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CONCEPTUAL MODEL OF ENTRY MODE: T HE CASE OF BANKING INDUSTRY IN SOUTH AND EAST EUROPEAN MARKETS

CONCEPTUAL MODEL OF ENTRY MODE: T HE CASE OF BANKING INDUSTRY IN SOUTH AND EAST EUROPEAN MARKETS. Authors: Maja Makovec Brenčič, Tomaž Čater, Andreja Lavrenčič, Luka Peršič. I nternationalization of services is increasing, especially internationalization of banking/finance services.

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CONCEPTUAL MODEL OF ENTRY MODE: T HE CASE OF BANKING INDUSTRY IN SOUTH AND EAST EUROPEAN MARKETS

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  1. CONCEPTUAL MODEL OF ENTRY MODE: THE CASE OF BANKING INDUSTRY IN SOUTH AND EAST EUROPEAN MARKETS Authors: Maja Makovec Brenčič, Tomaž Čater, Andreja Lavrenčič, Luka Peršič

  2. Internationalization of services is increasing, especially internationalization of banking/finance services • Proposed model provides complete framework for entry decision of banks entering developing markets • Characteristics of the model: • Major strength lies in its analytical and explanatory power which derives from reliable secondary literature, previously tested models and expert opinion. • Includes relevant internal factors of the company and external factors of both home and host country/market and variables which operationalize the factors. • Includes weights to measure the importance of variables. • Can be adapted if needed. 8th Portorož Business Conference

  3. + - - + + Economic activities between countries + Sociocultural distance between countries - Greenfield investment + Acquisition + + + + Joint Venture Strategic alliance Export External factors: host country/market Banking industry development Market potential Market size Host country stability Host country development Competition intensity Legal barriers External factors: home vs. host country/market Proposed entry mode Level of control and involvement Internal factors Availability of tangible resources Availability of intangible resources Degree of control Risk propensity Degree of involvement Model of entry mode selection Source: Hollensen, 2001; Own adaptation, 2006 8th Portorož Business Conference

  4. STRATEGIES OF A SMALL SPECIALIZED BANK ENTERING UKRAINIAN MARKET Authors: Tomaž Čater, Primož Ocvirk, Gregor Pfajfar, Mare Vahen, Staša Žunič

  5. Analysis of general and narrow invironment in Ukraine • Analysis of general environment • PEST analysis • Analysis of banking industry environment • Analysis of market size • Analysis of competition • Analysis of financial products and services • Location assessment • Evaluation of possible distribution channels • Case study analysis of TBIH Group and Erste Bank • Developments of economical, socio-cultural in legal-political environment in Ukraine present opportunities for a small specialized banklooking for niche markets there. • A small specialized bank can expect a growing demand for the proposed products and services in Ukraine. The market size harbors much opportunity for differentiation and profitable niche operations. 8th Portorož Business Conference

  6. Model for determining the mode of entry into Ukraine STRATEGIC PARTNERSHIP WITH LESS THEN 10 % SHARE 8th Portorož Business Conference

  7. Niche characteristics identification • Two main sections: • corporate banking(FTES , deposits and loans from legal entities, accounts, etc.) and • financial markets (investment and treasury banking). • Segmentation: • Principle customers (home-country companies): • direct contacts by bank representatives and by direct mail • making the most out of existing clients is essential for long-term profitability • Non-principle customers (Ukrainian SMEs): • below-the-line promotions (seminars, counseling) the possibility of cross-selling other bank’s products and services 8th Portorož Business Conference

  8. Strategy development (relationship marketing approach) STRATEGY • CORPORATE • BUSINESS RELATIONSHIP MARKETING • FUNCTIONAL “Try to please everyone and you will please no one”. (Beare, 2003) 8th Portorož Business Conference

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