Why foreign markets pose a different set of challenges for smaller firms?

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Why foreign markets pose a different set of challenges for smaller firms?

With the western world going into recession, markets have shifted to greener pastures in Africa and Latin America. Countries like Angola, Nigeria, Ghana & Peru have become attractive to all and sundry. While MNC’s like Nestle, Nokia, P&G, Unilevers, to name a few had already established presence in some pockets, new firms are making an attempt to also make their presence felt. The question is while smaller firms can make their presence felt in larger markets by identifying specific segments which could be niche, adopting a similar strategy in a much smaller market which is of the size of a state in India, becomes all the more difficult.

Therefore questions that arise are –

  • Smaller firms can never do business in untapped lesser known foreign markets in Sub Saharan Africa and Latin America?
  • Can niche markets be identified and targeted in small virgin markets like Lesotho, Botswana?
  • Are they attractive enough?
  • What shall be the mode of entry – alliance/ acquisition/ greenfield?

 

 

1 Comment

  1. Prof. Ashutosh Kar says:

    I think the extrinsic challenges a small firm faces in a foreign land aren’t very different from a large firm. A small or a large firm, either, would have challenges pertaining to understanding of the local market, language and culture issues, supply chain, sourcing, partners, laws of the land / compliance etc. etc. However, what makes a big difference is the “access to resources”- it could be human resources or monetary resources or something else – which more often than not, a small firm has less of.

    Therefore, for small niche players, it might make more sense to try and exploit the existing market until it’s saturated, rather than go and expand in an unknown place. For large players who already have saturated markets, looking for new markets makes more sense.

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