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Companies have shifted their focus from domestic to global marketing due to the emerging competition. Global marketing entails opening up markets in a worldwide degree and taking business advantage of different global operations and opportunities (Gillespie 2007).
Dubai Academic City (DAC)
The Academic city is a home to new global schools such as colleges and universities and was launched in 2006 by Dubai Educational Council.
This global academia city was initiated to increase the level of quality of education and training so as to develop the human resources. The City hosts over 25 globally recognized universities and colleges with more than 150,000 enrolled students set to benefit from the quality education.
The project is set to be complete by 2012 during which time the number of the educational centers and the students are expected to have doubled.
Some of the firms that have been set up in Dubai City include Michigan State University with the head office in Michigan and the Institute of Management Technology which was established in 1980 and based in India. There are many ways in which the firms would have entered the market but this paper will discuss the main market entry strategies stating their advantage and disadvantage of each.
Exporting is one strategy which was adopted by the two firms. It entails marketing of the companies services from one country to another. The firms have exported their services from their countries to set up and market them in Dubai Academic City.
In most cases, most operations are conducted in the home country where the firm has been established and services are just exported to the foreign country. The company has options on how to conduct its exporting operations.
These options include indirect exporting or direct exporting. Indirect exporting entails engaging agents or intermediaries located in the foreign country to assist the firm market its services.
The main advantage of using the agents to enter the market is their wide knowledge and expertise of the foreign market hence providing a smooth landing board for the firm.
The main disadvantage of this strategy is that due to firms being run under an overseas agent they lack absolute control over how to run their firms in the foreign market.
The other option is through direct exporting where the firm sets up an export department within itself and hire experienced sales force to sell the services directly to the foreign customers.
The advantage of using this method is the fact that the firm has control over how its operations are run. It also saves a lot of investment costs in the foreign market as it relies on the set up exporting firm.
On the other hand, the main disadvantage the firm is likely to face is lack of expertise knowledge on the market they intend to invest. This is because the firms opt to enter the market on their own without engaging the services of the foreign market intermediaries who are in better position to advise them.
It therefore becomes risky to them as the market can fail to accept the services exported (Lymbersky 2008). Michigan State University adopted this strategy to first set their base in the academic city. The other entry strategy that was used by the Institute of Management Technology was foreign production, which includes licensing and franchising.
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Licensing entails the firm’s access to patent or trademarks rights for a fee and as a protective measure in the foreign market. The advantage of this method is that the firm gets to gain the commercial right to utilize the patent or trademark without restrictions. It also serves as a base to test the foreign market before expansion and further investing.
The main shortcoming of licensing is that the firm mostly depends on the overseas licensee to create revenue thus the disbursements of fees are made on sale volume percentage only.
Franchising acts the same as licensing though it is more comprehensive as the scope of control of the marketing program are more in depth.
The last entry marketing strategy is the ownership strategy which include joint ventures and Strategic alliance. This method of entry has become very common in firms which want to expand and increase their capital base in the foreign market.
Michigan University entered into a strategic alliance with New York College in order to strengthen its base. Though the college operates under Michigan University, the profit margin is better and this is one of the main advantages of this strategy.
The disadvantage however is lack of future certainty of the alliance survival. This is because the partners in this venture tend to disagree over time ending in a split.
It is evident therefore that firms have options on how to enter a foreign market to market and sell their services. Whichever strategy a firm chooses to enter the market, it should have conducted research on the foreign market to establish the customers who are to receive the services. It should be noted that foreign entry strategy seems to be favored by most firms as it forms a strong base in the foreign country with its own identity.
Gillespie, K. (2007) Global Marketing. USA, SoutWestern: Cengage Learning.
Lymbersky, C. (2008) Market Entry Strategies: Text, Cases and Readings in Market Entry management. Hamburg: Management Laboratory Press.