Blog - Strategy

Can a clear market entry strategy plan make the difference?

Posted by Diego Miglioranzi on Apr 17, 2012 4:37:00 PM

Leading companies come to a point where they have to expand geographically and enter new markets. However not all the companies are successful in doing this. What are the distinctions between the companies that are successful in entering new markets and the ones that fail? There are a myriad of factors that potentially can explain this difference and the simple answer does not exist.

However, looking at companies that have successfully entered new markets, we can see that in most cases they are the ones that have a clear view of what their entry strategy is.

Many companies have invested most of their resources to improve manufacturing capabilities and develop innovative products. Is this enough to succeed in a global economy? Can a company remain competitive in the future by just investing in their upstream capabilities?

We think the answer to this question is “No”. In the global economy, leading companies need to be effective in making proper new market entry decisions and then effectively implement them.

Think for a second of the company that in the minds of many people built their incredible success on superior technological capabilities- Apple. At what level and extent do you think this success can be explained with their technological or commercial capabilities?

So, what are the guidelines that a leading company follows when entering a new market. We don’t want to be exhaustive, however I’m reporting below some answers to this question that come from the experience we developed by working with our clients:

  1. Ensure you understand the customer point of view before making any decisions
  2. Don’t assume or think that entering a new market is a “sales project”
  3. Start from the assumptions that your current products doesn’t fit with the market needs
  4. Handle the relationship with a partner that potentially could manage your business on the new market, as if it is a Joint Venture
  5. Ensure the decisions are coherent with your long term strategy

Our questions and thought provocations for the readers are:

  1. Did you consider your past market entry plan successful?
  2. Is you company investing or improving their ability to make new market decisions?
  3. If your company improved the way it approaches new markets, what could be the impact on the bottom line?