- iv) Strategic methods of entry and possible consequences
GlaxoSmithKline Company can adopt many kinds of strategies for entering the market of New Zealand. It has been researched that a successful market entry strategy requires a combination of knowledge for the chosen market and selecting an appropriate business partner in the foreign market for growth and development of the business. Rapport, trust and communication can be three important elements for bridging up the gap of geographical distance (Zou and Yu, 2020). The local manufacturers of New Zealand are very open to new kinds of business activities and support honesty and diligence while conducting their operations.
The various kinds of entry methods to be used by GlaxoSmithKline and their possible consequences can be described below.
- Partnering can be a very good technique to be used by the company, while entering New Zealand market owing the factors and conditions prevalent in the market. Partnering is a process by which the company can partner with one of the local players of the New Zealand market (Song et al. 2019).The partnering can take place through strategies like strategic alliance in manufacturing or co-marketing arrangement for marketing activities. The company can easily gain local market knowledge and contacts by adopting this collaborative strategy with the local partner.
- Licensing can be another effective strategy that can be adopted by pharmaceutical companies like GlaxoSmithKline to enter the market of New Zealand. In this process, the company can grant permission to a local company for using its intellectual properties, such as its patented manufacturing process, trademarked product, technical aspects and copyrights (Musah et al. 2019). Through licensing, the company can enter smoothly into New Zealand market, which can otherwise impose restrictions on business activities. This process will also help in easy flow of capital and will not tie up the capital into only one business.
- Another significant method of entering new markets like New Zealand can be through Joint Ventures. GlaxoSmithKline can form a joint venture with any of the local pharmaceutical companies of New Zealand. This will lead to a creation of a third company, which will be managed and handled independently (Horn, 2016). In this process, all the operations of the independent company are shared equally by the two parent firms. Both risks and profits are shared equally among the two companies and neither of them are liable towards each other. This process can be useful in situations when the company wants to diversify the risk of its portfolio of products.
- Another important market entry strategy can be greenfield investment, which is generally adopted by companies when they want to earn a considerable market share in the new unexplored market. GlaxoSmithKline can also develop such a strategy for entering the market of New Zealand. In this kind of investment, the company would be majorly involved in the international business conducted in the market of New Zealand. However, sometimes this strategy can be costly and involve greater risks as compared to other strategies.
References
Zou, L. and Yu, C., 2020. The evolving market entry strategy: a comparative study of Southwest and jetblue. Transportation Research Part A: Policy and Practice, 132, pp.682-695.
Song, H., Yu, Y. and Koo, B., 2019. A Study on Establishing Entry Strategies of Private Engineering Firms in the Overseas Urban Development Market. Korean Journal of Construction Engineering and Management, 20(1), pp.86-95.
Musah, A., Badu-Acquah, B. and Yusif, A., 2019. Accessing Market Entry Strategy in Emerging Markets: A Case Study of Edel Technology Consulting Limited. International Journal of Academic Research in Business and Social Sciences, 9(1).
Horn, S.A., 2016. Subsidiary capacity building in emerging markets: How Japanese MNEs sequence market entry and development strategies in India. Thunderbird International Business Review, 58(1), pp.55-74.