The Strategy of Export Entry Mode
To enter an international market, one approach is to practice the rate of exporting, which involves the company producing the product in its home country and then exporting it to a separate foreign market. This application of the indirect export technique aims at reducing neither the local participation nor the involvement of the foreign company as its representatives, or the sales team will act as an intermediary to make the product available in the foreign market (Albaum and Duerr, 2008). There are two sorts of export entry modes: indirect business exporting is the company’s way of utilizing independent intermediaries or agents, and direct exporting in the target market is where the company builds its sales and distribution channels.
The Strategy Advantages, Disadvantages, and Suitability for Anker
Based on our market strategy indicated, the tools provided to Anker could be manifold. Second, it contributes to safety and expense reduction by taking advantage of the firm’s existing manufacturing structures and resources. Subsequently, it yields a low-entry and flexible model, offering Anker ample room for the rigorous test before moving on with the high-cost entrance schema. Deng et al. (2020) research will also show Anker how it can move the logistics and physical distribution chain within a global market channel with enough expertise in the sector as a well-established brand (E-marketing, 2017 ). The notion implies an international marketing approach exactly as the Dynamic World expresses, as the term is used in this theory.
As a result, the subcontracting method of exporting has many issues that Anker is not immune to. Transhipment may face increased transportation costs and non-tariff restrictions (such as taxes and import barriers), which might impede income-generating activities. Indeed, Anker may not have as much control over its advertising space and product distribution in the United States, mainly if it uses intermediaries. Market instability may be challenging for this because keeping the same brand image as locations fluctuate is challenging. If Anker is a leading international brand, backed by a spectacular brand image and broad market expertise of a global player, exporting may be the first and most practical alternative for its launch on the US market. This approach would allow Anker to leverage its existing expertise and incur lower risks compared to a large-scale manufacturing plant. Nevertheless, as Anker seeks to achieve a sustainable and significant foothold in the United States sales market, it may need to adopt more thorough and complete entry strategies that result in localization and greater power.
Contractual Entry Mode (e.g., Licensing or Franchising)
Another significant strategy for foreign market analysis is the contractual entrance mode, which describes a method of signing a long-term deal with a local partner in the target foreign market entirely. This paradigm encompasses methods like licensing and franchising as identified in the class work. In a licensing agreement, the company (licensor) offers a local firm (licensee) the right to use its intellectual property, such as trademarks, patents, or copyrights, in exchange for royalties (Root, 1994). In contrast, as illustrated by Alon (2010), franchising entails the corporation (franchisor) offering the right to a local partner (franchisee) to use its whole business system, including branding, products, and operational processes, in exchange for fees and a percentage of the revenue. Ideally, research by Global Market Entry Strategies ( 2017) indicates that the licensing cost is easy to implement and that the company has the autonomy to adopt products to local tastes ( Lec.7).
It has both positive and negative effects and is suitable for Anker.
For Anker, a contractual entry mode could have various benefits. It offers a low-risk and low-cost approach to entering the US market, with the local partner bearing most of the investment and operational costs. Furthermore, it allows Anker to exploit the local partner’s understanding of the market, distribution channels, and consumer preferences, which may be particularly useful in a new and unfamiliar market like the United States. Anker may have weaknesses in contractual entry modes but on the contrary. Firms can have minimal influence on how partners perform their operations, resulting in variability of quality and integrity of the brand’s image. In addition, there remains a chance that the local partner will foe the company if the collaboration is dissolved or the collaborator will be misusing the company’s intellectual property. Moreover, seeking a good and reliable local business partner is also not that easy, and the excellent determinant of the partnership’s success involves a lot of money and time spent.
In light of the fact that Anker is a well-known brand with solid research and development as its core strengths, by means of contractual-orientated entry measures like licensing, Anker has an opportunity to enter the US market. As a result, Anker’s creative approach will help them reap huge benefits, such as brand capital and other intellectual property, while reducing the risk and initial investments. Anker has to be very selective among its associates and build a set of quality indicators that will validate the integrity of the product. Also, it must have a mechanism to ensure its brand is consistent and its intellectual rights are guarded.
Recommended Entry Strategy for Anker
Evaluation Mode
Anker decides to take either of the two enterprise strategies, namely, export and contractual, to penetrate the US market, which has to scrutinize its characteristics, market conditions, and the firm’s vision and goals. Anker’s Characteristics: Being a mature and reputed multinational corporation large enough to conduct research and development projects and gain global exposure and experience, Anker is of the size needed to overcome the potential challenges of a new market launch. However, as a relatively new competitor in the United States market, Anker may lack the local understanding and distribution connections required for instant success. Market Conditions: During the analysis of the American market, however, I found that it is competitive, as there are many leading companies around the region, as well as customers who may not be accustomed to the experience of their location. Furthermore, laws and trade barriers might impact foreign enterprises’ profitability and ease of entry (Gielens & Dekimpe, 2007). Anker’s Goals and Objectives: Anker aims to enable brighter lives through creative products, implying a desire for brand management and direct consumer interaction. Its objective of creating brands that customers love includes a long-term commitment to the US market and an emphasis on establishing a solid local presence.
One of the best-recommended entry strategies is Contractual Entry Mode. For instance, according to the review, a contractual entry mechanism, such as licensing or franchising, is advised as Anker’s initial plan for entering the US market (Salvoldi & Brock, 2023). This strategy is consistent with Anker’s strengths and ambitions in several ways, which entails Bridging Anker’s Strengths and Aims and Licensing/Franchising Agreements. Via this mechanism, Anker uses its well-established brand name and property rights, which also removes the upfront investment and risks. In the view of Alon (2010), this approach allows Anker to gain market access in the United States while the company edges jurisdiction upon quality standards.
Again, the recommended strategy is Capability to Overcome Potential Challenges: By getting into a partnership with the local business, Anker might avoid the potential risks by taking into account the lack of local knowledge and distribution channels. The local partner’s knowledge and networks, which can support easy market entry and better comprehension of the specificity of consumer preferences, are also vital (Root, 1994). In addition, whether or not the needs that have been strongly emphasized assume a positive side of either long-term viability and success potential, one that is curious and interesting, remains to be seen. For instance, Anker can attempt to enter the US market stock exchange risk-free and flexibly to see the waters before it sells off publicly. A study by Deng et al. ( 2020) indicates that Anker may explore a new phase of growth with the deepening commitment and expansion of its resource-intensive entry strategies, becoming co-mingled companies or establishing its own subsidiaries.
Justification and Implementation Considerations
In the context of franchising globally, as discussed by Alon (2010), we realize that while contractual entrance is recommended as an initial step, there is a need for careful examination by Anker on potential partners and create comprehensive quality control and monitoring methods to ensure brand consistency and intellectual property protection (Alon, 2010). Additionally, it is also essential for Anker to consider adding components from the offered information, such as strategic alliances or joint ventures, as part of a long-term expansion strategy in the United States market, leveraging its success from the first contractual entry approach strategy.
References
Albaum, G., & Duerr, E. (2008). International marketing and export management. Pearson Education.
Alon, I. (2010). “Franchising globally”: Innovation, learning and imitation. Springer.
Deng, P., Liu, Y., Gallagher, V. C., & Wu, X. (2020). International strategies of emerging market multinationals: A dynamic capabilities perspective. Journal of Management & Organization, 26(4), 408-425.
Gielens, K., & Dekimpe, M. G. (2007). The entry strategy of retail firms into transition economies. Journal of Marketing, 71(2), 196-212. https://doi.org/10.1509/jmkg.71.2.196
Global Market Entry Strategies, ( 2017). “Innovative Marketing in a Dynamic World,” [Lecture 7], Copyright © 2017 Pearson Education, Ltd.
Global Marketing Channels and Physical Distribution, ( 2017). “Innovative Marketing in a Dynamic World”,[Lecture 10], Copyright © 2017 Pearson Education, Ltd
Root, F. R. (1994). Entry strategies for international markets. Lexington Books.
Salvoldi, R., & Brock, D. M. (2023). International alliance structure and effectiveness: evidence from law firms. Journal of Management & Organization, 1-27.
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