Market entry barriers in China

Although industrial economists and strategy theorists provide a considerable amount of research regarding market entry barriers in the context of industrialized countries such as those in North America and Western Europe, few studies focus on entry barriers in the business context of China. Consequently, an understanding of the barriers to entry to Chinese markets as perceived by Chinese business executives is limited in the marketing literature. This research, based on the development and administration of a self-completed survey of one hundred and ninety three Chinese executives, attempts to ascertain the dimensions and order of importance of market entry barriers in this context. The findings of the research indicate seven dimensions of marketing entry barriers and show that business executives in China perceive advertising effects as the most important entry barrier and capital requirements as the least important.     

Market entry in Japan barriers,problems and strategies

The global strategic importance of the Japanese market can hardly be overemphasized. The presence of Western companies is in sharp contrast to this role. This paper presents the results of an empirical study on entry barriers and entry strategies in the Japanese market. German expatriates in Japan and Japanese managers perceive the overall difficulty of entry and specific barriers as being relatively high. German managers in Germany possess a biased perception of the barriers to entry, they perceive institutional barriers as being more and marketing barriers as being less important. The Japanese market is highly dynamic and competitive. A transfer of experiences from Western markets involves high risk. Endurance and commitment are the most important success factors, short term orientation and lack of flexibility are likely to lead to failure. The marketing performance of German companies is not well geared to the needs of the market. While German companies have strengths in quality, image and innovativeness, their position with regard to service, delivery and distribution is very weak. Market entry in Japan certainly is worth while the devotion of substantial resources and management capacity. But only an attack which is full-hearted and committed is likely to succeed.     

Age,order of entry,strategic orientation,and organizational performance

This paper proposes an empirical test of several hypotheses linking age, order of entry, and strategic orientations to a firm's performance. Three strategies are defined: cost-leadership strategy, innovative differentiation, and marketing differentiation. The aim is to show that the impact on performance of both age and each of the three strategic orientations may differ according to a firm's order of entry into an industry.Following Lieberman and Montgomery's (1998) evaluation of their major contribution on first mover advantage, we emphasize three points. First, we develop and test hypotheses related to early and late followers' strategic orientations, broadening the scope of traditional studies on pioneers. Second, the model combines the dimensions of a firm's age, order of entry, and strategic orientations, as well as industry conditions (stage of the industry, environmental unpredictability, and technology diffusion), to establish a contingent model of performance analysis. Finally, the empirical study deals chiefly with organizational performance and not market share, which is considered a typical advantage accruing to pioneers.In addition, the scope of the study (582 French manufacturing firms) provides the means to fill a void in empirical studies because it is a broad cross-sectional test on non-U.S. data. The firms are mainly private, small to medium-sized, and single or dominant business firms. Therefore, our assumptions must be understood as particularly applicable to this type of firm.The results reveal important lessons for practitioners. First, we did not find a first-mover advantage in terms of organizational performance. In addition, pioneers' organizational performance is enhanced by the cost leader strategy—contrary to our assumption emphasizing innovative differentiation for these firms. Second, early followers' performance benefits from innovative differentiation and marketing differentiation. Finally, late entrants developing a cost leader strategy have a significantly higher performance. All groups considered, late followers are the firms most sensitive to environmental uncertainty and age effects.Our study clarifies the impact of a firm's age and strategic orientations on its performance depending on the firm's order of entry. The implications of these results are particularly relevant for practitioners and entrepreneurs. First, a cost leadership strategy seems to be a guarantee for a pioneer to increase its organizational performance. New ventures should therefore take into consideration the fact that newness and innovative differentiation might not be the best strategic orientations for high performance in the long run. Second, as a second mover, however, developing a superior product and being able to market it efficiently appear to be the enhancing factors of firm performance. Third, for both pioneers and early followers, age does not significantly reduce their performance. However, the longer a firm waits before entering, the greater is the negative effect of age on its performance. This is due to the difficulty of resisting competitive erosion, because pioneers and early followers drive the changes in the industry. The identification of these effects should help managers and stakeholders to make more effective entry decisions to sustain a firm's advantage, leading to better performance and higher probability of survival.     

FDI entry mode choice of Chinese firms: A strategic behavior perspective

This study investigates the determinants of foreign direct investment (FDI) entry mode choice between a wholly owned subsidiary and a joint venture by Chinese firms that invest overseas. We argue that the FDI entry mode choice of a Chinese firm is primarily influenced by the variables related to the firm's strategic fit in host industry and its strategic intent of conducting FDI. Using survey data of a sample of 138 Chinese firms, the results suggest that a Chinese firm prefers wholly owned subsidiary entry mode when it adopts a global strategy, faces severe host industry competition, and emphasizes assets seeking purposes in its FDI. A joint venture is preferred when the firm is investing in a high growth host market.     

Preventing competition using side payments: when non-neutrality creates barriers to entry

Network neutrality is often advocated by content providers, stressing that side payments to Internet Service Providers would hinder innovation. However, we also observe some content providers actually paying those fees. This paper intends to explain such behaviors through economic modeling, illustrating how side payments can be a way for an incumbent content provider to prevent new competitors from entering the market. We investigate the conditions under which the incumbent can benefit from such a barrier-to-entry, and the consequences of that strategic behavior on the other actors: content providers, users, and the Internet Service Provider. We also describe how the Nash bargaining solution concept can be used to determine the side payment.     

Large established firms entry into franchising: an exploratory investigation of strategic and operational issues

Although franchising is traditionally associated with newly emerging businesses which need to finance growth, this marketing technique is being increasingly utilized by large established firms as a method of business development. This article analyses the business objectives which led a sample of such firms in the UK to introduce franchising as a means of channel management. The modes of franchising-including the master franchise-selected by these firms as well as their operational and organizational experiences are investigated. In particular, there is an examination of the major managerial/cultural issues which these firms encountered in trying to reconcile the decentralized organization and operating methods implicit in the franchising concept with the centralized decision making and organization of a corporate concern. The implications for management of this dichotomy are explored.     

Changing barriers to the internationalization of franchising operations: Perceptions of domestic and international franchisors

This study examines factors that inhibit the internationalization of franchising operations. The factors are classified along the dimensions of importance and difficulty. The perceptions of domestic franchisors and international franchisors are compared. The results indicate that different factors inhibit internationalization of franchising efforts depending upon the stage of the franchising process. Comparisons of the results with previous studies indicate that significant changes have occurred in the perceived importance, changes which are understandable in light of changes in franchising practices as well as changes in the international environment. © 1995 John Wiley & Sons, Inc.     

Why are some people more likely to become small-businesses owners than others: Entrepreneurship entry and industry-specific barriers

Why are some individuals more likely to become owners of small businesses than others? We classify industries using measures of entry barriers and proceed to investigate how determinants of entry vary in high- as opposed to low-barrier fields. Claims that neither financial-capital constraints nor the educational backgrounds of aspiring small-business owners predict the likelihood of small-business entry are investigated in this context. These claims of irrelevance, we find, are inconsistent with the facts. The wealth and educational background characteristics potential entrepreneurs possess predispose them to make distinctly different industry choices, both because of the differing rewards available to them and the very different entry barriers they face. The characteristics of potential entrants, in other words, draw them toward some industries and away from others.     

Cost of capital and market power: The effect of size dispersion & entry barriers on market equilibrium

A market power explanation for the observed empirical fact that large firms in a given industry pay less for their capital than small is developed. Larger firms in an industry are shown to pay less for their capital than small because they have more control over the market and the riskiness of their divided stream is correspondingly smaller. More firms in an industry with a given size dispersion raises the cost of capital to the incumbents, but proportionately more to smaller firms. However, the most significant result is that a greater dispersion of sizes will reduce the riskiness of the dividend stream of the larger firm and increase the riskiness of the smaller firm, causing an increase in the dispersion of capital costs. Hence product market power enhances capital cost efficiencies.     

Perceptions of older consumers regarding food packaging as a prerequisite for its improvement: A case study of Polish market

In many societies, the scale of demographic change associated with increased longevity has the potential to influence the market for consumer goods. As a result, continuous improvement in packaging design that takes into account the needs of older people should become an important challenge for both packaging producers and product manufacturers. Due to the fact that there is limited research concerning the design of food packaging for older people, the aim of the study was to identify the expectations of this group of consumers in this respect. Milk packaging was selected as a model subject of study. Factors influencing older consumers and their buying patterns when purchasing milk have been thoroughly examined. The research was conducted among people over the age of 60 with the use of three methods: a questionnaire (600 subjects), an in‐depth interview (60 subjects) and eye tracking (30 subjects). The results of the study show that older consumers have specific preferences regarding packaging type and design. When considering milk packaging, for example, they prefer glass bottles, simple graphics and font and subdued colours. They most frequently look for information concerning the product's expiration date, its producer's name and its composition. Eye tracking revealed that the older the consumers are, the more problems with finding expiration date they have. The time required to find such information, however, strongly depends on where exactly the expiration date is printed on the packaging. The preferred place in this case is the top of the bottle. Older consumers identify product's brand with the name of the producer. Moreover, the absence of the term ‘ingredients’: on the milk packaging oftentimes causes confusion among older people, who are concerned about potential food additive content.     

Developing and managing strategic partnerships

This paper reports the empirical work carried out in the first stage of a three year Engineering and Physical Sciences Research Council (EPSRC) funded project. The first stage of the project: “The Development of Partnership Strategies” is the subject of this paper; it is concerned with testing, in an inter-firm context, a technique which has been validated in an intra-firm context. The technique is concerned with identifying the nature, strength, and sustainability of competitive advantage in terms of the features which customers value, the intangible resources which produce these features and the development scenarios for each key intangible resource. The companies collaborating in the research include: Flymo Ltd. (Electrolux) and Cellnet plc (British Telecom.).     

Financial analysis and strategic management

Applications of financial analysis and planning models to strategic management are presented and discussed in this article. The authors first define the concept of strategy and the nature of strategic problems, then present a useful organizing paradigm of the strategic management field. Against that backdrop, financial analysis applications are discussed. Various financial analysis and planning models are reviewed, focusing on their usefulness to strategic management. Suggestions for future research directions are raised and considered.     

Trade liberalization and strategic outsourcing

This paper develops a model of strategic outsourcing. With trade liberalization in the intermediate-product market, a domestic firm may choose to purchase a key intermediate good from a more efficient foreign producer, who also competes with the domestic firm for a final good. This has a strategic effect on competition. Unlike the outsourcing motivated by cost saving, the strategic outsourcing has a collusive effect that could raise the prices of both intermediate and final goods. Trade liberalization in the intermediate-good market has a very different effect compared with trade liberalization in the final-good market.     

Informal export barriers and poverty

This paper investigates the poverty impacts of informal export barriers like transport costs, cumbersome customs practices, costly regulations and bribes. In low-income countries, these informal barriers act as export taxes that distort the efficient allocation of resources, lower wages and agricultural income, and increase poverty. I investigate the case of Moldova, a very open economy where poverty is widespread, agriculture is a key sector, formal trade barriers are low, and informal export barriers are widespread. I find that improving export practices would benefit the average Moldovan household across the whole income distribution. Poverty would also decline, affecting 100-180 thousand individuals.     

Incumbent innovation and domestic entry

This paper analyzes the escape-entry incentive for innovation by incumbent firms. The threat posed by the possibility of leading-edge firms entering the market influences incumbent innovation. To overcome problems of endogeneity, we apply an instrumental variable approach to analyze a rich firm-level dataset (1987–2000) for Germany. We find evidence that domestic entry has a negative effect on incumbent product innovation, which is a strong indication of new entrants’ comparative advantage in commercializing new ideas. In contrast, domestic entry has a positive effect on incumbent process innovations, an effect also known as the escape-entry effect.     

Learning from strategic success and failure

Organizations facing complex, ambiguous, and dynamic environments find adaptive learning a key to survival and success. This study proposes three models of organization response in such environments: 1) A model of how aspiration levels or goals adapt over time, 2) a model of the riskiness of strategic choices made, and 3) a model of the innovativeness of search activities (R & D). In each model, the difference between performance and aspiration level is posited to be an important explanatory variable. Using the Markstrat game as a research environment, the data are consistent with all three models.     

The marketing and strategic planning interface

This article examines the potential contribution and implementational problems of developing marketing planning as a means to increase the marketing orientation of a company. It draws on the experience gained from a two year involvement in the design and implementation of a planning system for a large manufacturer, and reviews some of the literature on marketing and strategic planning. The focus is on the problems of managing the interface between strategic and marketing management, and the important role played by marketing information, the Chief Marketing Executive and the planning function in achieving effective and integrated strategic marketing planning.     

Structural and strategic dynamics in franchising

In this paper we examine the changes in ownership patterns of franchise systems as they mature. We compare the predictions made by three alternative theories within the context of the fast food industry. Signaling theory predicts that franchise systems will move toward a greater reliance on franchised outlets as systems mature, while resource acquisition theory (or as it is sometimes known, ownership redirection thesis) predicts a tendency in the opposite direction. A third theoretical perspective, tapered integration or plural forms, suggests a tendency toward maintaining a steady state of mixed distribution. Results indicate that although franchisors value the benefits of the mix of ownership types and do maintain that mix over time, there is some evidence of a greater tendency to permanently convert existing franchised outlets to company-owned outlets as fast food systems mature and gain greater access to resources.