Small-sized manufacturer’s market entry mode to the German market

Companies expanding overseas need to make vital decisions when developing their international marketing strategy. Selection of market entry mode is one of the keys and far-reaching decisions the company needs to make to enter the market successfully. The objective of this thesis was to find out what would be the most suitable market entry mode for a Finnish small-sized manufacturer to the German market. As the case company is rather small and has limited resources, the intention was to discover a time- and cost-effective alternative. The purpose was to collect information on entry modes available in the market and determine which entry mode would be the most beneficial for the case company. Additionally, general practicalities and pitfalls related to market entry to Germany were aimed to be found out. The theoretical section explored internationalization theories, different entry modes and Germany as a market area. The empirical part covered data collection through qualitative research with eight semi-structured interviews. The interviewees were chosen as a selective sampling: three interviewees were the stakeholders of the case company and five external interviewees with experience from the German market or German background. The data was analyzed using grounded theory with the help of coding. The result of the study was that direct exporting would be the most suitable market entry mode for the case company and employing a local German salesperson could make the entry more effective. The findings of the research indicated that close vicinity to the customers is critical, and a sales representative having readily established contact networks, with proficiency in German, and being familiar with the German culture are important factors to enable successful market entry. Furthermore, the result of the study clearly showed that a company acquisition could be a fast and feasible way of entry if the case company could consider a larger investment to the German market. This approach is supported by the big market potential in Germany, and the case company’s experience in company acquisitions in its domestic market. Hence, the development proposal of this thesis is a company acquisition arrangement in Germany