Question

a) List various market entry costs (at least twenty items) for a physical shop on one hand and for a e-commerce business in the same sector on the other, b) give examples of search costs for patients searching for a good dentist, c) give examples of menu costs (cost of adjusting prices) for Marks and Spencers for their physical shops.

Answer 1

Part a)

Market entry costs:

1 Direct exporting - it means selling directly into the market.

2 Licensing- it is useful for those who has a large market share in the market.

3 Franchising- it help with start up and beyond, buying power, profits.

4 Partnering - it considered with two parties come together run the business n share their profits n losses.

5 Joint ventures- it includes the creation of a third independently managed company.

6 Buying a company- it provides you the status of being a local company.

7 Piggy backing - it is the unique way of entering in the international arena.

8 Turnkey projects- it is the good way to enter into the foreign market.

9 Green Field Investments- is where you buy the land , build the facility and operate the business smoothly for the future benefits.

Part B

Search costs - it is related to finding what we want actually . When we purchase something the economic cost is more than just the price we pay for it.

For example - the search costs for patients is to search the dentist doctor are :

It includes - travelling expenses, doctor fee and medical expenses.