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CHAPTER 4

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Entry Strategies in Bangladesh

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Foreign market analysis

Steps:
A. assessing alternative foreign market
Factors to considered
• Market potential
• Level of competition
• Legal and political environment
• Socio-cultural influence

B. Evaluating cost, benefits and risk of entering each

C. Select those that hold the most potential for entry and
expansion.

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Choosing mode of entry

 Exporting
 International Licensing
 International Franchising
 Specialized mode
 Foreign direct investment

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Decision factors

a. Ownership advantages
b. Locational advantages
c. Internalization advantages
d. Others factors
 Need for control
 Resource availability
 Global strategy

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Modes of entry

 Exporting to foreign market

• Primary advantages
– Relatively low financial exposure
– Permit gradual market entry
– Acquire knowledge about local market
– Avoid restrictions on foreign investment
• Primary disadvantages
– Vulnerable to tariffs and non-tariffs barrier
– Logistical complexities
– Potential conflict with distributors

• Reactive VS Proactive exporting

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Modes of entry
 Exporting to foreign market
Forms of exporting
– Direct exporting
– Indirect exporting
– Intra-corporate transfer

Additional consideration
 Government policies
 Marketing concerns
 Logistical consideration
 Distribution issues

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Cont…

Export intermediaries
 Export management companies
 Merchant middleman
 Agent Middleman
 International trading company
 Other intermediaries
1. Manufacturer agents
2. Manufacturer’s export agents
3. Export and import brokers
4. Freight forwarders

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International Licensing

 Licensor, and Licensee

 Basic issues in international licensing
• Boundaries of agreement
• Determining compensation
• Establishing rights, privileges and constraints
• Specifying the agreement’s duration
 Advantages and disadvantages of international
licensing

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International Franchising

 Franchisor and Franchisee

 Advantages and disadvantages of international franchising

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International Franchising
 Basic issues in international franchising- International
franchising is likely to succeed when certain market
condition exist:
 The franchisor has been successful domestically because of unique products and
advantageous operating procedures and systems. Ex: McDonald’s was successful
initially because it provided a popular menu with quick and efficient service.

 The factors that contributed to domestic success should be transferable to the

foreign locations. For example McDonald’s serves fresh food at affordable and
lower prices are valued by consumers around the world.

 The franchisor has already achieved considerable success in franchising in its

domestic market. Ex: There were hundreds of franchised McDonald’s restaurant in
the USA before the first start was built abroad.

 There must be foreign investors who are interested in entering into franchise
agreements.
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Specialized entry modes for

international business

 Contract manufacturing
 Management contract
 Turnkey project

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Foreign Direct Investment

 Methods of FDI:
• The Greenfield strategy
• The Brownfield strategy
• Participation in joint venture

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