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market entry strategy of textile and garments

  1. 1 1) a.Choose a market entry mode and explain the factors would influence your entry mode selection. Globalization means service firms have great opportunities to conduct their business in foreign markets. Therefore, the primary consideration and the most critical issue in an international market entry strategy is the selection of an appropriate entry mode. Entry mode selection is interpreted to mean a suitable way for enterprises to enter foreign markets so as to operate their international businesses by exploiting their advantages. Therefore, I choose exporting as a market entry mode. Direct Exporting strategies: A direct strategy is when products are sold directly to buyers in target markets either through local sales representatives or distributors local sales representatives promote their company's products and do not take title to the merchandise. distributors take ownership of the goods (and the accompanying risk) and usually on-sell through wholesalers and retailers
  2. 7-2 The modern form of exporting is popular and has the distinguishing characteristics: Low initial investment Reach customers quickly Complete control over production Benefit of learning for future expansion It offers low financial risk local operating knowledge is enough to run the business Costing, timing, customs clearance can be done by agents Transportation arrangements can be done by agents
  3. 7-3 There are four potential benefits that our international business may realize from strategic alliances: Easy of market entry: Advances in telecommunications, computer technology and transportation have made entry into foreign markets by international firms easier. Entering foreign markets further confers benefits such as economies of scale and scope in marketing and distribution. Shared risks: Risk sharing is another common rationale for undertaking a cooperative arrangement when a market has just opened up, or when there is much uncertainty and instability in a particular market, sharing risks becomes particularly important.
  4. 7-4 Shared knowledge and expertise: Most firms are competent in some areas and lack expertise in other areas; as such, forming a exporting strategic alliance can allow ready access to knowledge and expertise in an area that a company lacks. The information, knowledge and expertise that a firm gains can be used, not just in the joint venture project, but for other projects and purposes. Synergy and competitive advantage: Achieving synergy and a competitive advantage may be another reason why firms enter into exporting. Exporting has becomes a way to decrease the risk of market entry, international expansion, research and development etc.
  5. 7-5 .In retail, entering a new market is an expensive and time consuming process. Forming exporting strategic alliances with an established company with a good reputation can help create favourable brand image and efficient distribution networks. Even established reputable companies need to introduce new brands to market. The factors that influence the selection mode are as follows: Exporting is treated as the most traditional form of internationalization. All related costs to exporting have to do mainly with marketing, so it is not only the oldest but also the safest way to reach a foreign market.
  6. 7-6 it does not require your company to move its premises and everything can be done directly in the country of origin. there are a number of associated risks and costs, mainly to do with transport with the most important factor being, inability to be close to the foreign market (indirect access to market data etc. Exporting are increasingly becoming an important part of overall market entry strategy, as a way to grow product and service offerings, develop new markets and leverage technology and R&D. Risk management is a company wide concern and exporting strategic alliances have their share of risks.
  7. 7-7 The Joint venture strategic alliance I suggest. The joint venture mode involves relatively lower investment and hence provides risk, return, and control commensurate to the extent of equity participation of the investing firm Below are the key benefits of forming a joint venture: Sharing Assets. Creating a joint venture allows the participants to share their collective tangible and intangible assets in pursuit of a common goal. For example, two or more parties may collectively own the intellectual property required to develop a new product or technology, but none of the parties individually has all of the necessary IP rights to pursue the project. 3) b. Assume the apparel company has decided to enlist a foreign partner in a strategic alliance. Which form of strategic alliance do you suggest? Why?
  8. 7-8 Sharing Critical Expertise and Experience. By forming a joint venture, the parties can share management experience and expertise, industry knowledge, technological capabilities and any other expertise or experience necessary to the business. Sharing Costs. Another key benefit of entering into a joint venture is sharing costs. Joint ventures often allow their participants to undertake a venture that neither could afford independently. Research and development, labour and management, distribution, supply and administrative costs as a percentage of revenues may be significantly reduced for each party Sharing Business Risk. A joint venture enables the participants to share the business risk of creating a new product or service or entering into or expanding a business.. Sharing resources and costs can help ease the burden of the risk.
  9. 7-9 Access to New Markets. Forming a joint venture can enable the participants to access geographic or high- growth markets that they would not otherwise have access to individually. The parties may also pool their access to suppliers or customers. For example, one joint venture member may have the required intellectual property for a venture while the other has the infrastructure or distribution networks to access markets and customers. Diversification. Another key reason that parties enter into joint ventures is to diversify their own businesses. As mentioned above, a joint venture may help participants gain access to markets or businesses that they could not enter individually. Diversification helps reduce a participant's business risk across its product or service lines, and may also increase the participant's access to resources (such as superior talent) and more capital if the profits and/or assets of the joint venture grow significantly.
  10. 7-10 Flexibility. There are many ways to structure a joint venture, which offers co-ventures maximum flexibility in creating the entity and establishing a relationship that works for them. For example, if multiple parties are involved, an M&A transaction could prove costly and difficult to manage and would usually require one or more of the parties to cease to exist and/or cede control of their businesses. In contrast, a joint venture structure allows each party involved to undertake a new business opportunity while maintaining their respective identities and existing business operations. Favorable Tax Treatment. Unincorporated joint ventures, such as general partnerships, can provide favourable tax treatment for their parties. They allow profits to flow through to coventurers' financial statements without the double taxation that would occur, first, on a corporation's profits and, then, on the dividends paid to its shareholders. They also allow losses to flow through to co-venturers that can be used to offset income from the co-venturer's other operations.