Foreign Market Entry Modes UK College of Business and Computing

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Analysis of different stability modes to be used by Binatone

Binatone is one of the leading electronic and mobile phone manufacturers in the UK. It is the leading business firm that works in the mobile phone, electronics and telecommunication industry. On the other hand, India is one of the biggest economies in the world and the fastest-growing nation. In recent years, it has emerged as one of the major consumers and manufacturers of mobile phones and has seen tremendous growth in the telecommunication sector. Thus, all these factors have made India one of the major countries to have the potential market for the mobile phones of cited business firms. In such a case, Binatone can penetrate and emerge as one of the major options for customers in the Indian market. To enter the market, the firm will see through the better handling of the different entry modes that will help the firm meet its operational and financial goals in the market (De Villa, Rajwani and Lawton, 2015).

Binatone would consider the various measures that will be taken in the organisation that will help in better growth and development of the organisation in the foreign market of India. The utilization of the different sort of market penetration measures that will be undertaken by the firm will help the business entity which will help the business organisation to handle a wide range of operations. The adoption and following of different sorts of entry modes will help the firm to gain better sustainability and stability in a foreign market. The effective analysis and adaption of the wide range of business entry modes will help the firm achieve its targeted goals and handle a wide range of business operations in the firm. The effective handling of the strategic entry modes will help mobile phone firms to develop a high level of productivity and revenue generation in a foreign market (Laufs, Bembom and Schwens, 2016).

            The entry mode is a form of strategy or business function that will help the cited organisation to meet the strategic requirements of the firm and handle the different business operations which will help the business organisation to meet the operational requirements of customers. The entry mode style will help Binatone to develop a strategic approach to enter and establish itself in the foreign market of India. The different business strategies that are been developed by the firm will help the business organisation to handle the trade organisation in a better and more significant manner (Pongelli, Caroli and Cucculelli, 2016).

Market entry modes

Some major foreign market entry modes are as follows:

• Export: It is the practice of selling the goods and services that are been produced in one country into the market of another country. For instance, Binatone will produce or manufacture mobile phones in the UK and export them to the Indian market for selling to customers. It is basically of two types: Direct and Indirect. The direct approach uses the approach of capitalization of the economies. The production is focused in the home country, while the products are been sent out for selling. It is the best approach when the product volume is low (Gubik and Karajz, 2014). It also involves processes like fulfilling foreign demands and domestic orders by means of distributors or sales representatives. In the indirect export, the company don't have control over the products in the international market. It involves the approach of having export trading companies (ETC) or Export merchants who will promote and sell the finished goods or services, manufactured by the cited firm. The major advantage of using the export approach is that it helps to keep a check on the foreign market. It also helps the firm to have a better handling of the different sorts of relationships with its buyers to protect its intellectual property like patents or trademarks (Johanson and Mattsson, 2015). Also, it supports the effective setting of R & D departments and develops effective marketing and sales strategies. However, the major drawback of this approach is that it requires regular investments to maintain the resources and personal changes in an organisation. Also, the no control over the market in an indirect export approach will impact sales. Apart from this, the incorrect selection of export partners and strategy may hinder the performance of organisations in foreign markets.
• Licensing: It involves the usage of the international trade licence, allowing foreign firms to enter and sell their products and services in a specific market or country. For instance, Binatone accessing a licence from the trade authority or government to carry out the manufacturing and selling of its mobile phones in the Indian market. In this approach, the owner of the firm is been granted permission to get access to the resources and rights in the host countries, including the patents and trademarks. The approach of licensing helps in gaining a better introduction of the latest and updated technology in the host nation and developing the skills of local labour. The extent of the licence is present up to the extent of understanding and knowledge of the host country towards that technology and product quality of the licensor. This involves the selection of the right business partners to function in the market and avoid any sort of competition (Wulff, 2015). The major advantage of this approach is that it helps the firm generate extra revenue by implementing the latest technology and skill sets. Besides this, it will help the cited business entity to access the new market in the host country, leading to its expansion without high-risk factors. Other than this, the political risk is also minimal in this approach. The major disadvantage is it generates low revenue as compared to any other modes of entry and the loss of quality standards can lead to a decrease in sales and business efficiencies.

• Strategic alliances: it is a form of agreement that is been made between the different firms like sharing technology and resources, developing joint ventures and having minority equality participation. This entry mode is generally practised in industrialized nations, helps in focusing on the creation of better quality products and services and is created for a short duration. For example, Binatone collaborates with a local technical firm to carry out its business operations and meet the needs and demands of users in foreign markets in a better way. It is one of the popular forms of entry modes used by the organisation to enter into the foreign market (Hennart and Slangen, 2015). The major advantage of this approach is that it helps in the better exchange and development of technologies, keeping in mind the local as well as the foreign customer base of a cited business firm. This will include the better development and utilization of the R&D department of Binatone and better products and services using innovation. Other than this, the collaboration approach will help the firm to meet the global competition. Also, this will help in better scaling the economy of the host nation and reduce the risk factors to be faced by the business organisation. However, the major disadvantage related to this approach is that the exchange of resources may lead to the contract or alliance getting forged and reduce the benefit for both firms. Besides this, it creates a situation of dominance of one firm over the other. It may create a threatening condition for the less powerful firm in the alliance. Also, the technology or the knowledge that is been gained in the firm can be used against each other, impacting the performance, trust level and sales of both the collaborating firms. This has the major risk of developing unequal business relationships (Naidoo and Wu, 2014).
• FDI: It stands for “Foreign Direct Investment”. It is the approach in which the firm or the industrial sector gets a high amount of foreign investment in the country, through various sectors. This approach helps the host country to increase the foreign currency reserve with the government and improve trade relations with other countries. It can be implemented in the firm through various ways such as establishing a new branch in the host country, acquiring the controlling share of an existing mobile phone firm in the country and participating with another firm to develop better products and services. This approach has been quite controversial in certain countries for its direct approach and very low involvement of government in decision making but has the big advantage of generating high amounts of revenue and investment in foreign countries (Wulff, 2015). It helps in the development of better collaboration with the local firms and thus, will help Binatone to develop a better trade relationship with India and manufacture and sell its mobile phones in the Indian market. However, the investment acquisition process will require the approval from Security Exchange Board of India. This approach helps the foreign organisation to have a technical and financial collaboration with an Indian firm in the same market sector. Also, as per the laws, the recipient firm for the FDI has to get permission and clearance from the RBI and local government to carry out the production and selling operations in the Indian market.

Thus, it can be analysed from the research that the different entry modes of penetrating the foreign market have certain advantages or disadvantages that can impact the overall operations of the business organisation in the foreign market. Thus, it can be said that the entry modes like exporting or licensing are quite appropriate for Binatone as compared to the strategic alliance and FDI. This approach will have a significant impact on the overall functionality of the business firm. Other than this, it will take the following measures in deep consideration (Hernández and Nieto, 2015).

Factors of growth and development

            The major factors of the growth and development that are been taken into consideration are  as follows:

• Economic indicators: Market penetration approaches or entry modes like Export and Licensing will be developed by the firm, after taking in consideration the various sort of economic indicator factors like GDP growth rate, inflation rate, Balance of trade and annual growth rate. Binatone will look after these measures before developing a strategy to enter the Indian market in order to ensure better handling of the wide range of business operations. The entry modes approaches like Exporting, licensing or FDI will create a positive condition for the business firm by contributing in the growth and development of better economic indicators and the economy of host-country, by the firm (Naidoo and Wu, 2014). These approaches or entry modes will contribute to better development and a rise in the productivity of foreign business firms. Also, the rise in income and economic stability of people in the country has paved a better path for the firm to carry out the business operations in a better way.
• Country risk/ Political risk: Binatone has to look after the political or national risk factors like opposition from political or social groups etc. This approach is been taken into consideration by the foreign business firm before entering the host country. Other than this, approaches like exporting, licensing and FDI are highly susceptible to being impacted by political and national issues. This will not only impact the growth and development of cited business firms in foreign markets but also impact their brand equity (Gubik and Karajz, 2014). Thus, before investing in India in the form of export or FDI, the mobile phone firm will look after the proper rectification of such impacting factors.
• Culture: the country's culture will also have a very deep and significant impact on the overall functioning of Binatone in the Indian market. The Indian market culture is quite open and liberal to adopt the latest and highly advanced technical products and services, the mobile phone firm has a very emerging market to sell its products and services (Johanson and Mattsson, 2015). The cited firm can utilize the approach of intermingling innovation and cultural factors to develop better products and services, keeping in mind the different sorts of cultural obligations and measures. The firm can utilize factors like using Indian languages to make the UI of its mobile phone or provide customer support services in the local region. This will help the firm to increase goodwill and gain a better customer satisfaction level.

CONCLUSION

Thus, from the above analysis, it can be said that the different entry modes can be utilized by UK-based Mobile phone firm, Binatone. Approaches like Exporting and licensing to carry out the trade in the Indian market, developing strategic alliances with local technical firms and involving the FDI will help the cited business firm to carry out its business operations in a very effective way. Besides this, the consideration of these approaches with different factors like economic indicators of the country, assessment of political risks and cultural background will help mobile phone firms to develop a better strategy before entering in foreign market.

REFERENCES

• Ang, S.H., Benischke, M.H. and Doh, J.P., 2015. The interactions of institutions on foreign market entry mode. Strategic Management Journal. 36(10). pp.1536-1553.
• De Villa, M.A., Rajwani, T. and Lawton, T., 2015. Market entry modes in a multipolar world: Untangling the moderating effect of the political environment. International Business Review. 24(3). pp.419-429.
• Gubik, A.S. and Karajz, S., 2014. The Choice of Foreign Market Entry Modes: The Role of Resources and Industrial Driving Forces. Entrepreneurial Business and Economics Review. 2(1). pp.49-63.
• Hennart, J.F. and Slangen, A.H., 2015. Yes, we really do need more entry-mode studies! A commentary on Shaver. Journal of International Business Studies. 46(1). pp.114-122.
• Hernández, V. and Nieto, M.J., 2015. The effect of the magnitude and direction of institutional distance on the choice of international entry modes. Journal of World Business, 50(1), pp.122-132.
• Johanson, J. and Mattsson, L.G., 2015. Internationalisation in industrial systems—a network approach. In Knowledge, Networks and Power (pp. 111-132). Palgrave Macmillan, London.
• Laufs, K. and Schwens, C., 2014. Foreign market entry mode choice of small and medium-sized enterprises: A systematic review and future research agenda. International Business Review. 23(6). pp.1109-1126.
• Laufs, K., Bembom, M. and Schwens, C., 2016. CEO characteristics and SME foreign market entry mode choice: The moderating effect of firm’s geographic experience and host-country political risk. International Marketing Review. 33(2). pp.246-275.
• Naidoo, V. and Wu, T., 2014. Innovations in marketing of higher education: Foreign market entry mode of not-for-profit universities. Journal of Business & Industrial Marketing. 29(6). pp.546-558.
• Pongelli, C., Caroli, M.G. and Cucculelli, M., 2016. Family business going abroad: the effect of family ownership on foreign market entry mode decisions. Small Business Economics. 47(3). pp.787-801.

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