Beyond the Choice of Entry Mode - A case study of Micropower

Seminar paper from the year 2002 in the subject Business economics - Offline Marketing and Online Marketing, grade: Passed with Distinction (1,0), Växjö University (School of Management and Economics), course: International Marketing Strategies, language: English, abstract: Any company that starts to do business in foreign markets goes through a process,

which is triggered by proactive and/or reactive factors. This process starts generally by

finding and selecting a target market, decisions which frequently are made on the basis

of marketing research. An important part of the research is to locate the market entry

barriers, when entering in the foreign market. With this information the company has to

develop a strategy to enter the market. Within the strategy formulation the company also

has to choose an appropriate mode of entry. There are several different market entry

modes and no one is the correct one, since they all have advantages as well as

disadvantages. They are, however, more or less suitable depending on the company, its

resources, its products etc. (Czinkota, 1993, p. 329-331, Johansson, 1997, p. 208 ff,

Taylor, C. 2000).

However, a company¿s internationalization process does not stop here. As the company

gains experience from its current activities, it may want to make additional investments

in the market, due to factors that could be described as internal or external. These

factors could also motivate a change of entry mode. Extreme views even say that once

the internationalization process has started, it will tend to proceed regardless of whether

strategic decisions are made in that direction or not (Randoy, T. 2002, Wheeler, 1996).

Although a lot of theory has been written on internationalization and on the choice of

entry mode, there is little to be found on the internationalization process and particularly

on the changing of entry mode.

To realize that the company could find itself in such a situation, where they need to

develop in the foreign market, can be difficult. The fact that the strategy and in that also

the entry mode chosen needs to be changed can be hard for a company to grasp, because

change is always connected with a high degree of uncertanity. Research has shown

(Randoy, T. 2002, Wheeler, 1996) that companies have found themselves in situations

where their strategies and entry modes needed to be changed and, more importantly,

research (Randoy, T. 2002, Wheeler, 1996) has shown that companies has managed to change entry modes. However, what the research lack is more indepth analysis of the

process of changing entry mode. For reasons indicated above, a company in the relevant

situation may need some help, some recommendations, which could make the change

process less uncertain. [...]