course work

Direct vs . Indirect Market Entry Mode

Question : What are the trade offs involved in selecting a direct market entry mode over an indirect one

Selecting a direct or indirect mode of market entry involves trade-offs revolving around the amount of control of the expanding firm and the corresponding risks involved relative to costs and outcomes . Since direct and indirect modes of entry lie on opposite sides of the spectrum , the trade offs in selecting one over the other means the preference of the benefits provided by one mode over the other p

One trade off is between cost and control over marketing outcomes Direct modes of entry involve higher levels of investment but offers greater control on the part of the expanding firm while indirect modes of entry require lower investment but lesser degree of control (Keegan 1989 . On one hand , preference over direct modes of entry is when expected returns from a promising large market should outweigh the bigger amount of investment required . On the other hand , preference for indirect modes of entry finds support from expectations of limited long-term market expansion but the current market can comprise a significant venue for boosting sales (De Burca , Fletcher Brown 2004 By selecting one mode of entry over the other , the strategic fit between market conditions and the preference of cost or control comes into play

Another trade off is between control and risk in accomplishing the desired marketing outcomes . Direct modes of market entry involve greater amounts of control over processes...