Factors Influencing Market Entry and Exit Decisions Essay

Total Length: 701 words ( 2 double-spaced pages)

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Market Entry and Exit Strategies and Decisions

Entering the market in a timely fashion is equally as important as exiting the market. Just as leaving the market, market entry can be planned. In any market, a business can make money by properly timing both the entry and exit. If one miscalculates any of these, then the business runs the risk of not getting the return on investment.

Entering a market sooner has the advantage of being a market pioneer (Bednarek, 2013). In contrast, late market entry can be advantageous since the products are cheap or improved unlike those already in the market. Already cluttered markets serve an opportunity for late arrival based on improved quality. For instance, a company may launch its product in German, Mexico, and Australia but at different times. The company may launch the product in one country at a time and will only enter the next market after establishing sales in the previous market.

Timing is a major contributor to a company's success or failure. Some markets are barriers at particular times of the year. For instance, companies that deal with Christmas products will only enter the market early enough to gain momentum as the peak shopping season approaches (Drews & Lamson, 2016).

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A risk to entry is something that impedes of blocks the ability to enter a market. A risk to exit impedes the ability of a company leaving a market comfortably. Markets that are difficult for new entrants have the benefits of limited rivalry among competitors and good profitability. On the contrary, markets that are easy to enter may attract new entrants during seasons of profitability. However, markets that are difficult to exit are characterized by intense rivalry than markets that are easy to exit. Some of the common risks associated with market entry and exit are discussed below.

A monopoly situation is a very serious risk for market entry. Monopoly is a situation whereby one company becomes the major provider of a service or product in the market (Miles, 2011). A monopoly can be created through the merger of competing firms or state-owned companies. Often, a monopoly situation can pose a risk in the market by using licenses and patents to prevent the entry of any new company through controlling suppliers, resources, distribution channels and using price strategies. A good example….....

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Bednarek, D. (2013). Market entry barriers for German small and medium-sized companies in India. Munich: GRIN Verlag GmbH.

Drews, R., & Lamson, M. (2016). Market entry into the USA: why European companies fail and how to succeed. http://public.eblib.com/choice/publicfullrecord.aspx?p=3568046.

Miles, D. A. (2011). Risk factors and business models: Understanding the five forces of entrepreneurial risk and the causes of business failure. Boca Raton: ***.com.

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