The study of Market Entry Strategies of SGP to expand into China Literature review

The study of Market Entry Strategies of SGP to expand into China - books review ExampleDuring its expansion programs SGP already had bought a stake in Chinas Liquid Petroleum Gas market and is looking forward to become the market leader for the product. (Forbes.com, 2010). Literature Review One of the largest Liquid Petroleum Gas distributors, SGP based in Thailand as studied focuses on its strategic move on gaining entry into the Chinese soil. To this end, Levi (2006) states that the strategy devised by a company to make its entrance into a totally new or sub-divided market is better known as the market entry strategy for the company. These incorruptibles further adopt another strategy to support its expansion to newer markets. This strategy helps the firm to make reasonable allocation of its resources to gain the potence of effectively operating in the newer markets. Levi (2006) further states that through the employment of the market entry strategy the firm successfully draws o ut a plan to topple the newer markets. The plan incorporates an outlook through which the newer market is properly segmented and effective plan of actions are chosen to meet the demands of the target group through learnedness and expansion operations. The central component of the strategy taken by the company to enter into newer markets is constituted by ascertaining the mode of entry by the company into the external market. Research made along several(prenominal) firms on a global scale confirms that there are mainly five modes through which a firm plans to make a foray into orthogonal markets. (Levi, 2006, p.34). Levi (2006) states in this regard that entry models like exporting, licensing, financing, digiting up a joint hypothesis with the foreign firms and establishment of subsidiaries in the foreign land are considered feasible by a firm willing to enter into foreign markets. Each of the several modes of entry has signifi laughingstockt advantages and disadvantages which can be underlined as follows. The company through the export mode targets to push the products produced in its own country to the foreign market. olibanum the company is not required to set up a new factory in the foreign market. The company through the export mode endeavours to build huge amount of revenues by exporting a large number of products to the foreign soils. Export strategy used by the firm to enter into foreign markets however faces some distinct disadvantages. The company using such strategy whitethorn have to face the stringent regulations and market policies of the foreign market which can prove detrimental to its expansion. The cost of transferring products along the borders also tends to impose huge costs to the production firm. Again the foreign market may happen to be non-demanding to the products produced by the exporting firm. The level of obstruction can also result out from the barriers relating to difference of culture between the exporting and the receivin g nation. Thus the above reasons may happen to make the export mode unsuccessful for the exporting firm. Levi (2006) further observes that the company can also take help of transferring the license to produce a stated amount of the products and thereby to market the same in the foreign market. In that the company renders a sum to the firm in the foreign nation taking such task. The company operating through the licensing mode gains the advantage of cost for not