Currently, the environment in which companies operate points towards a path with growth barriers due to high competitiveness and market demand, which has forced them to intensify the search for new alternatives that allow them to grow and consolidate. For companies that decide to grow through the incursion into new foreign markets, globalization becomes a means that provides them with knowledge of new spaces, tools, and commits them to transcend in a landscape of transformation. In this way, they integrate new strategies that allow them to develop new adaptation capabilities, advance in learning processes, and a global vision that leads them to obtain greater resources with the aim of achieving competitiveness levels, minimizing risks, and obtaining positive growth figures.
Likewise, the following research is carried out, which aims to outline the non-traditional entry modes that are taking advantage of new ways of doing business in global industries, considering a wider range of activities available to companies, as well as adopting new theoretical perspectives to understand the phenomena of internationalization.
In particular, emphasis is placed on four categories of non-traditional entry modes, according to The Journal of International Business Studies:
Innovation Outposts
Innovation outposts refer to teams focused on knowledge inflows and outflows that drive innovation within the company. Those who adopt this strategy have the ability to explore new technological ideas, business models, and management knowledge that they do not have available internally or are not exposed to in commercial networks.
To do this, the company must establish some of its operations in the foreign country, although these operations do not require direct foreign investments, establishment of subsidiaries or sales offices in the foreign market, or even formal contractual arrangements. In addition, this mode does not seek to create financial resources but is based on obtaining knowledge about new technologies, product and process innovation.
These entry strategies are particularly critical in a digital age where unprecedented connectivity is enhancing the company’s ability to create partner networks or networking without traditional entry.
Virtual Presence
This entry mode highlights how companies can leverage existing advantages in potential markets while maintaining little to no physical presence in the country. This method is possible thanks to technological evolution in recent years, as it allows companies to enter foreign countries by directly acquiring customers or users and delivering products (3D printing) or services (downloads) while avoiding the need to establish formal international relationships in addition to investment for physical points of sale.
While companies especially belonging to digital service industries have a greater advantage to access in this way, as they can exploit their digital technologies in any foreign territory by acquiring customers or users through digital channels. However, product-based companies can make use of these technologies without physical presence, as they can establish platforms that allow them to create a direct channel with the consumer and thus distribute or deliver merchandise anywhere it is located.
Managed Ecosystems
Managed ecosystem entry modes deal with foreign entries of multi-channel platforms, where companies leverage their specific digital infrastructure while simultaneously conducting localized operations.
These types of virtual presence entry, although both provide a vehicle for the company to leverage the company’s specific advantages in a foreign market. However, these require the company to establish a presence in the foreign country to comply with local legislation, gain legitimacy, connect with local networks, and create value for customers/users.
Access to Capital
This method refers to foreign market entries to seek and obtain access to new financial resources while performing few or no other activities in the target market. While this entry strategy, unlike the traditional form, seeks to receive foreign investments instead of investing in them, as is done in the traditional form.
There are multiple means to venture through this method, such as initial public offerings (IPOs), seasoned equity offerings (SEOs), cross-listings on foreign stock exchanges, bank loans, foreign bond issues, engagement with private equity firms, international investment syndicates, foreign venture capital (VC), sovereign wealth funds (SWFs), as well as various informal social capital channels (Filatotchev, Bell, & Rasheed, 2016).
Companies like Alibaba and Aramco sought IPOs in the U.S. without operating or having physical assets in the “host” country. Similarly, many startups and other young companies receive funding from foreign venture capitalists while remaining in their home countries, and these companies are more likely to subsequently list on foreign exchanges. Likewise, a recent increase in research interest in such entries is currently observed with the aim of internationalizing companies with positive outlooks.
Conclusion
In this context, it can be concluded that the opening of borders and the growth-oriented aspirations of companies are articulated in the adoption of entry strategies where new possibilities for participation and options for the development of new markets emerge. These respond to market conditions, as through them it is possible to position brands, reduce costs throughout the value chain, consolidate markets, create synergy between strategic allies, foster commercial cooperation, and be sustainable over time.
The choice of entry forms is based on the company’s needs and market behavior, as there isn’t one that stands out as the best option. Ultimately, it is not possible to determine which strategy is the most convenient since each case has a particular management and the results are subject to numerous variables of an economic, social, cultural, political, legal, demographic nature, even to the type of response from the host country, the nature and size of the company, the type of product or service offered, the market to which the product or service is directed, and the scope of advertising, among others. The company has innumerable strategic options that must be adjusted and adapted to each situation, in order to guarantee success in the pursuit of the company’s growth abroad.