001

ENTRY &
EXIT STRATEGY

PPT
ENTRY
STRATEGY
Market Entry Strategy is a planned distribution and delivery
method of goods or services to a new target market. In the import
and export of services, it refers to the creation, establishment, and
managements of contracts in a foreign country.

Many companies can successfully operate in the niche market

without ever expanding into new markets. On the other hand,
some businesses can only achieve increased sales, brand
awareness and business stability if they enter a new market.

Developing a market-entry strategy involves thorough analysis of

potential competitors and possible customers. Relevant factors that
must be considered when deciding the viability of entry into a
particular market include trade barriers, localized knowledge, price
localization, competition, and export subsidies.
 SOME OF THE RISKS INCURRED WHEN ENTERING A NEW
MARKET AND START DOMESTIC OR INTERNATIONAL
TRADE INCLUDE:

SYSTEMATIC RISK
In finance and economics, systematic risk (in economics
often called aggregate risk or undiversifiable risk) is
vulnerability to events which affect aggregate outcomes
such as broad market returns, total economy-wide
resource holdings, or aggregate income.

In many contexts, events like earthquakes, epidemics

and major weather catastrophes [Tsunami, floods]
pose aggregate risks that affect not only the distribution
but also the total amount of resources.
SYSTEMIC RISK

In finance, systemic risk is the risk of collapse of an entire

financial system or entire market, as opposed to the risk
associated with any one individual entity, group or component
of a system, that can be contained therein without harming the
entire system. It can be defined as "financial system
instability, potentially catastrophic, caused or exacerbated
by idiosyncratic events or conditions in financial
intermediaries". It refers to the risks imposed by interlinkages
and interdependencies in a system or market, where the failure of
a single entity or cluster of entities can cause a cascading
failure, which could potentially bankrupt or bring down the
entire system or market.
SOVEREIGN RISK

Sovereign credit risk is the risk of a government

becoming unwilling or unable to meet its loan
obligations, as happened to Cyprus in 2013.

Many countries faced sovereign risk in the Great

Recession of the late-2000s. This risk can be mitigated by
creditors and stakeholders taking extra precaution when
making investments or financial transactions with firms
based in foreign countries.
OTHER MARKET ENTRY
STRATEGIES INCLUDE:

Production at home

Indirect exporting (export merchant)

Direct exporting (foreign customer, agent, distributor,

representative office, foreign branch, foreign subsidiary)

Production abroad without direct investment (management

contract, franchising, licensing, contract manufacturing) with
direct investment (partly owned subsidiary, acquisition of a
foreign company, set up a new company, equity joint venture)

 EXIT
STRATEGY
An exit strategy is a contingency plan that is executed by an investor, trader, venture
capitalist, or business owner to liquidate a position in a financial asset or dispose of tangible
business assets once predetermined criteria for either has been met or exceeded.

An exit strategy may be executed to exit a non-performing investment or close an

unprofitable business. In this case, the purpose of the exit strategy is to limit losses.

An exit strategy may also be executed when an investment or business venture has met its
profit objective. For instance, an angel investor in a startup company may plan an exit

strategy through an initial public offering (IPO). Other reasons for executing an exit strategy may
include a significant change in market conditions due to a catastrophic event; legal reasons, such
as estate planning, liability lawsuits or a divorce; or for the simple reason that a business
owner/investor is retiring and wants to cash out.

Business exit strategies should not be confused with trading exit strategies used in
securities markets.
 KEY TAKEAWAYS

An exit strategy, broadly, is a

conscious plan to dispose of an
investment in a business venture or
financial asset. Business exit
strategies include IPOs, acquisitions,
or buy-outs but may also include
strategic default or bankruptcy to
exit a failing company.
Trading exit strategies focus
on stop-loss efforts to
prevent downside losses
and take-profit orders to
cash out of winning trades.
UNDERSTANDING EXIT STRATEGIES

An effective exit strategy should be planned

for every positive and negative contingency
regardless of the type of investment, trade, or
business venture. This planning should be an
integral part of determining the risk
associated with the investment, trade, or
business venture.
 UNDERSTANDING EXIT STRATEGIES

Money management is one of the most

important (and least understood) aspects of
trading. Many traders, for instance, enter a
trade without an exit strategy and are often
more likely to take premature profits or,
worse, run losses. Traders should understand
the exits that are available to them and create
an exit strategy that will minimize losses and
lock in profits.
 EXIT STRATEGIES FOR A BUSINESS VENTURE

In the case of a startup business,

successful entrepreneurs plan for
a comprehensive exit strategy in
case business operations do not
meet predetermined milestones.
EXIT STRATEGIES FOR A BUSINESS VENTURE

If cash flow draws down to a point where

business operations are no longer
sustainable and an external capital
infusion is no longer feasible to maintain
operations, a planned termination of
operations and a liquidation of all assets
are sometimes the best options to limit
any further losses.
 EXIT STRATEGIES FOR A BUSINESS VENTURE

A KEY ASPECT OF AN EXIT STRATEGY IS BUSINESS

VALUATION, AND THERE ARE SPECIALISTS THAT
CAN HELP BUSINESS OWNERS (AND BUYERS)
EXAMINE A COMPANY'S FINANCIALS TO
DETERMINE A FAIR VALUE. THERE ARE ALSO
TRANSITION MANAGERS WHOSE ROLE IS TO
ASSIST SELLERS WITH THEIR BUSINESS EXIT
STRATEGIES.
EXIT STRATEGIES FOR A TRADE

When Trading Securities, whether for long-term

investments or Intraday trades, it is Imperative that exit
strategies for both-the profit and-loss sides of a trade be
planned and diligently executed. All exit trades should be
placed immediately after a position is taken.For a trade
that meets its target profit, It could immediately be
liquidated, or a trailing stop could be employed in an
attempt to extract more profit.

Under no circumstances should a winning trade be

allowed to become a losing trade. For losing trades, an
investor should predetermine an acceptable loss amount
and adhere to a protective stop-loss.
 EXIT STRATEGIES FOR A TRADE

In the context of trading, exit strategies are

extremely important because they assist traders
in overcoming emotion when trading. When a
trade reaches its target price, many traders
become greedy and hesitate to exit for the sake
of gaining more profit, which ultimately turns
winning trades into losing trades. When losing
trades reach their stop-loss, fear creeps in, and
traders hesitate to exit losing trades causing even
greater losses.
THANK YOU
- A. SAIDIVYA