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. [...]
Table of Contents
1 INTRODUCTION
1.1 Background and Problem discussion
1.2 Problem formulation
1.3 Purpose
1.4 Limitations
2 THEORY FRAMEWORK
2.1 Introduction
2.2 Current Phase
2.2.1 Internationalization
2.2.2 Market Entry Strategy
2.2.3 Market Entry Modes
2.2.4 Porter´s Five Forces – Model
2.3 Next Phase
2.3.1 Change factors
2.3.2 Market entry strategy change
2.4 Adjustments
3 METHODOLOGY
3.1 Research Journey
3.2 Research Method
3.2.1 Qualitative versus Quantitative Methods
3.3 Access
3.4 Data Collection
3.5 Scientific Credibility
3.5.1 Validity
3.5.2 Reliability
4 EMPIRICAL DATA
4.1 The Micropower case
4.2 Results from another study
5 ANALYSIS
5.1 Introduction
5.2 Current Phase
5.2.1 Internationalization
5.2.2 Market Entry Strategy
5.2.3 Market Entry Mode - Exporting
5.2.4 Porter´s Five Forces – Model
5.3 Next Phase
5.3.1 Change factors
5.3.2 Market Entry Strategy Change
5.4 Adjustments
6 CONCLUSIONS
7 RECOMMENDATIONS
Research Objectives and Focus
This case study examines the complexities of changing international market entry modes for a small technology-based company. The research aims to explore the internal and external triggers and strategic obstacles faced by firms as they evolve from initial export methods toward more integrated market presence.
- Analysis of internationalization processes in small-scale technology firms.
- Evaluation of market entry mode transitions and triggers for strategic change.
- Application of Porter’s Five Forces and transaction cost theories to market strategy.
- Exploration of the dilemma between maintaining distributor relationships and achieving direct customer access.
Excerpt from the Book
The Micropower case
Micropower produces a wide range of standardised battery chargers for industrial purposes, but they also offer specialized chargers, made for charging large extraordinary products like the ferris´ wheel for DisneyWorld Tokio. The reason, that Micropower can develop and poduce the technologically advanced chargers lies in the company’s core philosphy, to have good knowledge of the products they produce and to have good knowledge of their customers. They feel that this is very important in order to be competetive. However, the life-cycle of the charger is in most cases not determined by the charger itself but by the product it is bought to charge. Their strategy has from the start been to sell their products through agents and distributors, in Sweden as well as on the international markets. This strategic choice was made upon the contacts with agents and distributors already established by the two founders of Micropower. This choice means, however, that they have no or very little contact with the end customer of the chargers. The website of the company is merely for information, they do not sell any products through it because that would steal market from their agents and distributors, or as Mr. Larsson puts it:
“That would be like shooting ourselves in the foot!”
Summary of Chapters
1 INTRODUCTION: Outlines the background of international market entry and defines the problem regarding the challenges of changing entry modes in small technology companies.
2 THEORY FRAMEWORK: Establishes the theoretical foundation, including internationalization models, Porter’s Five Forces, and transaction cost theory.
3 METHODOLOGY: Describes the qualitative research design, data collection via semi-structured interviews, and the assessment of scientific credibility.
4 EMPIRICAL DATA: Presents the primary data from Micropower’s case and provides contextual results from previous industry studies.
5 ANALYSIS: Connects the gathered empirical evidence with established theoretical frameworks to explain the drivers and challenges of strategic change.
6 CONCLUSIONS: Summarizes the key findings and addresses the research question by reflecting on the company's internationalization process.
7 RECOMMENDATIONS: Proposes strategic actions for Micropower and suggests directions for future financial research.
Keywords
Internationalization, Market Entry Mode, Exporting, Technology-based Company, Micropower, Strategy Change, Distribution Channels, Transaction Costs, Bargaining Power, Porter’s Five Forces, Germany, Foreign Markets, Business Performance, Direct Exporting, Sales Subsidiaries.
Frequently Asked Questions
What is the core focus of this research?
The research focuses on the challenges and processes involved when a small, technology-based company attempts to change its international market entry mode.
What are the primary thematic areas?
The study covers international marketing strategy, the transition from traditional distribution models to direct market presence, and the management of organizational change.
What is the main research objective?
The objective is to identify and characterize the internal and external factors that trigger changes in entry strategies for firms operating in foreign markets.
Which scientific methodology was applied?
The study utilizes a qualitative research approach, primarily through semi-structured interviews conducted with company representatives, supplemented by secondary data.
What does the main body address?
The main body bridges the gap between theoretical frameworks—such as Porter's Five Forces and transaction cost analysis—and the empirical realities of Micropower’s operations.
Which keywords define this work?
Key terms include internationalization, market entry modes, technology-based firms, strategy change, distribution channels, and bargaining power.
Why is Micropower currently facing a dilemma?
The company struggles with the trade-off between keeping established, yet limiting, relationships with agents/distributors and the competitive necessity of interacting directly with end-customers.
What is the author's suggestion regarding the German market?
The authors suggest a review of the current market entry strategy and mention the potential for acquiring the local distributor to gain better control and customer insight.
- Quote paper
- Judith Plante (Author), Karl Nordhill (Author), 2002, Beyond the Choice of Entry Mode - A case study of Micropower, Munich, GRIN Verlag, https://www.grin.com/document/8665
