1 Chapter 2 Instructor Shan A. Garib, Winter 2013

2 Overview:  When a company tries to entry market find it challenging, more expensive, impossible  This chapter to discuss main market barriers and strategies used to overcome them

3 Types of Entry Barriers  Two schools of thought: A) B)  Don’t forget!! Sometimes,  In other cases they are

4 Types of Entry Barriers  Source of Entry Barriers (Michael Porter) ◦ EOS: ◦ Product Differentiation: ◦ Capital Requirements: ◦ Switching Costs:

5 Types of Entry Barriers  Source of Entry Barriers (Michael Porter) ◦ Access to Distribution Channels: ◦ Government Policy:

6 Types of Entry Barriers  Examples of Common international market entry barriers ◦ Political and Legal – ◦ Customer – ◦ Environmental – ◦ Economic – ◦ Business Infrastructure Barriers

7 Types of Entry Barriers  Examples of Common international market entry barriers ◦ Political and Legal – Eg. Higher tariffs (taxes or duties) imported from the country in question Eg. A set quota limiting the amount of goods from the importing country Eg. The need for a license before importing or exporting goods 

8 Types of Entry Barriers  Examples of Common international market entry barriers ◦ Political and Legal –

9 Types of Entry Barriers  Examples of Common international market entry barriers ◦ Political and Legal – eg. FDI policies, Political Instability  Strategies to Consider

10 Types of Entry Barriers  Examples of Common international market entry barriers ◦ Export and Import Controls – Purpose:  Strategies to Consider

11 Types of Entry Barriers  Examples of Common international market entry barriers ◦ Customs tariffs and additional taxes –  Strategies to Consider

12 Types of Entry Barriers  Examples of Common international market entry barriers ◦ Import and Tariff Quotas –  When a product imported is restricted it cannot gain a large market share eg guns  Two Types import quotas:  Strategies to Consider

13 Types of Entry Barriers  Examples of Common international market entry barriers ◦ Import and Tariff Quotas –  Strategies to Consider

14 Types of Entry Barriers  Examples of Common international market entry barriers ◦ Government Subsidies –  Strategies to Consider

15 Types of Entry Barriers  Examples of Common international market entry barriers ◦ Trade Blocs – Various levels of trade reciprocation: Preferential Free Common Economic  Strategies to Consider