MARKET ENTRY STRATEGIES

(MARKETING STRATEGIES WITH FDI)

MANUFACTURING
STRATEGIES WITH
MARKETING ENTRY STRATEGIES
FACTORS TO BE CONSIDERED:
• Can the company understand the
consumers.
• Can it offer unique products.
• Can they deal with foreign nationals.
• Market size, competitive advantage, risk
level etc.
Foreign Direct Investment refers
to long term investment by an
investor in an enterprise in
another economy , resulting in
lasting interest with significant
influence over the overseas
enterprise.
The investor is known as
Direct investor ,while the
overseas enterprise is
known as Direct
Investment Enterprise
The transactions will be
recorded in Singapore’s outward
FDI ,conversely inward FDI is
recorded ,when a foreign direct
investor invest in Singapore
 BENEFITS  MANUFACTURING STRATEGIES WITH
FDI

 Merger
 Increased Employment
 Acquisition
 Hr Development
 Joint ownership ventures
 Increase in exports
 Strategic Allowance
 Creation of competitive market
 Wholly owned Subsidiaries
 Economic Development
 Market entry strategies of Indian
company
 A merger is an agreement that unites two existing companies
MERGER into one new company. It also refers to a strategic process
whereby two or more companies mutually form a new single
legal venture. The companies agreeing to mergers are typically
equal in terms of size and scale of operations.
WHY DO MERGERS HAPPEN?
 After the merger, companies will secure more resources and the scale of operations will increase.
 Companies may undergo a merger to benefit their shareholders. The existing shareholders of the
original organizations receive shares in the new company after the merger.
 Companies may agree for a merger to enter new markets or diversify their offering of
products and services, consequently increasing profits.
 Mergers also take place when companies want to acquire assets that would take time to develop
internally.
 A merger between companies will eliminate competition among them, thus reducing the advertising
price of the products. In addition, the reduction in prices will benefit customers and eventually increase
sales.
 Mergers may result in better planning and utilization of financial resources.
 TYPES OF MERGERS
There are five basic categories or types of mergers:
1. Horizontal merger: A merger between companies that are in direct competition with each other in terms of product
lines and markets. Horizontal mergers are done to increase market power (market share), further utilize
economies of scale, and exploit merger synergies.
2. Vertical merger: A merger between companies that are along the same supply chain (e.g., a retail company in the
auto parts industry merges with a company that supplies raw materials for auto parts.) . A vertical merger is the
combination of companies along the production and distribution process of a business. The rationale behind a vertical
merger includes higher quality control, better flow of information along the supply chain, and merger synergies.
3. Market-extension merger: A merger between companies in different markets that sell similar products or services.
The goal of a market-extension merger is to gain access to a larger market and thus a bigger customer base.

4. Product-extension merger: A merger between companies in the same markets that sell different but related products
or services.
5. Conglomerate merger: A merger between companies in unrelated business activities. There are two types of a
conglomerate merger: pure and mixed.
 A pure conglomerate merger involves companies that are totally unrelated and that operate in distinct markets.
 A mixed conglomerate merger involves companies that are looking to expand product lines or target markets. (e.g.,
a clothing company buys a software company)
ADVANTAGES OF A MERGER

1. Increases market share

When companies merge, the new company gains a larger market share and gets ahead in the competition.

2. Reduces the cost of operations

Companies can achieve economies of scale, such as bulk buying of raw materials, which can result in cost reductions. The
investments on assets are now spread out over a larger output, which leads to technical economies.

3. Avoids replication
Some companies producing similar products may merge to avoid duplication and eliminate competition. It also results in
reduced prices for the customers.

4. Expands business into new geographic areas

A company seeking to expand its business in a certain geographical area may merge with another similar company operating
in the same area to get the business started.

5. Prevents closure of an unprofitable business

Mergers can save a company from going bankrupt and also save many jobs.
DISADVANTAGES OF A MERGER

1. Raises prices of products or services

A merger results in reduced competition and a larger market share. Thus, the new company can gain a monopoly and increase
the prices of its products or services.

2. Creates gaps in communication

The companies that have agreed to merge may have different cultures. It may result in a gap in communication and affect the
performance of the employees.

3. Creates unemployment
In an aggressive merger, a company may opt to eliminate the underperforming assets of the other company. It may result in
employees losing their jobs.
4. Prevents economies of scale
In cases where there is little in common between the companies, it may be difficult to gain synergies. Also, a bigger
company may be unable to motivate employees and achieve the same degree of control. Thus, the new company may not
be able to achieve economies of scale.
In total,
 Companies seek mergers to gain access to a larger market and customer base, reduce competition, and achieve
economies of scale.
 The above mentioned types of mergers that the companies can follow, depending on their objectives and
strategies.
 A merger is different from an acquisition. Mergers happen when two or more companies combine to form a new
entity, whereas an acquisition is the takeover of a company by another company.
ACQUISITION:
WHAT IS ACQUISITION ?

• An acquisition is a corporate action in which a company

buys most, if not all, of another firm's ownership stakes
to assume control of it.

• An acquisition occurs when a buying company obtains

more than 50% ownership in a target company.
DIFFERENT TYPES OF ACQUISITION
There are mainly two types of Acquisition:
◦ Friendly
◦ Hostile FRIENDLY ACQUISITION
Friendly acquisitions occur when the target firm expresses its agreement to be acquired. Friendly
acquisitions often work towards a mutual benefit for both the acquiring and the target companies.
Hostile acquisitions don't have the same agreement from the target firm, and the acquiring firm must
actively purchase large stakes of the target company to gain a majority.
Hostile takeovers occur when the target company does not consent to the acquisition.
In this case, the acquiring company must attempt to gather a majority stake to force the acquisition to
go forward.
IMPACT OF ACQUISITIONS:

● Employees

●Impact on top level management

● Shareholders of the acquired firm

● Shareholders of the acquiring firm

ADVANTAGES & DISADVANTAGES OF ACQUISITION

ADVANTAGES
● Increased market share.
● Increased speed to market
● Lower risk comparing to develop new products.
● Increased diversification
● Avoid excessive competition
 DISADVANTAGES

● Inadequate valuation of target.

● Inability to achieve synergy.
● Finance by taking huge debt.
JOINT VENTURE
JOINT VENTURE
 A joint venture is a business entity created by two or
more parties. It is characterized by shared
ownership, shared return and risk and also shared
governance.
1.DOMESTIC JOINT VENTURE:
The domestic joint venture means all partners with the
same nationality.
2. INTERNATIONAL JOINT VENTURE:
The international joint venture setup by partners of different
nationalities.
ADVANTAGES
 Accessing additional financial resource
 Sharing the economic risk with co ventures
 Trapping new method, technology, and approach
 Building relationship with vital contacts
 Enables flexibility
LIMITATIONS OF JOINT VENTURE
 Liability
 Shared profit
 Undesired outcome of the quality
 Unmonitored increase in the operations
STRATEGIC ALLIANCES
Definition:-
A strategic alliance refers to a business agreement where two organizations join forces to accomplish a
mutually beneficial goal. Each participating organization preserves its independence and autonomy in a
strategic alliance, remaining an individual entity while working toward shared objectives. Organizations may
choose to establish a strategic alliance to break into a new market segment, expand their customer base, gain a
competitive advantage, improve product offerings and grow business.

Example:-
• Vodafone India And ICICI Bank

• Mastercard And Apple Pay

• Chevrolet And Disney

 TYPES OF STRATEGIC ALLIANCE
There are three types of strategic alliances:-

1) Joint Venture

2) Equity Strategic Alliance

3) Non-equity Strategic Alliance

ADVANTAGES OF STRATEGIC ALLIANCES
 Speed up the entry into a new market

 Enhance sales

 Learn new skills and technology

 Divided fixed costs and resources

 Innovative products and services

 Enhanced distribution channels

 Easy to get into the international market

 Builds the image of the brand

DISADVANTAGES OF STRATEGIC ALLIANCES
 Poor Management of the business alliances

 Poor Communication

 Benefits are unequal

 Loss of control

 Increased liability
WHOLLY
OWNED
SUBSIDIARY
A wholly owned subsidiary is a company whose common stock is 100% owned by another
company, the parent company. Whereas a company can become a wholly owned
subsidiary through an acquisition by the parent company or having been spun off from the
parent company, a regular subsidiary is 51% to 99% owned by the parent company.
Benefits of Wholly-Owned Manufacturing Subsidiary
1) No risk of losing technical competence to a competitor thus gaining a competitive edge.
2) It provides tight control over operations.
3) It provides the ability to realise learning curve and location economies.
4) Protection of technology can be well executed.
5) It provides ability to engage in global strategic coordination.
6) It provides ability to realise location and experience economies.
LIMITATION OF WHOLLY-OWNED MANUFACTURING SUBSIDIARY
1) Company bears full cost and risk.
2) An effective supervision and direction is needed which increases rigidity.
3) It faces several hurdles in the forms of regulations and taxations in foreign countries.
4) Heavier pre-decision information gathering and research evaluation.
5) Political risk.
6) Country-of-origin effects can be lost by manufacturing elsewhere.
A wholly owned subsidiary company can be established in a foreign market in two ways:
1. Greenfield Investment
 Building an entirely new subsidiary in a foreign country from scratch to enable foreign sales and/or production.
 The parent firm has decided to clone its strategy and structure in the foreign plant
ADVANTAGES
 Provides high experiential knowledge in foreign markets
 Low level of conflict between the subsidiary and the parent firm
 Able to control operations abroad
 Does not have the problem of integrating different cultures, structures, procedures, and technologies
DISADVANTAGES
• Could not rely on pre-existing relationships with customers, suppliers, and government officials
• Potential difficulty in accessing existing managers and employees familiar with local market conditions
ACQUISITION
 Combining two companies from different countries to establish a new legal entity.
 Acquisition of a local firm's assets by a foreign company.
 Both local and foreign firms may continue to exist.
Advantages
 Low risks of technology appropriation
 Access to existing managers and employees familiar with local market conditions
 Could rely on pre-existing relationships with customers, suppliers, and government officials
Disadvantages
 Managers of acquired foreign subsidiaries may have a weak attachment to the parent firm
 The cultures of the acquiring and acquired firm clash
INDIA - MARKET ENTRY STRATEGY
INDIA - MARKET ENTRY STRATEGY
1. Find the right partner
2. Localize your products to meet consumer needs and preferences
3. Remember the high level of price sensitivity
4. Enter the Indian market for long-term growth, not to make a quick
buck
5. Prepare to navigate a much different legal and regulatory
landscape
  High Tariffs and Protectionist Policies
 Price Sensitivity

MARKET  Infrastructure

ENTRY  Data Localization Requirements and E-Commerce

Restrictions
CHALLENGES  Local Content Requirements
 Power of States
THANK YOU……