Market Entry Mode

Market Entry Mode
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Market Entry Mode
A multinational corporation plans to enter China, Singapore or India and launch its products within that market. Since the company plans to penetrate only one country, it is important to identify the best mode of market entry best upon a number of factors. In this paper, the best market entry mode for each of these 3 countries is determined basing on: ownership advantage, location advantage; internationalization advantage; need for control, global strategy and resource availability.
Ownership advantages
Ownership advantage is one of the 3 key advantages that a company needs to have before it invests internationally. The other advantages are location advantage and internationalization advantage (Claver & Quer, 2011). In regards to the ownership advantage, the vast majority of Indian and Chinese companies do not have the advantage that foreign companies have in terms of scale, finance, marketing, technology, currency, as well as management of organization. To a great extent, enterprises in Singapore actually possess the advantages that foreign companies have. In essence, it is imperative for the multinational corporation to have the competitive advantages – such as well-known brand name, entrepreneurial skills, production technique, technology and benefits of economies of scale – as it seeks to engage in foreign direct investment. It is notable that ownership-specific advantages will result in lower costs and/or higher revenues that could offset the costs of operating at a distant location in China, India or Singapore (Rasheed, 2009).
Location advantages
The location advantages of the various countries are important in determining the country that the multinational corporation would penetrate. In essence, the best country for investment has more advantages relative to the others in terms of several aspects including cost of transportation, investment policies, market demand, cost of labor and natural resources (Cumberland, 2010). China: the attractiveness of this country as a destination for investment capital lies in its development of infrastructure including both telecommunications and transport, availability of resource both labor and physical resources, market size and scope. Modern China is the second the largest economy globally and the country has robust transport and telecommunications network that includes a large network of world class highways and railway, and its aviation sector is also well developed in many parts of the country. China’s superb transport and telecommunications have allowed it to post significant growth in GDP of 8.6% on average over the past decade, and helps in lowering costs of transportation and telecommunications (Claver & Quer, 2011). China is the world’s largest market; There are 1.3 billion people, the sheer size of this population and market, as well as the potential for growth that would arise from this sheer size makes China attractive for the multinational corporation. Costs of labor are also relatively low in China given the high availability of labor force. The country has few trade barriers for instance tariffs which has also allowed many multinational corporations to shift their manufacturing operations to China. Culturally, China is a homogeneous society.
India: with a population exceeding 1.1 billion citizens, this country has the second largest market in the world behind China. The large population guarantees availability of cheap labor for the multinational corporation seeking to penetrate this market. India’s transport and telecommunications is considered as not well-developed given that its rail and road network are in poor state, which essentially make the costs of transport and telecommunications high (Rasheed, 2009). However, the Indian government is aware of this and is investing substantially on improving the country’s transport network and telecommunications infrastructure. In India, foreign product...