Question

Many global retailers are targeting China, India, and other emerging marketing. what would be the most likely entry strategies for these countries and why? Provide evidence and relevant examples supporting your argument.

Answer 1

The entry strategies for retailers to enter emerging markets like China, India are as follows.

1. Exporting is the process in which the product is manufactured in one country and is ship to other countries to sell by distributors or suppliers, It allows the company to enter into different countries without investing huge capital as the product is manufactured in their home country and is just exported to other countries. And the limitation to exporting is that company cannot control the activities of the distributors. For example companies like Apple, Ford motor, Pfizer, Intel are the companies which manufacture the product in the home country and ship it to different countries.

2. Direct investment is the process in which a new company is incorporated in the emerging market countries like China and India. This strategy involves a huge investment of capital and it involves huge risk as well because the company doing direct investment doesn't have the knowledge of the market in which they are investing in, so it is full of risk.

For example companies like Citibank, RBS, Glaxo Smith Kline are some example of direct investment companies which are available in India.

3. Franchising is the process in which one brand allows other business to operate the business using their name. The Franchiser (McDonald's) allows franchisee (another party) to use the brand name to do business in a specific country.Franchising is a very good process for a company to expand their business and brand value and at the same time, it shares the trade secrets of the company. For example in case of McDonald's they have to share the secret spices recipe with the franchisee. In franchising process, the franchiser only earns a fixed amount of profit even if the business do really good.

4. A Joint venture is a process in which two companies join together for the common set of goals. In this process financial investment is share and as well as the risk is also shared, it is a good strategy when a brand wants to enter into a new market, they can joint venture with the local company and can work. For example, PNB Metlife, HDFC ERGO General Insurance Co Ltd, Aviva India Life Insurance, Renault-Nissan are some examples of joint ventures.