AGILITY: A LOGISTIC COMPANY Modes of entry

Introduction  Foreign markets are very dynamic and full of uncertainty.  Therefore, companies choosing to participates in these,markets must be well informed and choose the best entry modes in an attempt to exploit the revenue advantages they promise.  The companies must also control and commit their resources in an effective manner so as to mitigate the impacts of the risks involved

Entry Modes  There are two main entry modes in international participation.  These are: 1) Equity modes: Comprising of Contractual agreements and Exports. 2) Non-Equity modes: Comprising of Wholly owned subsidiaries and joint ventures

How Equity Modes of entry work in logistics companies  Exports: Is a mode of entry in which a company produces and stores goods to be sold in other countries. Can be direct exports or indirect exports  Exports are used by third party Logistic companies, such as those involved in supply chain management, warehousing, transportation and shipping.  In an attempt to economise the economies of scale, companies seeking to enter foreign markets contact third party logistic companies to transport, distribute or store their products.

Continuation  For instance, a company may sell its products through its affiliate logistic company in the foreign country  Contractual agreements: Licensing.  Involves franchising, contract manufacturing and turkey contracts.  Licensing is where your own organization charges a fee and/or royalty for the use of its technology, brand and/or expertise

Continuation  Franchising involves the organization (franchiser) providing branding, concepts, expertise, and infact most facets that are needed to operate in an overseas market, to the franchisee. Management tends to be controlled by the franchiser. Examples include Dominos Pizza, Coffee Republic and McDonald’s Restaurants.  Turnkey contracts are major strategies to build large plants. They often include a the training and development of key employees where skills are sparse

How Non-Equity Modes of entry work in logistics companies  Joint Ventures tend to be equity-based. That is, a new company is set up with parties owning a proportion of the new business. There are many reasons why companies set up Joint Ventures to assist them to enter a new international market:  These might be to gain access to technology, core competences or management skills. For example, Honda’s relationship with Rover in the 1980’s.  To gain entry to a foreign market. For example, any business wishing to enter China needs to source local Chinese partners.

Wholly Owned Subsidiaries  A wholly owned subsidiary refers to a company whose common stock is entirely owned by the parent company.  Their entries are categorised into two strategies: Green field Investments and acquisitions.  Greenfield investments are the establishment of a new wholly owned subsidiaries. They are always potentially costly and but provide full control to the company.

Acquisitions  A logistics company may choose to acquire a new firm due to a variety of reasons.  These are to acquire expertise and knowledge of the existing market by third parties, such consultant, competitors, or business partners.  This entry strategy is time consuming due to the need of establishing new distribution networks, new operations, and the need to learn while implementing appropriate marketing strategies to compete with rivals in the dynamic markets.

Logistics companies in Kuwait and the UK  There are different logistic countries operating in Kuwait and United Kingdom  Good examples are the KGL logistic company based in Kuwait and Agility in the UK.  Agility uses Non-equity based modes such as joint ventures.  Through Joint ventures, Agility is able to partner with premiar air carriers and maximize on performance and space allocation.

Continuation  Through such joint ventures, Agilitry has been able to have more than employees working inn over 600 offices located in almost 200 countries across the globe.  On the contrary, KGL logistics company in the UK used equity based entry modes such as to offer warehousing and freight.  For instance, through foreign exports in transportation, shipping and freight services, KGL has been able to offer customized services from small parcels to large sea freights.

Agility and Airfreight services

Continuation  Furthermore, the manner in which logistic companies in both the UK and Kuwait creates the basis for arguing that foreign involvements are intense in the two countries.  Most of the logistics companies in the two countries utilize both Equity and Non-equity based entry models. However, according to a research done by Agility in 2014, equity based entry methods are more predominant that than non-equity based modes due to the nature of international markets.

KGL AIR FREIGHT

Continuation  If Agility chooses to expand her operations in the UK and Kuwait, the company may use acquisitions in the UK and joint ventures in Kuwait.  Joint Ventures will work best in the UK because they facilitate entry into new markets and also bring together complimentary skills and assets that Agility cannot achieve alone (Abdulla, 2015).  Similarly, acquisitions work best for Kuwait because the broaden the company’s customer base.

Conclusion  In summary, entry modes into foreign partcipatiions can either be equity based or non-equity based modes  Equity based entry modes comprise of exports and contractual agreements such as licensing, franchises and other forms of contracts.  Non-equity based entry modes comprise of joint ventures and wholly owned subsidiaries. ‘  Each entry mode has its own strengths an d weaknesses

References Agility. (2015). Agility emerging markets logistic index. Retrieved from: Us/Documents/Agility%20Emerging%20Markets%20Logistics%20Index% pdf Abdulla, M. (2014). Modes of Entry. Retrieved from: Marketing teacher.com. (2009). Modes of entry into international market places. Retrieved from: KGL Logiostics. (2010). Supply chain management. Retrieved from: