This tool can be used for two different purposes: 1. As an analytical framework for the formulation of the market entry strategy off national export promotion strategy 2. As a conceptual basis for supporting Seems in choosing an appropriate market entry option for exporting (export promotion on the operational level) Choosing the right market entry option depends on the particular structure of the target market and on the specific objectives, capabilities and resources of the IT companies.
IT companies do not necessarily have to stick to a single entry mode but can combine several entry options. Description: The Tool provides an overview on five different export market entry options for IT companies from developing and transformation countries, ranging from the so-called intermediate mode of internationalization to establishing a representative office in a particular target market. For each option a short comparison of the particular advantages and disadvantages is being provided Overview on the different market entry options:
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IT exporters from developing and emerging countries By map Intermediate mode of internationalization 2 Offspring IT consultants, agents, brokers 3 Internet IT service providers, IT consultants, system integrators 4 5 Direct investment: representative office, subsidiary End-clients on potential export markets (non-IT end-clients, software vendors) 200 Short description of market entry options: Option 1: Intermediate mode of internationalization 0 Channeling of a company’s services or products through an existing multinational client in the home market Examples: in Ireland and India, for many Seems, doing business with Macs in the domestic market was the first step in entering international markets 0 Also several examples from Macedonia (e. G.
Nine-Sofa) 0 Through referrals by international clients in the domestic market, access to new clients in export markets 0 Strategic linkages with Macs also provide local companies with access to latest technologies 0 Increasing FDA creating business opportunities for local IT companies 0 Indirect access to foreign markets without overstretching resources High transaction costs International reference clients Lack of information on markets and end-clients (information asymmetry)
This is due to the complexity of software/let services and to all the different factors that are involved in the decision-making process for offspring. It plays, however, an important role as information source for potential clients in the export markets and as a marketing tool or IT exporters from developing and transformation countries to present themselves with a professional website. 202 It is relatively difficult to define a common market entry strategy for the whole IT industry of a country, as the selection of the most appropriate entry option will finally have to be made on the micro-level by the individual companies. As a matter of fact, companies do not necessarily have to stick to a single entry mode but can combine several entry options.
The most important factors influencing the final selection of the suitable market entry mode include: the company objectives concerning exporting; 0 the importance of the market within the company’s export plans (e. G. Key market); 0 the characteristics and nature of the products or services to be exported; the resources and capabilities of the company; 0 the company’s experience in the market; 0 the characteristics and structures of the export market (customer groups, level of competition, distribution channels, etc. ); 0 the transaction costs involved in the different market entry modes; legal constraints and requirements; 0 the desired speed of market entry.