The relationship between foreign market expansion strategies
and foreign market entry strategies for SMEs
Abstract: The increased developments of technology and falling barriers of trade have
been encouraging companies all over the world to internationalize. Not only
multinational companies but also small and medium-sized enterprises succeed
in conducting business on foreign markets. When deciding to
internationalize, small and medium-sized enterprises face the need to
develop a foreign market expansion strategy as well as a foreign market
entry strategy. Market expansion strategies treat of the amount of markets
to enter and the temporal approach chosen. The main strategies are country
diversification and country concentration. A market entry strategy contains
the level of commitment of resources planned for each market. Typical entry
modes are export and foreign direct investment.
This research explains the interrelations within and between market
expansion strategies and market entry strategies. Our aim was to gain deeper
understanding about the possibilities for small and medium-sized enterprises
to combine market expansion with market entry strategies. For that we
conducted a case study of a Swedish firm that is active on international
markets.
As a result we found out that the combination of market expansion and market
entry strategies can diverge from theory. An important factor affecting a
firms choice of strategies is the financial background.
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