Advantages and Disadvantages of a Market Entry Strategy for SMEs Essay

Advantages and Disadvantages of a Market Entry Strategy for SMEs - Essay Example The risks associated with entry into a new and unfamiliar market can be reduced by applying pertinent market entry strategies. Under this strategy, exporting can be divided into two parts such as indirect exporting as well as direct exporting. Indirect exporting is referred as decreasing the producer’s risk by selling the manufacturer’s product in the foreign market with the help of others. On the other hand, direct exporting signifies that a company controls the export activities as well as sells the manufactured products directly to the foreign market. Therefore, in the direct exporting strategy producers have more control on the activities of a foreign market (Tielmann, 2010). In this paper, the benefits and the disadvantages of a foreign market entry approach about exporting of small and medium enterprises (SME’s) as well as multinational enterprise (MNE’s) are discussed. Evaluating the advantages as well as the disadvantages of market entry strategy is most important in order to develop SME’s exporting. Entry strategy of exporting for SME’s can be defined as sale of goods produced by the SME’s in the foreign market with the help of agents and distributors (Bendt & Skropska, 2011). The selection of optimal entry mode strategy is imperative for SMEs in the international marketing context in order to make their presence felt in the competitive foreign markets where there are a number of existing competitors present. SMEs have been observed to possess quite simple objectives as well as organisational structures. SMEs’ key aim is to make growth as well as development, which can be ensured by maximising the anticipated profit level. However, SME’s face resource and information constraints (Decker & Zhao, 2004).