Timing strategy (cross-border)

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A transnational timing strategy is the term used in international management to describe strategies that relate to the timing of companies entering international markets. A distinction must be made between the waterfall strategy and the sprinkler strategy. The former is also known as the concentration strategy and the latter as the diversification strategy .

Waterfall strategy

With the waterfall strategy (also known as the concentration strategy), a company initially concentrates all its efforts on entering a specific international country market. A gradual market entry is thus pursued, with the aim of avoiding a “cross-border flop”, since products are only offered to potential buyers in other markets after they have been successfully launched in one country. The basic requirement for the waterfall strategy is the preparation of information regarding the markets and countries in question. The introduction of a product into other foreign markets will only take place if the relevant targets have been met in the countries already developed and experience can be gained. Only then will efforts be concentrated on the next country market. Furthermore, two further strategic subdivisions can be implemented when using the waterfall strategy. They describe the planning of the strategy, which selects a new country successively and thus expansion round for expansion round or is based on long-term planning in which the individual stages of expansion are clearly specified from the start.

Dysfunctional aspects of the waterfall strategy include:

  • New markets are developed more slowly and only after an extensive search for information with differentiated market development.
  • The danger of this strategy lies primarily in the neglect of individual markets, to which it may be difficult to gain access at a later point in time - as a result of the competition's interim market development activities.
  • There is also the risk of a gray market developing

Sprinkler strategy

With the sprinkler strategy (also called diversification strategy ), a company distributes its resources between simultaneous efforts to enter several attractive international country markets at the same time. The use of resources is thus diversified. The sprinkler strategy, like the waterfall strategy, is preceded by a collection of information. The selected countries are thus served at the same time with the product (s), which leads to a parallel product life cycle across countries and shortens this, viewed internationally. The aim of simultaneous entry into foreign markets is to distribute the market entry risks (risk diversification) across a large number of country markets in order to avoid high dependency on one or a few foreign markets.

Dysfunctional aspects of sprinkler strategy include:

  • The prerequisite for largely standardized market development, which can lead to the peculiarities of individual markets being ignored.
  • The dispersion of corporate resources can mean that in certain more competitive markets, not enough resources can be allocated to withstand the competition.
  • As part of the pricing policy , a higher price must be estimated due to the shorter product life cycle .

literature

  • M. Kutschker, S. Schmid: International Management. 6th edition. Oldenbourg, Munich 2008, ISBN 978-3-486-58660-2 , p. 984 ff.
  • H. Meffert: Marketing. 9th edition. Gabler, Wiesbaden 2000, ISBN 3-409-69017-4 .
  • A. Sänn: Expansion strategies in international marketing. GRIN Verlag, Munich 2009, ISBN 978-3-640-60690-0 .