Wave strategy
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[edit] Theory
The Wave Strategy[1] 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 that show similar characteristics to the home market of a company."[2]
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[3] such as Germany, Austria and Switzerland would be grouped in one group.[4]
[edit] 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.
After a successful entry of all desired markets, exact documentation of all problems should be produced in order to avoid pitfalls and to transfer the experience gained to future management generations.
[edit] Example
An Example of the Wave Strategy would be if a German company enters the Austrian and Swiss market first, since they are culturally similar to the German market. However this depends highly on the product.
[edit] References:
[1] Christoph Lymbersky: (2008) "Market Entry Strategies"; Management Laboratory Press
[2] Geert Hofsteede: (2001) "Culture's Consequences"; Sage Publishing
[3],[4] Edward T. Hall, Mildred Reed Hall: (1990) "Understanding Cultural Differences
