The Ways of Entering the Market
When expanding to the global market, there are different strategies that a firm can use. The strategy chosen will depend on the preference of the firm, its size, financial capacity, type of products, and other environmental factors. Direct export is one of the oldest ways of entering a new market. When using this strategy, an exporting firm will identify firms that can distribute its products in the foreign market. Joint ventures or mergers have also been used as a strategy when entering foreign markets. This is where two firms in two different countries enter into an agreement to operate as a single entity. Instead of becoming competitors in the target market, the two firms will operate as a single firm. They will open new branches because of the increased production capacity.
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Direct market entry is popular among large firms dealing in specialized products. These firms find it more appropriate to open their own branches in the target markets where they can control all the activities going on because of the sensitivity of their products. Franchising is gaining popularity as another simple strategy of going global. In this strategy, the parent firm also known as the franchiser allows a firm in a foreign market to use its brand name and logo to operate in the foreign market. The franchisee will be paying the franchiser royalties and other benefits as agreed in the contract signed between them.
Examples fitting these methods
- General Motors is directly exporting its manufactured cars to foreign markets in Europe, Asia-Pacific, South American, Africa, and other foreign markets.
- Chase bank has been using mergers and joint ventures as a strategy of expanding to foreign markets.
- PepsiCo Company is currently using direct market entry to expand its operations to parts of Africa and Asia.
- Berger King has decided to use franchising strategy to enter some Asian markets that it considers volatile.
Importance of Making Adjustments in Market Potential and Market Share Figures
A firm may find it necessary to make adjustments in market potential and market share strategies due to a number of reasons. The first reason that makes many firms to make adjustments in market potential is the need to determine changes needed in the production capacity. In the current competitive business environment, firms find it very important to be precise. Producing goods which exceeds market demand may lead to serious losses, especially when dealing in products which are perishable.
Excess products may be disposed cheaply, a move that will hurt profitability of a firm. Similarly, when a firm produces goods which do not meet the demand in the market, it will give room for competitors to penetrate the market to capture the segment that is not taken care of by the firm. For this reason, adjustments in market potential and market share figures are of critical importance.
Another reason why making adjustments in market potential and market share figures is important is to determine the level of market competition. A firm may need to do this in order to determine the gains or losses made against market competitors. If gains have been made, then it is a sign that the firm is experiencing growth. If it is losses, then it is a sign that some adjustments in marketing strategies are needed. These adjustments may sometimes help in determining the changing tastes and preferences of customers. A consistent drop in market share may be a warning that a firm is not producing what customers expect.
How to Evaluate Non-Quantitative Factors in a Small Beverage Shop
Evaluating non-quantitative factors such as goals, experiences, lifestyle, and content of work may be challenging because of limited use of statistics. However, for a small beverage shop seeking to expand its operations, these factors must be evaluated appropriately. Goals can be evaluated by determining the milestones made after a trading period of one year against what was expected. If the two compare closely, then it is a sign that the beverage firm is making progress in the market.
Experience of the employees can be evaluated by determining the level of customer satisfaction. This may require the management to engage these customers in a survey to determine their views about the quality of service they get from employees of this firm and how this has changed over a given period. Lifestyle of employees may be used as a reflection of how contented employees of a firm are, especially in terms of remunerations.
The management can set up a team to evaluate changes in the lifestyle of the employees. This team should consist of employees who interact with the target group almost on a daily basis. Finally, it may be necessary to evaluate content of work. This refers to changes in quality of goods that a firm produces over time. Customers may help in determining the changes in quality of products of this beverage shop. These employees can even make suggestions about changes that may be necessary to enhance quality of products.