Skagen Desgin

Question 3

Which market entry mode should Skagen Design use on the chosen markets?

First of all, you have to know what is a market entry mode : this is an institutional arrangement which is necessary for the entry of a company’s products into a new foreign market.

There are three different types of entry mode:

* Export

* Intermediate

* And hierarchical mode

There are few factors that influence the market entry mode choice.

These factors are externs or interns, or specifics.

The market entry mode is different between countries with low, medium and high standard of living.

Firm’s products are manufactured in the domestic market or a third country and then transferred either directly or indirectly to the host market.

Three types of exporting:

1. Indirect mode

2. Direct mode

3. Cooperative mode

| Lowest US $ per capita | Medium US $ per capita | High US $ per capita |

Indirect export mode | Is the process of exporting through domestically based export intermediaries, but the exporter has no control over its products and over the marketing decisions.Fast market access.No infrastructures are built.Low sale promotion.No market researches are carried out. | | |

Direct export mode | | If the international markets are considered as a crucial part of the company’s success the direct exporting is the best market entry tool.Using own sales subsidiary and direct marketing (including mail order and telemarketing).Low infrastructures are built.Market researches are carried out upon secondary data.The business can use: * Distributors * Market country agents | |

Intermediate mode | | The intermediate mode is used to transfer the knowledge and the skills to the local producer/seller.There is no full ownership by the parent firm involved, but ownership and control can be shared between the firm and the local partner.Four types of intermediate entry modes: * Licensing * Franchising * Contract...