Kellogg’s, Essay Example

When entering a new market, a business has to take several factors into account to minimize risk and enhance the probability of success. First of all, a business should determine the political risks that may exist in a country such as political stability and attitude of foreign government towards international companies. A business should also study economic factors such as inflation rate and currency value trends because they affect the overall performance, especially if the income is emitted to the corporate headquarters. A business also has to take legal factors into account such as the ease of entering and exiting the market and local laws about intellectual property. A business should also make sure the size of the market is large enough to allow the company to recoup its investment and become profitable in the long term.

Regarding mode of entry, Kellogg’s may have to take several factors into account when deciding the preferred mode of entry. If the market has quite similar characteristics to Kellogg’s home market, FDI (Cheng, 2006)may be the best mode. But for FDI to be justified, Kellogg’s also has to ensure the size of the market is large enough to justify initial capital investment and the targeted market offers significant intellectual property protection. If the market is different and Kellogg’s has little knowledge of local factors, joint venture(Cheng, 2006) may be preferable since the company will benefit from the local knowledge of the partner.

As far as marketing strategy is concerned, Kellogg’s should study the market it plans to enter thoroughly because it may have to develop a different marketing mix(BBC) for the targeted market. It may be that the targeted customer segments use different distribution channels to purchase products and similarly, products may have to be offered at different price points as compared to other markets due to different population demographics such as income levels. Kellogg’s may also have to focus on different products and may even create new flavors if consumer tastes in targeted market are quite different from other markets.

References

BBC. (n.d.). The marketing mix. Retrieved June 3, 2014. Web.

Cheng, Y.-M. (2006, September). Determinants of FDI Mode Choice: Acquisition, Brownfield, and Greenfield Entry in Foreign Markets. Canadian Journal of Administrative Sciences, pp. 202-220. Print.