Discussion: Entry Strategies in Global Business

Market entry strategy is a projected allocation and transmission strategy for merchandise or services to another objective market, such as a foreign country. For a market entry strategy to succeed in global business, a thorough analysis of the international market should be conducted to figure out which entry strategy is the most appropriate. I chose foreign acquisitions as my entry strategy. A foreign acquisition is whereby an international organization buys most or the entirety of a local organization’s shares and assets to have absolute control over the local firm.

I will focus on the foreign acquisition of Reynolds American Inc. (RAI) by British American Tobacco (BAT). In 2017, BAT, which previously owned more than 40% of Reynolds, agreed to purchase the remaining shares for $49.4 billion to have full control over the firm (Sandle, 2017). BAT was aiming at growing its market into the US. In this manner, it ended up being a smart move for them to purchase an organization that existed as opposed to coming into the US and start a new organization, which would take a while before having a substantial market share..

The following entry strategies were applied for a successive takeover. First, BAT did not change the name of Reynolds, as it was essential to retain the market share previously owned by Reynolds in the US. A change in title could have led to a substantial loss in customers. Secondly, BAT heavily advertised the new change in management through both print and mainstream media. This was an entry strategy as people needed to know there was new management. Lastly, BAT had to sell their products cheaper to attract new customers and keep the previous ones.

References

Sandle, P. (2017, January 16). BAT agrees to buy Reynolds for $49 billion. Retrieved from Reuters: https://www.reuters.com/article/us-reynolds-amricn-m-a-brit-am-tobacco-idUSKBN1510LW