Market entry strategies and their applicability to SMEs - The winding road to foreign business (PDF)

Research Paper (undergraduate) from the year 2003 in the subject Business economics - Offline Marketing and Online Marketing, grade: 1,9 (B+), Heidenheim University of Cooperative Education (Economic - International Commerce), course: International Commerce, language: English, abstract: "There will be hunters and hunted, winners and losers. What counts in global
competition is the right strategy and success."
Heinrich von Pierer1
In business planning the globalization of the world market and the limits of
domestic growth raise the question to what extent a foreign commitment should
be considered if at all.2
In Germany these considerations are particularly underlined by the strong
integration into the world economy. German enterprises obtain a third of their
total revenue in foreign business, 25 % of all jobs depend on foreign trade.3
Contrary to expectations, going global is no longer subject only to large multinational
companies. Due to saturation tendencies in the domestic market,
global competition and the dependency on international key-account customers
small and medium-sized enterprises (SMEs) have been faced with the need for
international activities. 4
Considering the fact that SMEs account for 97,3 % of all German enterprises,
generating almost 45 % of the total revenue per year, the importance of future
growth potential becomes evident.5 In general, SMEs are referred to as the
"backbone" of German economy and many of them, the so called "hidden
champions" have successfully faced the challenge of entering foreign markets.6
Others have been afraid to take this step. For these, the need for adaptation
remains and their continuity will depend on the competitiveness in the world
market. In general, entering new markets is connected with a multiplicity of chances and
risks. SMEs especially, tend to underestimate the importance of profound
information and the need for a realistic estimation of own capabilities.7
Accordingly, it becomes necessary to focus on a SME specific approach which
considers major evaluation criteria for carefully developing market entry
strategies.

1 Dr. Heinrich von Pierer, President and Chief Excecutive Officer of Siemens AG:
Quotation cp. 'TheGlobalist' (2000)
2 cp. Hoppen (1999:144)
3 cp. Statistisches Bundesamt (2001:1.6)
4 Due to the IFM in Bonn (2000) SMEs intend to increase their foreign sales from an actual
average of 30 % to 50 % in 2020
5 cp. IMF Bonn (2000)
6 cp. Hibbert (2000:1)
7 cp. Brenner (1999:2 et sqq.)