The relationship between foreign market expansion strategies and foreign market entry strategies for SMEs

The increased developments of technology and falling barriers of trade have been encouraging companies all over the world to internationalize. Not only multinational companies but also small and medium-sized enterprises succeed in conducting business on foreign markets. When deciding to internationalize, small and medium-sized enterprises face the need to develop a foreign market expansion strategy as well as a foreign market entry strategy. Market expansion strategies treat of the amount of markets to enter and the temporal approach chosen. The main strategies are country diversification and country concentration. A market entry strategy contains the level of commitment of resources planned for each market. Typical entry modes are export and foreign direct investment. This research explains the interrelations within and between market expansion strategies and market entry strategies. Our aim was to gain deeper understanding about the possibilities for small and medium-sized enterprises to combine market expansion with market entry strategies. For that we conducted a case study of a Swedish firm that is active on international markets. As a result we found out that the combination of market expansion and market entry strategies can diverge from theory. An important factor affecting a firms choice of strategies is the financial background.Validerat; 20101217 (root