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Introduction
In the context of rapid digital transformation and globalization of the world economy, American IT companies are becoming an important driver of innovation, developing and implementing technologies that change the market structure, the economy and everyday life. However, despite their leadership at the global level, entering European markets is associated with a number of unique challenges and requires careful development of strategies.
For all the talk about European decline, data shows U.S. software companies don’t have a future without the old continent . The European market is the second most important for most global companies after the USA . According to Cognitive Market Research, with a market value of USD 681241.2 million in 2024, it is projected to expand at a compound annual growth rate (CAGR) of 3.8% from 2024 to 2031 . Europe accounted for a share of over 30% of the global market size of USD 204372.36 million.
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Chapter 1. Theoretical Framework of Market Entry Strategies of American IT Companies in European Markets
1.1. Classification of Market Entry Strategies
In the era of globalization, companies strive not only to ensure their competitiveness in the domestic market, but also to develop foreign markets for products and technical services. However, despite the desire of many countries to be more open and reduce barriers for foreign companies when entering the market, many companies experience significant difficulties in organizing foreign economic activity and do not achieve the desired results in this area. Therefore, the issues of justification and rational choice of a company"s strategy for entering foreign markets, taking into account the organizational and economic characteristics of its activities, and the features of the products being created, are becoming especially relevant .
A foreign market entry strategy is a comprehensive action plan that defines how a company will expand its operations beyond its domestic market to successfully enter new foreign territories. A foreign market entry strategy covers key aspects such as selecting target markets, determining optimal entry methods, assessing risks, adapting products and services, and developing marketing and operational approaches to ensure competitive advantages in a new market .
All companies that have successfully mastered their domestic market are looking for opportunities to expand their market share. Most focus on international activities, namely, organizing events to enter foreign markets. Foreign economic activity of enterprises is considered as an activity that is closely related to foreign trade, including import and export of goods and services, foreign investment and credit activities, as well as joint activities with companies from other countries. As a result of successful foreign economic activity, companies expect to gain access to foreign markets, which entails an increase in production and sales volumes, increased competitiveness, the use and adaptation of foreign technologies, as well as strengthening the company"s brand and ensuring the loyalty of consumers of its products .
The results of the analysis of modern scientific publications show that effective foreign economic activity is the most important tool for the development of national innovation systems and the formation of state innovation strategies, the intensification of the international transfer of industrial technologies and the improvement of the efficiency of R&D in the creation of innovative products, the use of the results of intellectual activity to improve the efficiency of management of innovative enterprises .
We would like to emphasize that the process of entering foreign markets is a rather long and complex process, which is not within the power of every enterprise. Therefore, often, foreign economic activity is started by already established companies that already have a large network in the domestic market . In the international arena, the supply volumes are much higher, as are the levels of other barriers, in addition, each country has its own specifics, its own needs and its own requirements for the product, therefore it is very important not only to meet the requirements of international standards, but also the local standards of a particular country, and, moreover, to have advantages in comparison with local manufacturers.
One of the main goals of entering foreign markets is to increase sales volumes and, as a result, profit growth. Saturation of the domestic market may limit opportunities for further business development, while international markets provide access to a wider audience of consumers. Export operations, the creation of foreign branches or strategic alliances allow companies to diversify sources of income and increase economic sustainability .
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References
1. The European Expansion Report. How US Software Companies Win (and Lose) In Europe 2023. Frontline// https://frontline.vc/wp-content/uploads/2023/06/The-European-Expansion-Report-2023.pdf
2. Johanson, J. Wiedersheim-Paul, F. (1975). "The Internationalization of the Firm: Four Swedish Cases". Journal of Management Studies. 12 (3): 305–323. //https://onlinelibrary.wiley.com/doi/10.1111/j.1467-6486.1975.tb00514.x
3. Dunning, John (1979). "Toward an Eclectic Theory of International Production: Some Empirical Tests". Journal of International Business Studies. 11 (1): 9–31// https://www.jstor.org/stable/154142
4. Rothaermel, F. T., Kotha, S., & Steensma, H. K. (2006). "International Market Entry by U.S. Internet Firms: An Empirical Analysis of Country Risk, Cultural Distance, and Market Size." Journal of Management, 32(1), 56-82.// https://www.scheller.gatech.edu/directory/research/strategy-innovation/rothaermel/pdf/06jom.pdf
5. Stiegert, K. W., Ardalan, A. A., & Marsh, T. L. (2006). "Foreign-Market Entry Strategies in the European Union." Agribusiness, 22(1), 45-56// https://www.researchgate.net/publication/23944123_Foreign-Market_Entry_Strategies_in_the_European_Union
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