The Wave Strategy as a market entry strategy to reduce corporate internationalisation failures

The Wave Strategy developed by management consultant Christoph Lymbersky of the Management Laboratory was developed in order to minimize market entry failures. End Quote

(1888PressRelease) April 10, 2011 - The Wave Strategy was first described by Christoph Lymbersky in the book "Market Entry Strategies". This strategy can be employed by a company that wants to expand its business to other countries.

"The wave strategy focuses on cultural differences and clasifies countries/markets in market groups (e.g. A, B and C) that show similar characteristics to the home market of a company."

The Wave Strategy is a mix of the Sprinkler strategy where all suitable markets get entered at the same time and the Waterfall Strategy where one market gets entered at a time and several in a row. These strategies are however very theoretical. In the real world, we often find a mixed timing to enter a foreign market. Markets that get grouped into the first wave are markets that are similar to the home market with little variations. Based on the thoughs of *Geert Hofstede and Eduard T. Hall countries that show similar cultural characteristics such as Germany, Austria and Switzerland would be grouped in one group.

The process

In this first wave (group) the successful concept of the home market can be replicated more easily and differences can be explored. The experience out of these market entries should influence the strategic planning process of the second wave.
Once a secure stream of cash-flow can be generated from the first wave, the second wave can be launched.

The second wave consists of a group of markets that are different from the home market. If one or more market entry of this second wave fail, the cash-flows from the home country and first wave should be able to make up for the loss.

A third wave can be launched once the secure cash-flows from the second wave can be expected. The third wave then consists of countries that are very different from the home country or that are difficult to enter because of high competition or government restrictions.

Furthermore, the economies of scale can be explored one by one and the following entries can be refinanced from the previous generated cash flows. This strategy allows high learning and experience effects and these should be documented for further market entries. The only disadvantage is that the company has to pay for all arising costs for the launch of the product in the country group A.

References:
Christoph Lymbersky: (2008) "Market Entry Strategies"; Management Laboratory Press
www.management-laboratory.com

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