European Market Entry Strategies

Abstract

The purpose of this paper is to examine how external market factors influence the choice of international market entry (direct investment, partnership or acquisition) and to propose a framework to help companies when making their entry decision. It is based upon initial interviews with companies in 4 industry sectors and 6 countries and also upon a longitudinal two year case study working with a major German Food company entering a number of European markets, initially the U.K., Italy and Poland. The research confirmed the importance of external market factors in addition to the more prevalent research approach which focuses more upon internal company factors such as the resource-based view and company attributes and culture. It also allowed a framework to be derived from the research and actually tested in practice to guide the company's entry strategy. Using the derived framework, working within an action research methodology, the company chose 3 different entry strategies for entering the British, Italian and Polish markets based upon market-based criteria such as market growth, market consolidation, end customer and distributor fragmentation, product/service fit and market risk factors. The study therefore contributes to the body of knowledge on international market entry and through its managerial implications and use. It shows that a company, with the same set of internal resources and culture, can act in very different ways depending on local market conditions. It therefore seeks to ‘redress the balance’ from the predominantly internally focused approach by making the market entry decision more ‘marketdriven’.