Market Entry Strategies

[Pages:171]Market Entry Strategies

The Case of Aura Light Entering the Bulgarian and Romanian Markets

Authors:

Stella Georgieva Kostova Tina Gloria Esho

Tutor:

Joachim Timlon

Program:

Growth Through Innovation

& International Marketing

Subject:

Master Thesis

Level and semester: Masterlevel Spring 2008

Baltic Business School

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"Shining a New Light on Entry"

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Abstract

Developing countries are quite attractive destinations for foreign investments in various economic sectors.Whether an MNC can successfully enter these markets embodies the aptitude to understand the external macroeconomic and social environment of the host country. An MNC must adjust their competitive stance, decipher adequate market potential and uncover the relevant entry strategy to acquire operational success.

We have built a framework surrounded by essential operational strategy. This concerns matching a firms resources and capabilities to the opportunities that arise in the external environment. In most common literature, emphasis lies within identification of profit opportunities in the external environment of the firm. Imperative emphasis shifts from the interface between strategy and the external environment; towards the interface between strategy and the internal environment. In this context, the concentration of the organizations resources and capabilities is targeted to combat turbulent external environments and devise a secure foundation for long term strategy.

To understand why the resource-based view has had a major impact on strategy assessment, a preceding glimpse for strategy formulation can be considered. Conventionally, firms have answered the question "who are our customers?" "What are their needs were seeking to serve?" "Who are our Competitors?" "How can gain a competitive advantage?"

Through answering these questions in conjunction with macroeconomic analysis are inevitable prerequisites for pinpointing the key success factors (KSF) for the individual market segments. The KSF are the factors within the companys market environment that determine its ability to prosper and survive exploiting its core resources.

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Acknowledgements

It has been a great pleasure to write this Master Thesis in conjunction with Aura Light International AB. We would like to thank all the individuals who helped us throughout the entire written process, and provided continual support and assistance. We would like to extend special thanks to Martin Malmros, Chief Executive Officer at Aura Light in Stockholm, Sweden who provided tremendous intellectual and financial support. We would also like to express our gratitude to Sara Berglund, International Sales and Marketing Manager, as she was our key internal contact within the company. Finally, we would like to thank our tutors, Joachim Timlon and Hans Jansson, for their constant guidance and encouragement. This paper would have not been possible without their keen knowledge and expertise. We are sincerely grateful. H?gskolan i Kalmar, June 2008 Stella Kostova & Tina Gloria Esho

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About The Authors

Stella Georgieva Kostova was born 24th February 1983 in Burgas, Bulgaria. In 2006 she graduated with a Bachelor in International economics from Varna University of Economics, Bulgaria. She has also had one year academic experience as an exchange student at Seinajoki University of Applied Sciences, Finland. She has worked as an international purchasing and logistics assistant at big multinational companies. Her motivation for this thesis comes from her deep interest in international marketing, strategic planning and experience in project management. She would like to continue her career development in the international marketing field.

Tina Gloria Esho was born Sep 5 1985 in Canada and grew up in a small suburb of Toronto. In June 2007, she graduated with a Bachelor of Business Administration with a Marketing Major from the University of GuelphHumber situated in North York Canada. Her motivation for this thesis lies within her natural passion for market research, and instinctive abilities to discover new opportunities, dynamic possibilities, and innovative strategies for market entry. She would like to further develop her career in business consulting and international marketing.

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Abbreviations

KSF Key Success Factors MNC Multinational Corporation EU European Union WTO World Trade Organization UNCTAD United Nations Conference on Trade and Development

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Table of Contents

Introduction

1.1 1.2 1.3 1.4 1.5 1.6 1.7

.......................................................................................................................10

Background ....................................................................................................10 Research Background .....................................................................................10 Research Problem...........................................................................................11 Purpose ..........................................................................................................13 Delimitations ..................................................................................................13 The Case Company ........................................................................................13 Outline of Thesis ............................................................................................16

Methodology

2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8

.......................................................................................................................17

Research Approach.........................................................................................18 Research Strategy...........................................................................................18 Case Study Design..........................................................................................19 Data Collection ..............................................................................................23 Data Analysis .................................................................................................26 Quality of Research ........................................................................................27 Ethics in Research ..........................................................................................30 Data Collection ..............................................................................................21

Theoretical Framework...........................................................................................................31

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3.1 External Environment Analysis .....................................................................31 3.2 Absorptive Capacity and Inter - Organizational Relationships ........................34 3.3 Basic Institutions Model .................................................................................18 3.4 Organizations Resources & Capabilities & Inter Relationships .......................35 3.5 Summary........................................................................................................36 3.6 Organization Field Analysis Product Market .................................................23 3.7 Summary........................................................................................................45 3.8 Market Entry Strategy ....................................................................................47 3.9 Summary & Personal Research Model............................................................48 2.8 Data Collection ..............................................................................................21

Empirical Study.......................................................................................................................51

4.1 Internal Environment the Case Company Aura Light ......................................51 4.2 External Environment.....................................................................................52 4.3 Product Market Customers .............................................................................63

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4.4 Product Market Competitors...........................................................................82 4.5 Summary of Empirical Findings .....................................................................91

Analysis of Empirical Findings

5.1 Internal Environment Aura Light ....................................................................95 5.2.1. External Environment Bulgaria.......................................................................96 5.2.2. External Environment Romania.......................................................99 5.2.3. Summary of External Environment .................................................101 5.3. Product Market.........................................................................102 5.3.1. Customer Analysis.....................................................................102 5.3.1.1. Customer Analysis Bulgaria ........................................................102 5.3.1.1.1. Private customers...................................................................102 5.3.1.1.1. Public customers....................................................................115 5.3.1.2. Customer Analysis Romania.........................................................118 5.3.1.2.1. Private customers..................................................................118 5.3.1.2.2. Public customers...................................................................122 5.3.1.3. Summary Customer Analysis ......................................................124 5.3.2. Competitor Analysis....................................................................127 5.3.2.1. Competitor Analysis Bulgaria.......................................................127 5.3.2.2. Competitor Analysis Romania......................................................132 5.3.2.3. Summary ...............................................................................136 5.4. Key Success Factors......................................................................139 5.5. Market Entry Strategy.....................................................................140 5.6. Summary of Analytical findings.........................................................143

Conclusions and Recommendations 6.1 Academic Conclusions .................................................................................145 6.2 Recommendations for the case company ......................................................154

References

Articles.........................................................................................................157 Books ...........................................................................................................157 Course Material............................................................................................158 Internet Sources............................................................................................158 Online Press Releases...................................................................................159 Interviews..................................................................................................... 160

Appendices Appendix A ........................................................................................... Data Collection Appendix B ...................................................................................... Competitor Lamps

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