When a company decides to enter a foreign market, adaptation and standardization are the primary entry strategies. Notably, the options vary significantly on such aspects as cost and risks. According to Samiee and Chirapanda, businesses are confronted with the need to choose between offering standard products and services or modifying various aspects of their commodities to suit the target market.
Notably, adaptation allows an organization to individualize its offerings to resonate with the local market since products that have registered success in one market may not succeed in another. In this regard, brand, product, price, and technology are the means through which Kaizer Consulting’s client will incorporate risk into its market entry strategy under the adaptation approach.
Under the product adaptation strategy, the company modifies various aspects of its products and services to reflect the practices, needs, tastes, and customs of the local people. Notably, the option has multiple risks, including facing stiff competition from the already existing firms and possible consumer rejection of the new commodities and services. Similarly, price adaptation entails setting the price of the products and services depending on the market instead of imposing a company-wide rate.
However, there are various associated risks with this approach, including the potential for loss-making and possible levying of charges above the competitors. For instance, the prices for labor, materials, and tax policies are different across the two markets. This implies that there are some specific market elements that may lead to an increase in the operating costs in Mexico.
Further, the company can modify or adjust the brand name according to the languages and norms in the new region. This brand adaptation is helpful, especially when the company investing in cross-border is not well-known or does not resonate with the target market. Under this foreign market entry strategy, the company retains such distinct features as the brand logo and packaging to ensure it remains identifiable by the existing customers while drawing new ones.
This ensures that the brand does not alienate loyal clients as it tries to gain a broader market. This also applies to technological adaptation, where an organization is required to choose between utilizing the already existing technical infrastructure or developing a new one for the foreign market. Where a business opts to change the technology, it faces the risk of high financial expenditure and adversely affecting the brand, especially where such changes are disruptive.