International Market Entry, Problems and Solutions 

Ken Barnes, DBABarnes Training and Consulting

Expansion and Growth Strategy Cost Saving Strategy Maintain a Strong Presence in a

Geographical Region to maintain market Share.

To Maintain Name Recognition To Escape fiscal and over regulated

Business Environment. On CSR grounds.

Why MNEs Enter Foreign Markets

Location is very paramount to International Business.

Locating markets which can help achieve Strategic Goals

Locating Markets which will culturally accept the products. Are the products culturally acceptable?

Locating Markets which is conducive in terms of cost- E.g. Availability of factors of product, Market.

Problem of Where to Enter

This problem relates to the MNEs’ decision to be an early mover or a late mover.

Early Mover Disadvantages -Initial capital outlay e.g. industrial infrastructure, increased uncertainties relating to a virgin industry. Untested industry rules and regulations.

Late Mover Disadvantages – Difficulty in securing market share, Difficulty in niche creation.

Problem of When to Enter

How to enter relates to the mode of entrance. MNEs are confronted with entering directly

through direct investment or indirectly. Should the MNE enter through Acquisition,

Merger, Collaboration or Franchise.

Problem of How to Enter

MNEs are confronted with which hirng approach to adopt to hire senior management for their foreign markets and their subsidiaries.

Problems relating to adopting Ethnocentric approach to hiring-hiring parent country nationals.

Problems relating to Polycentric approach to hiring-Hiring host country nationals

Problems relating to geocentric approach to hiring-Hiring from everywhere.-(Peng, 2013)

Problem of How to Staff

Language barriers Cultural barriers Value barriers and differences Perception barriers and differences.

Problem of Culture and Language

Corporate Social Responsibility(CSR) Challenges faced by MNEs relates to the following:

Expectations from Host Countries MNE’s budget and programmed CSR

activities Alignment of CSR Policies and program

emphasis and causes of the MNE and what the host country actually needs.

CSR Challenges

The major problem under this category is Discrimination in the following areas:

Which industry to enter Which product to deal in Taxes, Tariffs and Duties. Technology Access to information Access to local capital

Problem of Foreigners Liability

Most of the problems could be solved or controlled by the following:

Organizational Learning Diligence and good Country Risk Analysis Building Alliances, Collaborations and

Networks with local authorities competitors Hiring of local Experienced Consultants. Assessment of Resources and Capabilities.

Solutions

MNEs enter foreign markets for a lot of reasons. Chief Among the reasons is Profitability. There are however a lot of problems and challenges

inherent in entering the new market. These problems bother on Staffing, culture, timing, legal

and regulatory factors and CSR programs. It is important that MNEs find solutions to these problem

to ensure success. The solutions include Organizational Learning ,

Diligence , good Country Risk Analysis , Building Alliances, Collaborations and Networks with local authorities competitors, Hiring of local Experienced Consultants, Assessment of Resources and Capabilities.

Conclusion