12
STEPS NECESSARY TO ESTABLISH MARKET ENTRY
We will touch on the topic relative to why many firms enter a market at a particular time : when a firm is approached by a customer ; when competing firms enter an important market ; or when a market is growing very fast . For instance , Carrefour decided to expand in emerging markets such as Poland and China at the very time when the economies of these countries were quickly expanding and consumers had increasingly more money to spend on shopping . Firms may also decide to enter a market at a particular time for wider strategic reasons . Previous research highlighted the strategic importance of the timing of market entry , suggesting that first movers in foreign markets perform better than later market entrants . The concept of a first mover advantage suggests that pioneering businesses are able to obtain higher profits and other benefits as the consequence of early market entry .
Early entry into a foreign market can have five generic advantages :
1 . Cost advantages ( e . g ., allowing the firm to have larger economies of scale and accumulating experience about the foreign market before the entry of competitors .)
2 . Pre-emption of geographic space ( e . g ., pre-empting competitors by securing a specific geographic space or marketing channel .) 3 . Technological advantages ( e . g ., adapting products and processes to the local market and implementing new innovations before competitors enter the market .)
4 . Differentiation advantages ( e . g ., higher switching costs for buyers or reputational advantages of established brands .)
5 . Political advantages ( e . g ., the support of foreign government in raising barriers to entry for late movers .) For instance , Lockheed Martin has been able to reap considerable first mover advantages by expanding into Russia in the late 1990s before the company ’ s competitors did so .