Market entry is a strategy to expand a business. Companies expand their business footprint by entering into new foreign markets. They could also add to growth by expanding into a hitherto region or segment in which they were not operating. Business footprint expansion is also done by acquiring other companies, entering into joint ventures with others, or merging with companies.
Before entering a new market segment, business area, or market competition, business climate, legal, and financial scenario analysis are necessary. Most companies use a consulting firm that undertakes market research, works out possible business scenarios, and analyses prospects.
The analyses could throw up policy, operational, capability, and financial weaknesses that prevent or impede successful entry. Solutions to overcome each of the listed weaknesses must be worked out, and action must be taken before investing in a new market.
Often strategic alliances to smoothen entry and reduce entry barriers are good options. The consultant can identify and bring to the table an appropriate strategic partner. This is followed by business due diligence and other deal-making steps.
Policy bottlenecks workarounds often require advocacy within and without the government. Unlike the developed parts of the country, this job in India is done by individuals with networks and connections. Public relations firms are used once the environment for policy change has been created. Advocacy efforts must be made with care, caution, and ethics. The brand impact can be huge in case this aspect is mishandled.
Market entry strategies keep changing as new regulations are introduced. These will vary from State to State. The business climate in India is also evolving, but the principles enunciated above continue to hold even in 2022.
The decision to enter a new market is taken by studying the existing competition and estimating the market size. Pricing, business processes, organization model, sales, and competitors’ marketing strategies are also analyzed. Market entry decisions should be made after careful analysis. The key factor influencing this decision is determining if your company’s decision will enhance its competitive advantage.