For example, here is how Emma was able to get her offer from Bain. Save my name, email, and website in this browser for the next time I comment. We are sharing our powerful strategies to pass the case interview even if you have no business background, zero casing experience, or only have a week to prepare. Back to all. Last Updated September, Rebecca Smith-Allen. What is a Market Entry Case Interview? They could sell a new product into an existing market.
Example: Netflix produces its own content to air over its existing streaming service. Or they could take an existing product to a new geography. Example: Starbucks enters the Chinese market. The CEO will face complicated questions like: Is the market profitable? Does the company have the skills needed to compete in the new market? Does it have the financial resources needed to successfully enter the market?
Should the company create the capabilities to enter the new market in-house? Buy a company already competing in the market? Form a joint venture with another company? What regulatory hurdles might they face? Your Name.
Your Email. Send Me Access. Step 1: Assess the Target Market. Questions to ask during the assessment of the target market include: What is the size of the market in terms of revenue? What is the profit margin on sales in the market? What share of the market would the client need to break even? Become profitable? Do they have the technical skills? Is their cost structure competitive? Do they have the necessary sales or distribution channels?
Can they get whatever capabilities they currently lack? Are there barriers to entering the market? Does the client have an understanding of how to compete in the new geographic market?
Do they understand the customer segments in the new market? Can they tailor the product or service to the requirements in the new market so they can compete effectively? What government regulations will be encountered? Does the company have or can it raise the required capital?
For a new product or service, they should ask whether they should: Create the capability to build the new product or provide the new service in-house? Partner with someone already in the market? Buy or license intellectual property? For geographic expansions they need to ask whether they should: Export to the new market from their home country? Build a greenfield presence in the new country?
Partner with a company that already has a presence in the target market? License their brand to franchisees? Questions to ask when determining the best entry strategy: Are there barriers to entry in the market? Intellectual property? Regulatory approval? Can the company overcome these barriers on their own or will they need to partner to do so? How important is timing?
Is there an advantage to early market entrants? How fast do they need to have a product in the market to win? Will partnering allow the company to enter significantly faster than building capacity in-house? The company had to answer important questions like: How to tailor their menu to Chinese tastes?
What segment of the market to target? Where to locate their restaurants? How to develop a supply chain in the country? Look for market entry cases buried inside other types of case study interviews. Ask your interviewer questions and take good notes on their answers. Hence, the firms with intention to expand internationally should strategize their moves to ensure that they will be able to sustain and perform in foreign markets. In addition, Koch outlined some market entry strategies which include, choosing a specific market, setting objectives and goals, determining a control system to monitor performance, marketing plan to penetrate the market and also choosing the right entry mode to penetrate the market.
However, reviews of the literature suggest that a framework to guide the construction firms to adopt effective entry mode strategies is still lacking. Hence, this present research particularly identifies the entry mode choices by the Malaysian construction firms in venturing the international market.
The findings will be significant for domestic firms in developing their strategies to face the inevitable foreign market entrants. It will encourage and facilitate these domestic firms to expand their business by adopting effective entry modes to undertake construction projects in international market. However, each entry mode comes with its own benefits and risks. In addition, there are external factors related to the international market environment affecting the entry mode choices such as, the opportunities and threats.
Hence, in selecting the suitable entry mode, Ozorhon, Dikmen, and Birgonul suggested an extensive environmental scanning, determination of opportunities and threats, and the matching them with the firm strengths. However, there are limited studies that suggest a framework to guide the construction firms in order to decide which entry mode strategies; namely equity and non- equity modes to be used in international market expansion.
Yean et al. Local Agent A contractual arrangement between the entrant principle and a local where the agent provides principle information on local market conditions, contracts, and assistants to the entrant.
Joint venture A permanent joint venture in which the entrant and other legally separate parties from a JV company jointly owned entity in which they invest and engage in various decision-making activities. Sole venture A permanent venture in the host country wholly owned by the entrant where profit and SV company responsibilities are assigned exclusively to the entrant.
Joint Venture A project specific joint venture in which profits and other responsibilities are assigned e to JV Project the entrant and other parties according to a contract. Sole Venture A wholly owned project specific venture where both profits and responsibilities are SV Project assigned exclusively to the entrant.
Some studies have carried out research on entry mode specifically related to joint ventures JVs and alliances Mohamed, ; Ozorhon et al. Jung, Han, Park, and Kim have made comparison on the differences between entry mode decision made by manufacturing and construction industry for the small and medium construction companies SMCCs indicating that in manufacturing, the non-equity modes exporting, licensing and franchising, Greenfield and the equity EQ modes JVs, mergers and acquisitions were the preferred entry modes.
While, Gao and Pan divided the entry modes into three types of cumulative entry experience namely; contractual arrangement experience, equity joint venture experience EQ , and wholly owned experience NEQ. Therefore this research is conducted to investigate suitable entry mode choices EQ or NEQ or BOTH modes for construction firms in their international market expansion process, with a view to providing guidelines based on the strategies employed by the experienced Malaysian construction firms in the international markets.
Thus, this paper seeks to identify the entry modes preferred by the Malaysian construction firms, whether they choose equity EQ mode, non-equity NEQ modes or both modes BOTH for their international projects. Pan and Tse has established a similar conceptual framework on the factors that influence the entry mode decisions including firm-specific, industry-specific, country-specific and project- specific factors.
Furthermore, Kawai and Jonas have established another conceptual foundation for understanding the entry mode choices based on firm, industry and institutional factors. In sum, the specific factors identified based on these previous studies are related to OLI ownership, location and internalization , firm, industry, country, project and institutional.
Ahmed, Mohamad, Tan, and Johnson studied on the relationships between risk perceptions and the choice of foreign market entry mode of Malaysian firms in international market and found that low risk perceptions were associated with high control entry modes, while high risk perceptions were associated with low control entry modes.
Later, Ellis argued that a similar and close market distance have influenced the choice of low-risk entry modes such as exporting, licensing and setting branch office in the foreign market. Hence, this study is aimed at establishing factors which significantly influence the entry mode decision by the construction firms in the international market.
Figure 1 shows the entry mode choice as the variable of primary interest dependent variable , the variances in which are attempted to be explained by the specific factors as the independent variables.
The method of analyses used in this study to measure the entry mode choices are firstly, the descriptive analysis consisting of the percentage frequency of the firms choosing each entry mode and secondly, by using the multinomial regression analysis which are suitable for dependent variable having three 3 types of entry mode choices equity, non- equity and both.
Factor analysis using principal axis factoring PAF method was used to measure the independent variables specific factors influencing the entry mode choices and ANOVA was used to look at the significant relationship between the specific factors and entry mode choices.
However, detailed analysis based on factor analysis using PAF was excluded and only findings from the factor analysis are presented in this paper together with the descriptive analysis, multinomial logistic analysis and ANOVA. The requirements for the selection of the firms were organizational size, experience, and reputation. This study used a questionnaire survey as the primary data collection tool.
The respondents were the chief executives, general managers, senior managers or experienced project managers in charge of international projects in the selected firms.
Reminder calls, e-mails and faxes were specifically targeted to the known construction firms which did not return their questionnaires after a reasonable period of time. Section B is related to entry location decision not included in this paper. Section C of the survey consists of part C1 and part C2 related to the entry mode choices; part C1 asks the respondents to indicate the entry modes that their firms adopted in their international projects.
Part C2 solicits their opinions on the specific factors influencing the entry mode choices. The level of significance for each opinion was measured using a 5-point Likert scale 1: Not critical; 2: A little critical; 3: Critical; 4: Very critical; and 5: Extremely critical. Hence, the analysis in this paper is based only on the background of the respondents from Section A and Section C related to the entry mode choices.
The survey questionnaire related to this paper is given in the appendix. Under the equity EQ mode group, there are strategic alliance E1 , joint venture company E2 , wholly-owned subsidiary E3 , joint venture project E4 , and Build-operate-transfer equity project E5.
The analyses used to measure the dependent variables are descriptive analysis and the multinomial logistic regression analysis. Initially, there were 44 factors listed in the questionnaires. Then, the principal axis factorial analysis has extracted and grouped only 14 of the highly loaded factors into three 3 components namely, firm- specific, market specific and performance specific factors.
In other words, this test was carried out on the three 3 specific factors to determine the most significant factor influencing the entry mode choices as explained in the result section refer to Table 7: Parameter estimates.
In order to increase the rate of response, personal distribution, follow-up letters and phone calls have been carried out. Figure 2 shows the responses from the Class A and Grade 7 firms on years of experience in the international construction.
It shows that about 36 percent have more than 10 years of international experience, 15 percent having experience between 5 to 10 year and the rest 49 percent with less than 5 years experience. Hence, the respondents have the required international related construction background to participate and to give reliable opinions in the questionnaire surveys for this study.
The following sections explain the entry mode choices based on the descriptive analysis and multinomial logistic regression analysis. Under EQ modes, the ranking of the entry modes chosen by the respondents based on the frequency are as follows: Wholly owned subsidiary 19 , JV project 14 , strategic alliance 12 , JV company 7 and BOT 4.
The overall results for entry mode choices are outlined in Table 2. Table 2: Types of Entry Mode Choice. The descriptive analysis revealed three 3 types of entry mode choices; 1 Firms that chose equity modes only EQ , 2 Firms that chose non-equity modes only NEQ and 3 Firms that chose both equity and non-equity modes BOTH.
A binary logistic regression is used if the dependent variable is binary and only takes on two values e. Hence, in this study, in order to measure the correct percentage for entry mode choices as the dependent variable, a multinomial logistic regression analysis was found suitable to measure these multi-variables as explained in the following section. Hence, a multinomial logistic regression MLR model is constructed based on the dependent variable entry mode choices having these three 3 non-ordinal categories: equity mode, non-equity mode and both modes.
The assumption made in this multinomial logistic regression analysis is that the problem of multi-collinearity among the independent variables does not exist. Both the Pearson and Deviance statistic are chi-square based methods. Table 3 : Pearson and Deviance statistics test. Chi-Square df Sig. Pearson Table 4: Pseudo R-Square test. Cox and Snell. Table 5 shows the classification table based on the three types of entry mode choices.
Similar models have been used by Agarwal and Ramaswami to test their multinomial logistic regression models namely: 1 using "no involvement" as the base case from which deviations are interpreted Model I , 2 using "exporting" as the base case Model II , and 3 joint venture as the base case Model III , in which all three of these models fit the data very well. The results from the classification table provides the indication on how well the model is able to predict the correct category for each case.
The model has correctly classified For the overall cases, the model has correctly classified Table 6: Likelihood Ratio Tests. Intercept Thus, the results have shown that the independent variables factors are significant toward the dependent variables entry mode choices.
It is shown again that there is no statistically significant for the entry modes if the critical value is set to 0. Therefore, when it was set to 0. The reference category is: Equity Mode. The three specific-factors identified earlier in this study are the firm-specific factors, market specific factors and performance specific factors.
The tests of homogeneity were performed for all specific factors as shown in Table 8. Table 8: Test of Homogeneity of Variances for all specific-factors. Specific factors Levene Statistic df1 df2 Sig. Firm-specific Factors 1.
Since all values are greater than. Firm Between Groups. It should be noted on the following assumptions: The check on the assumption of normality was not carried out because ANOVA test is a robust test towards normality assumption. Hence, it is concluded that the three groups of independent variables namely: firm-specific factor, market- specific factor and projects specific factor were normally distributed with no statistically difference between the all types of entry mode choices and the three specific factors.
Overall results show that more than 50 percent 23 of the respondents have chosen BOTH modes. Furthermore, the MLR model has correctly classified In summary, the findings show that the majority of Malaysian firms in this study were found to adopt the adverse risk attitudes by selecting both equity and non-equity modes as indicated by the descriptive analysis and supported by the MLR model.
Hence, for the ease presentation and clarity in the discussion, the firm factors having similar concepts or related themes are grouped together under two main categories namely the firm organizational and management capabilities, and the firm resource capabilities.
Tjosevik and Refsland also found that the product or service delivered were especially important for the choice of entry mode. However, they did not did not find any specific influence from the firm factors which includes experience, network and international orientation on the entry mode choice.
In terms of management of risk attitudes, the current findings support a study by Ahmed et al. Luo also identified that contractual risks in FDI together with higher financial and operational risks involved greater investment commitment by the firms in the foreign environment.
Hence, these advantages help reduce the risk attitudes and perceptions related to entry mode choices. In addition, the superior management with organizational dynamic capabilities has encouraged the firms to select the suitable entry mode choices.
Thus, the organizational and management capabilities were considered as the significant influential factors by the Malaysian construction firms in their entry mode choices. Musso and Francioni examined the internationalization of small and medium-sized enterprises SMEs with regard to the entry mode choice process using the RBV theory.
These findings contribute to the RBV theory as the firms chose their preferred entry modes based on the availability of resources that they have acquired and controlled. In addition, the firms contended that based on their firm international experience in similar projects, they have chosen the entry modes that reduce the environment and operational risks in a foreign market.
Research by Wu and Zhao in the case of Huawei has provided the evidences that the desired entry mode was actually decided by firm factors.
However, the study has also shown a different finding where firm factor such as international experience was not important in choosing the entry mode.
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