Entering New Businesses: Selecting Strategies for Success

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Entering New Businesses Selecting Strategies for
Success
BUAD 661, Fall 2004 Peggy M Beranek, PhD
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New Product Market Entries
When a firm enters a new-product market two
questions must be answered 1) which products
markets should be entered, and 2) what strategy
should be used to enter the new market.
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New Product Market Entries
There are many entry strategies that a firm can
utilize with differing levels of commitment and
involvement, and differing levels of benefits and
costs. This chapter presents a rough analysis
matrix for answering these questions.
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Familiarity and Newness of the Market
A business may address new markets, new products
or both. Both these dimensions can be analyzed in
terms of the firms familiarity and newness of
the market and/or product.
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Familiarity and Newness of the Market

• Familiarity the degree to which the form
  understands the new product/service or the
  characteristics of the new market being served
• Newness represents a new market or a new type
  of product
• Base the firms current products/service and/or
  markets

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The Familiarity Matrix
New Unfamiliar New Familiar Base
Base New New Familiar
Unfamiliar
Generally represents diversification
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New Business Development (Entry) Mechanisms

• Internal Developments
• Acquisitions
• Licensing
• Internal Ventures
• Joint Ventures or Alliances
• Venture Capital and Nurturing
• Educational Acquisitions

Traditional approaches to new business development
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Corporate Involvement Required
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Optimal Entry Strategies
We have looked at nine common entry strategies
for new business development. We now wish to
compare these with the familiarity matrix to
determine if there is an optimal strategy which
fits the familiarity level of the new business
development.
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