Please have a read through the case study provided below and answer the question with suitable references.
Deciding to enter a Common/Single Market, such as the European market, can be much more complex than entering one market/country, i.e. entering an area with many different/internal cultural differences, strict regulations, different national economies, etc. Moreover, the entry strategy into the EU market will differ from one organisation to another, based, for instance, on its size (SME/LSE). Different models help us describe and analyse the factors that impact on entry modes and market selection, such as Kochs (2001) MEMS Model and Perks (2009) 6 Influential Factors.
A study from Eurodev explores the different entry modes for US-based SMEs planning to enter the European Single Market. Based on Reelankavil and Rajs classification of entry modes, the authors argue that a traditional export entry mode would be the easiest way to go for SMEs whereas a more risky strategy would be the wholly owned subsidiary. However, a traditional export entry mode would also mean little control over operations and an inability to achieve/benefit from the full potential of local markets (i.e. compared to a wholly owned subsidiary).
As for the specific case of US-based SMEs looking to enter the EU market, the least capital-intensive strategies appear to be the most preferred/used by SMEs (i.e. low cost options). Moreover, the high uncertainty SMEs have to face during their expansion into the EU market pushes them to focus on informal planning processes – compared to LSEs – as this has been described by Prater and Ghosh (2005). As for the operational challenges they face in the EU market, environmental regulations, inventory/logistics management and getting reliable financial data appear to be among their top concerns.
On the other hand, Large and Medium-scale Enterprises tend to have more financial/investment capital that allows them, for instance, to use a joint venture and/or buyouts. How can LSEs plan their entry into the EU Single Market?