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Why new market entry consulting

As growth opportunities decrease in domestic markets, awareness is shifting to new and emerging economies. These are the markets of tomorrow. According to UN estimates, emerging economies correspond to a joint market of around 2.7 milliards people (40 percent of the world's population) with a growing middle class. Within this are several hundred million people with incomes comparable to those in the developed world.

Companies should pay careful consideration to how they invest in these markets, how they make acquisitions and how they use entry strategies such as joint ventures and strategic alliances. Each country presents its own challenges.

New local markets

As certain markets reach saturation points, companies are gradually looking to expand into new industry sectors or product niches to protect their profitability. If a company sees core products become commoditized or margins squeezed too firmly, it may want to think about how its core skills can be used in a different sector.

Common problems may arise since companies have to live with the consequences of their decisions for a long time.

Problems can occur from a lack of market understanding and insufficient forward planning.

Decisions made in the early stages - about corporate structure, market entry strategy or market specific risks - may likely influence the success of the venture.

Emerging markets - many of the issues are well known: taxation, intellectual property, employee compensation, but a different regulatory framework means you may need to alter your existing working methods.

New industry markets - whether a new industry or a new product area, you need to consider innovation, pricing, supply chain, logistics and long-term strategy.

Indigo Consulting can prepare your company to this new entry. Planning and preparation are essential.

• IC put in the groundwork ahead of any move into a new market. We are aware of the specific risks and challenge each country or industry sector can present.

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• We choose on the best entry strategy. Joint ventures or strategic alliances with an existing competitor may be the best way forward and can mitigate some of the country or market specific risks.

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• If an acquisition is the way forward, the post-merger integration issues are addressed. The negative effect of learning these unchecked can eliminate as much as 50 percent of the perceived value off the deal.

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In summary

Establishing operations in a new market is not clear-cut. A company that has gaps in its comprehension and which fails to predict and prepare for the risks linked with entry into a new market will probably quickly find itself with an operation that adds nothing to the bottom line.

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By providing advice on:

  • Investing in emerging markets
  • Use of joint ventures and strategic alliances for market entry
  • Making successful acquisitions in new markets and potentially minimizing the post-acquisition integration issues
  • Locating and establishing new company operations