Barson Singh Mithun

111172033(SL: 26)
Section: A

“Entry Strategy” (01)

1) What would be the best timing of entry for his company according to you and why?
After deciding the market to enter the next most important thing is to decide the timing of entry
in a market. I think for “Classy perfume Ltd.” late entrance will be preferable option. Because
by doing so they will be avoid the pioneering cost. Pioneering cost arises when business system
in a foreign country is so different from the home country. Besides they will also be able to
observe and learn from the mistakes of early entrants.
2) Which entry strategy would be the best one for him? What would be the possible costs
to choose that specific strategy?
“Classy Perfume Ltd.” is a perfume manufacturing company and it’s thinking about expanding
globally. Besides it doesn’t have enough knowledge about international business. So I would
like to suggest “Exporting” as an entry strategy. Many manufacturing company stat to expand
globally by exporting first and then later move to another strategy. If “Classy perfume Ltd.”
choose to export:
- They won’t have to bear the substantial cost of establishing manufacturing company in
the host country. So by starting with exporting “Classy perfume Ltd.” can avoid huge
amount of investment and risk associated with that.
- Exporting will help “Classy Perfume Ltd.” to achieve experience curve as their labors
will be efficient and productive for performing a particular task frequently.
Despite having those advantages they will face some difficulties or let go some opportunities
too in exporting:
- “Classy Perfume Ltd.” have to bear high transportation cost as they are manufacturing
the perfumes back in Bangladesh and later on distributing them around the world via
different transportation channel.
- “Classy Perfume Ltd.” will face tariff barrier as difference countries have different
taxation policies.
- Exporters doesn’t look for lower cost locations to produce their product. Like for
producing perfume place like France could be a cheaper place and better place to
produce but as an exporter “Classy Perfume Ltd.” won’t be able to take that
opportunity.
3) What would be the problem if he chooses any other strategy?
“Classy Perfume Ltd.” Can also choose Licensing to enter in a foreign market. But in this
strategy but it have serious drawbacks like the company won’t be able to have tight control
over the manufacturing, marketing and other strategies. Besides licensing may create own
competitor for “Classy Perfume ltd.” in the foreign country.
“Classy Perfume Ltd” can also make joint venture with the foreign companies to conduct
international business. But as licensing it will put the firm in a risk of giving control of its
secrets and technology to its partner. It can also lead to conflict between two partner companies
to take control
“Classy Perfume Ltd.” Can also adopt Wholly Owned Subsidiary to enter into a foreign market
but this type of strategy involves huge investment and risk.