MARKET STRUCTURE AND ENTRY STRATEGY
(Langbacka, 2018) asserts that most of firms that take part in international business activities choose between four forms of entry strategies namely exporting and importing, joint venture, licensing and franchising once a company has made a conclusion to enter market in a foreign country, its’ choice of market entry is influenced by various factors such as company resources, product characteristics, foreign investment target, market distribution pattern, number of customers,
(Langbacka, 2018)Joint ventures are owned 50:50 by the two firms, which both enjoy monopoly power in the same way that an acquisition does. joint venturing is a common activity such as a Finnish company has a joint venture with a Swedish company for manufacturing and or sales of goods and services because some nations do not permit 100% foreign ownership, joint venture is appropriate for such circumstances. It can also be used as a temporary solution to get started with the business along the way they can be exchange of expertise and technology. Joint venturing provides access to local expertise and local resources while at the same time the exporting company gains more control in the market than when having resellers.
(Milton Stewart, 2011) States that joint venture can result into catastrophic experience and ultimately a failure due to inadequate planning and strategy. Marketplace developments, technology issues, regulatory uncertainties and economic downturns are often difficult to anticipate and can have a debilitating impact on joint ventures, profits are diluted or cut into half. Partners also may discover that they do not share expectations and are not flexible enough to change and accommodate the evolving needs of the business Joint venture does not always work due to difficulty of having different corporate cultures.
(Holmvall, 2010) claims that exports can be regarded as piggybacking, which means that a company allows another company or its subsidiaries in any foreign market to handle their exports amount depends on the agreement. The transferring of sales to a company with reputable market channels makes it quicker to introduce products to new markets.
(Langbacka, 2018) Company using subsidiaries does not have local knowledge which can be used for product improvement to fit the market well and it is easy to lose money when domestic company finds a better supplier, also there is high dependency on foreign agent in terms of delivering products. licensing is when sales (products and services ) abroad are protected by a patent this types of entry mode does not require a lot of staff commitment plus the company enjoys strong presence in the market through the use of logos, commercial brands and above all there is benchmarking as licensee know local conditions. Dishonesty of the licensee and low returns in royals compared to other forms of market entry.