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20.12.2022 17:01
Wave market entry strategy Antworten

The Wave Market Entry strategy is a simultaneous expansion of business into a number of foreign markets, but unlike the Sprinkler strategy, it limits the number of eligible markets by dividing them into groups. It does this by analyzing the culture and business environment of the available markets and grouping them according to how similar they are to the home market. For example, Latvia, Lithuania and possibly Estonia would be grouped together based on similarities in culture, business environment and economic relationships between the countries (although Estonia may not be included due to some parameters, it all depends on the analysis performed by the company itself).

Similar to the waterfall strategy, the wave-like business expansion can be divided into stages. The first stage includes markets that are similar to domestic ones and are also typically closer geographically. Each successive level includes another group of markets that resemble the domestic market less and less. This is reminiscent of circles of waves that emanate from a single center and first have to traverse the immediate vicinity in order to reach more distant areas.

Implementation
The Wave market entry strategy is usually initiated with a thorough analysis and grouping of the available markets. Then, for the initial expansion, a group most similar to the domestic market is selected. Due to the similarities, the business model from the home market can be transferred to these markets. With the initial expansion secured, the company can move into the next group of foreign markets, which now resemble less the domestic markets. Thus, the gains and experiences from each previous group offset the potential risks of each subsequent market as they become less and less known.

When grouping the available markets, it is important not just to choose one or more parameters, but to integrate them into a system. It would be a good idea to develop a rating table where each country gets its own score based on all the criteria and parameters. This is crucial as a foreign market can be culturally similar to the domestic one but radically different in terms of business environment or political stability. A company that fails to take this into account risks grouping economies that are intrinsically different in their own right, thereby diminishing the benefits of the wave market entry strategy.

Advantages
The main benefit of the wave market entry strategy is that it combines the breadth of the sprinkler strategy and the security of the waterfall strategy.

First, when entering multiple markets at the same time, a company gains multiple sources of profit and experience in internationalizing companies. While not as extensive as the sprinkler strategy, it also gives the company an advantage over the competition. This is particularly effective against domestic competitors who may be interested in the same first wave/group markets as they are the easiest to enter. Such an early and simultaneous expansion into all well-known foreign markets gives the competition no opportunity to gain a technological advantage, unless your business withdraws.

On the other hand, the Wave strategy also offers a certain level of stability and security in the event of failure to enter another group of markets. If the entry of the first wave fails, the company can withdraw to its domestic positions. If one of the following waves fails, the company can use resources from previous waves to recoup the losses and continue its international expansion. This minimizes the risks of each individual case, making the wave strategy quite cost-effective.

Disadvantages
While the wave strategy combines the advantages of the waterfall and sprinkler strategies, it is also a middle ground between the two and does not take full advantage of their advantages. It does not allow to enter all available markets at the same time, and the competitive advantage there can be lost. This is particularly noticeable when a competitor succeeds in entering more distant markets, and once there, the company in question will lag behind in introducing it to the local market.

While this is not always a disadvantage, the Wave strategy is sometimes criticized for taking extra time to analyze many markets in order to group them. Although market analysis is required in any strategy, the wave method needs to analyze more markets than the waterfall strategies

https://www.baltic-legal.com/market-entr...gy-wave-eng.htm

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