University of Twente Student Theses


Expanding the heritage abroad: A foreign market entry screening tool

Rumnit, Lorenzo Steven (2010) Expanding the heritage abroad: A foreign market entry screening tool.

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Abstract:Bolletje is a Dutch industrial bakery with its headquarters in Almelo. It employs more than 500 people distributed over three bakeries: Almelo, Heerde and Amsterdam. Bolletje produces over 60 different products assorted over six different segments. They also operate as an individual A-brand for over fifty years. Bolletje relies heavily on its the home market the Netherlands, about 75 percent of the turnover is obtained here. The remaining 25 percent comes from export, which is done through three channels: business to business, international retailers and importers/ distributors. The focus of the export lies in Europe, but besides Europe Bolletje exports to homesick countries like: Australia, Canada, New-Zealand and the United States. Bolletje would like to be less dependent on the home market. This can be done by increasing the export, which is currently being done. Bolletje is interested in penetrating markets via joint venture/alliance. The purpose of this thesis is to assist Bolletje in making a quick and informed decision when faced with the opportunity to start a joint venture/alliance partnership. This has led to the following research question: What evaluation tool can be developed for Bolletje to assess the attractiveness of a potential partnership? To answer this research question, a foreign market screening tool has been developed during this research. The screening tool is a systematic and logical process that assesses the attractiveness of foreign venture. It focuses on two areas, the market screen and the partner screen. When searching the literature for market screening two models were found: the “checkpoint in the foreign investment entry decision process” from Root (1994) and “selection of foreign markets” from Ball et al. (2006). Both models deal with market screening in a step-by-step way, assessing the environmental factors influencing the entry to that market. The models were integrated, adapted/modified to suit the needs of Bolletje. If the steps are passed successfully it is advisable to continue the investigation otherwise it should be terminated immediately. Once a country passes the market screen the next step is to asses if there is a positive fit between the potential partner and Bolletje. A framework by Douma et al. (2000) was used; the framework structures and supports the complex and dynamic process of alliance building. The framework states having a good “fit” between partners could make the difference between success and failure. There are several aspects of fit to be addressed in a mutual relationship. For each aspect the expected degree of fit is analyzed. To assess the relative strength of each criterion in the market and partner screen, two multi criteria decision methods were used. A three point scale (low, medium and high) is used to determine the relative strength of the different criteria; next the Analytic Hierarchy Process (AHP) is used to determine the relative weights of evaluation criteria. The tool was tested using two test cases. The 1st starting a partnership with a German importer/distributor and the 2nd starting a partnership with a Swiss company similar to iii Bolletje. In both cases they scored well on the market and the partner screen, the German case scored a bit higher on the market screen showing that it is more attractive than the Swiss market. In the partner screen the difference was small, showing that partner wise they are about an equal fit. In both cases a positive advice was given to start a partnership. Recommendations are to: use the tool in the sequential orders it is given. The process is highly dynamic and time-related. Market conditions change, partner performance may fluctuate and competitive intensity will increase. Therefore the management of Bolletje should constantly evaluate the different steps and the decision that have been made during the process. The management must be open to making course changes as circumstances dictate. Make sure to have a capable manager in charge that is able to execute the screening tool, because focusing on export strategies will result in several additional tasks. These tasks have to be assigned to a manager who is capable and knowledgeable of international business. Critical steps to be taken once the decision to start a partnership is made are to start contract negotiations and have an exit strategy ready. An exit strategy is necessary because there is no guarantee for success.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
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