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Mode of entry

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JES, Inc., a U.S. technology company has recently developed a revolutionary lighting product that will replace incandescent lamps. The product offers exciting new features along with all of the features of conventional lighting products, but at a fraction of the manufacturing costs. As the international business manager of JES, you have been asked to choose the best mode of entry into the European market. You have the following options:

Export your product from the United States.

Enter into an alliance with a large European company.

Manufacture the product in the United States and set up a wholly owned subsidiary in Europe.

License a European firm to manufacture and market the lighting products in Europe.

In preparation for your choice, list the pros and cons of each method of entry. Which choice do you present to Mr. Salina (CEO and inventor of the new technology)? Be sure to support your decision.

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Solution Summary

JES, Inc., a U.S. technology company has recently developed a revolutionary lighting product that will replace incandescent lamps.

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Export your product from the United States: The most important benefit of this option is that it is least risky and most cost effective way to enter the European market. However, the disadvantage of this strategy is that it may not allow the company to reap full potential of its innovative product offering. As the company is offering a unique product which may have a huge market in Europe, exporting may not be the best way to exploit market opportunities in a huge manner.

Enter into an alliance with a large European company: The main advantage of this strategy is that the company will be able to take advantage of the experience, ...

Solution provided by:
Sheetal Jain, PGDM
Education
  • BComm, University of Delhi
  • Post Graduate Diploma in Management (Equivalent to MBA), All India Management Association
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