Choose two articles from the Argosy Online Library, one that addresses Market Choice Strategies and one that addresses Market Expansion Strategies. Write an article review of 5 pages answering the following questions:
What are the main ideas of the two articles?
How do the two articles relate to one another?
Are the ideas in the articles contradicted by more recent thinking on the subject of global market entry strategies; for example, by the ideas in this module’s text resources? Describe any contradictions you found regarding global marketing entry strategies in the articles.
How will you apply the ideas in these articles to your course project?
Make sure you provide the full citation for both articles and follow APA formatting in writing your review.
Assignment 2 Grading Criteria
Accurately states the main ideas of the two articles.
Correctly identified the relationship between the two articles.
Described the contradictions regarding global marketing entry strategies.
Explained the application of the articles to the course project.
Formatting, Scholarly level writing, and timeliness.
Market Entry Strategies
The two articles under review in this essay are Koch (2001) and Petersen, Welch & Liesch (2002). The former is related to market choice strategies while the latter is related to market expansion strategies. The main idea being expressed in Koch (2001) is that the selection of a market and that of market entry mode should not be viewed as separate decisions but rather as two dimensions of one decision process. Koch (2001) argues that in the context of such an integrated process, outcomes can be influenced by a number of factors, including a marketing plan, control systems for monitoring performance in the target market, and choice of target market/product. Moreover, internal and external environmental factors are found to have a significant influence on the selection of both market and entry modes. According to Koch (2001), the influence of these factors has not been fully acknowledged in theory. To improve the quality of decisions on market choice, a systematic approach to the integrated process should be adopted. The study also identifies the need for many narrow studies to be undertaken and their findings integrated in order to increase the content validity of various market choice models (Koch, 2001).
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The second article, (Petersen, Welch & Liesch, 2002), examines how the market expansion is being influenced by one specific external environment factor: the Internet. Petersen, Welch & Liesch (2002) argue that the Internet has made market expansion strategies more effective. Against this backdrop, various benefits of the Internet in the market expansion are analyzed based on agency/transaction cost theory as well as internationalization theory. Findings indicate that the Internet has the potential to affect foreign expansion in a limited manner as well as to a far-reaching extent that leads to widespread global expansion (Petersen, Welch & Liesch, 2002). Moreover, the Internet may challenge mainstream internationalization theory as far as the role of knowledge is concerned; contrary to the expectation that internet-driven knowledge initially constrains market expansion, it mostly emerges as a factor that plays a leading role in propelling firms into widespread expansion into foreign markets (Petersen, Welch & Liesch, 2002).
The two articles are related to one another because they address issues relating to the dynamics of market choice and expansion in a global business environment. Both articles take cognizance of the fact that internal and external factors play a significant role in determining decision processes relating to market selection, expansion strategies, as well as entry modes. Both articles view market choice and expansion strategies as an integral component of any company’s international strategy. Moreover, both articles highlight the need to ensure that market transactions are efficient to facilitate full exploitation of newly accessed market opportunities.
An analysis of the articles indicates that there are many new things that every company seeking to launch international operations should be ready to learn. For instance, learning should be part of the internationalization process, with priority being on access to relevant information. Petersen, Welch & Liesch (2002) specifically addresses the need to address the problem of information asymmetry as a way of achieving congruence in current and target markets. The articles create the impression that regardless of whether the market entry decision is made by sales/ad hoc or popular choice, information asymmetry can have a negative impact on the ensuing expansion process. In many ways, therefore, the two articles are related to one another by virtue of addressing the interlinked concepts of market choice strategies and market expansion strategies. The ideas that are enumerated in regards to market choice strategies are relevant in the context of market expansion strategies and vice versa.
The ideas contained in the articles are not contradicted in any significant way by more recent thinking on the issue of global market entry strategies. For instance, recent literature acknowledges that market selection and mode of entry constitute a single decision process (Lee & Lieberman, 2010). For instance, the decisions that a company makes in terms of market choice may have an impact on market entry strategy. More recent thinking still recognizes the need for market choice strategies to be anchored on a number of decisions, particularly those that relate to choice of target market/product, objectives in the target market, choice of entry mode, marketing plan for penetrating the market, and control systems for monitoring performance in that market (Slangen & Beugelsdijk, 2010).
Meanwhile, some issues highlighted by Koch (2001) have not been widely discussed in subsequent research. A case in point is the analysis of the approaches to market choice strategy, which include the sales approach, expansion based on an existing strategy, and the systematic approach (market selection based on a specific strategy rule derived from the available alternative modes). Further research is needed to identify the factors that may drive a company into adopting the sales/ad hoc approach as opposed to the continued adherence to the existing market choice strategy or the systematic approach.
On the other hand, the role of the internet in market expansion strategy as espoused by Petersen, Welch & Liesch (2002) is being widely acknowledged in subsequent research. Rhee (2005) for instance, points out that incorporating the Internet and its effects into the contemporary model of international market expansion is a viable strategic choice that demonstrates how emerging patterns of international expansion should be a reflection of the changing business environments. However, it is problematic that aspects of market choice and market expansion strategies have been discussed in more recent literature as separate concepts that are potentially influenced by different combinations of internal and external environmental factors. This approach contradicts the concept of the interrelatedness of the two concepts as demonstrated in the two articles. Finally, the two articles analyzed in this paper seem to contradict each other in one aspect of global market entry strategies, which is a preoccupation with the influence of external environmental factors as the primary determinant of choice of overseas markets as well as an expansion strategy. Koch (2001) opposes the notion that the external company environment should be a major factor influencing market choice and expansion strategy. In contrast, Petersen, Welch & Liesch (2002) exhibit an upbeat attitude in regards to the preeminent role of the ubiquitous phenomenon called the Internet in determining the foreign markets that companies should select and the expansion strategies that they should adopt in those markets.
I will apply the ideas in these articles to gain an in-depth understanding of the theoretical basis for various market entry strategies. I am keen to analyze criticism of prevalent theories of market entry strategies as an indicator of the possible theoretical changes that may be proposed in future research. The same case applies to business models that seek to explain the need for the adoption of various market choice strategies based on today’s changing international business environment. I will specifically identify various narrow empirical studies and compare them with specific application models as well as iterative approaches to market selection decision processes. I will also be keen to determine whether there is dichotomy in market choice strategies and market expansion strategies or if the two concepts are interrelated in a manner that constitutes an integrated decision process. At the same time, I intend to apply the ideas by determining whether the validity of the theories and models mentioned in the articles will increase or decrease in light of current changes in the international business environment.
Finally, the article on the role of the Internet in the choice of market and expansion strategies (Petersen, Welch & Liesch, 2002) will equip me with valuable ideas on how companies are affected by dominant external environmental factors in their selection of various international expansion strategies. Petersen, Welch & Liesch (2002) anchor their analysis on two theories: transaction cost theory and internationalization theory. The way these researchers use the two theories to explain the Internet phenomenon will give me valuable insights on how to apply other relevant theories in the analysis of various internal and external environmental factors affecting the market choice and international expansion strategies. During this theoretical analysis, I will be keen on explaining various opposing forecasts as predicated by changing business environments. Similarly, I will set out to compare the theoretical approaches adopted in the two articles with the ones being used in more recent research to determine whether there are any significant differences in findings. On this basis, I hope to succeed in attributing the discrepancies to theoretical differences, changes in the international business environment, and/or varying marketing strategies as the case may be.
Koch, A. (2001). Selecting overseas markets and entry modes: two decision processes or one? Marketing Intelligence & Planning, 19(1), 65-75.
Lee, G. & Lieberman, M. (2010). Acquisition vs. internal development as modes of market entry. Strategic Management Journal, 31, 140–158.
Petersen, B., Welch, L. & Liesch, P. (2002). The internet and foreign market expansion by firms. Management International Review, 42, 207-221.
Rhee, J. (2005). The Internet Era and the International Expansion Process: The Moderating Role of Absorptive Capacity. Management International Review, 45(3), 277-306.
Slangen, A. & Beugelsdijk, S. (2010). The impact of institutional hazards on foreign multinational activity: A contingency perspective. Journal of International Business Studies, 41, 980-995.