Market entry strategies and their applicability to SMEs - The winding road to foreign business

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Research Paper (undergraduate) from the year 2003 in the subject Business economics - Offline Marketing and Online Marketing, grade: 1,9 (B+), Heidenheim University of Cooperative Education (Economic - International Commerce), course: International Commerce, language: English, abstract: There will be hunters and hunted, winners and losers. What counts in globalcompetition is the right strategy and success.Heinrich von Pierer1In business planning the globalization of the world market and the limits ofdomestic growth raise the question to what extent a foreign commitment shouldbe considered if at all.2In Germany these considerations are particularly underlined by the strongintegration into the world economy. German enterprises obtain a third of theirtotal revenue in foreign business, 25 % of all jobs depend on foreign trade.3Contrary to expectations, going global is no longer subject only to large multinationalcompanies. Due to saturation tendencies in the domestic market,global competition and the dependency on international key-account customerssmall and medium-sized enterprises (SMEs) have been faced with the need forinternational activities. 4Considering the fact that SMEs account for 97,3 % of all German enterprises,generating almost 45 % of the total revenue per year, the importance of futuregrowth potential becomes evident.5 In general, SMEs are referred to as thebackbone of German economy and many of them, the so called hiddenchampions have successfully faced the challenge of entering foreign markets.6Others have been afraid to take this step. For these, the need for adaptationremains and their continuity will depend on the competitiveness in the worldmarket. In general, entering new markets is connected with a multiplicity of chances andrisks. SMEs especially, tend to underestimate the importance of profoundinformation and the need for a realistic estimation of own capabilities.7Accordingly, it becomes necessary to focus on a SME specific approach whichconsiders major evaluation criteria for carefully developing market entrystrategies.1 Dr. Heinrich von Pierer, President and Chief Excecutive Officer of Siemens AG:Quotation cp. TheGlobalist (2000)2 cp. Hoppen (1999:144)3 cp. Statistisches Bundesamt (2001:1.6)4 Due to the IFM in Bonn (2000) SMEs intend to increase their foreign sales from an actualaverage of 30 % to 50 % in 20205 cp. IMF Bonn (2000)6 cp. Hibbert (2000:1)7 cp. Brenner (1999:2 et sqq.)

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