerned with competing differently from rivals and achieving a sustainable competitive advantage. There are a number of different strategies companies can pursue, however this …show more content…
Franchising • Many of the same advantages as licensing, however more suitable for service and retail organisations in gaining a foreign presence
• Franchisee bears the costs and risks of operating in the foreign country • Difficulty in maintaining quality control ensuring the franchise business model is adhered to
Table 2: Advantages and disadvantages of each market entry mode (continued)
Market entry mode Advantages Disadvantages
Acquisition • Enable the company to maintain control of foreign operations
• Quicker to execute than a greenfield venture
• Less risky to acquire valuable strategic assets such as brand loyalty, customer relationships, trade-marks, distribution and production systems than to build from the ground up • Can be difficult to integrate the acquired companies processes and culture with the acquiring company
• High failure rate (50% to 83% fail)
• High capital cost in acquiring the company
Greenfield venture • Complete control of the operations
• Higher returns • Costly capital investment with high risk
• Require significant company resources
• Do not work well in countries with little protection for foreign investors
• Slowest entry route into the foreign