Group selling activities can also help individual manufacturers in their export operations. Countertrade By far the largest indirect method of exporting is countertrade.
There is a broad agreement that countertrade can take various forms of exchange like barter, counter purchase, switch trading and compensation buyback. Under licensing, a company assigns the right to a patent which protects a product, technology or process or a trademark which protects a product name to another company for a fee or royalty.
It is certainly the most costly and holds the highest risk but some markets may require you to undertake the cost and risk due to government regulations, transportation costs, and the ability to access technology or skilled labour.
Asset requirements, costs and sales have to be evaluated over the planning horizon of the proposed venture, typically three to five years for an average company.
The disadvantage is mainly that one can be at the "mercy" of overseas agents and so the lack of control has to be weighed against the advantages. No money is involved and risks related to product quality are significantly reduced. To summarise, selection of market entry mode is of strategic importance and therefore it is vital to make an informed assessment before embarking upon any international business dealings.
Growing trading blocs like the EU or EFTA means that the establishing of subsidiaries may be one of the only means forward in future. For example, if volumes are expected to be low initially, then setting up your own manufacturing facility would not be appropriate.
The first is that your business model should either be very unique or have strong brand recognition that can be utilized internationally and secondly you may be creating your future competition in your franchisee.
In the latter the attempt is made to "globalise" the offering and the organisation to match it. In that sense, alliances may very well be just an intermediate stage until a new company can be formed or until the dominant partner assumes control.
It differs from licensing principally in the depth and scope of quality controls placed on all phases of the franchisees operation. In the past a number of tractors have been brought into Zimbabwe from East European countries by switch deals.
If the partners carefully map out in advance what they expect to achieve and how, then many problems can be overcome. Furthermore, many international firms grant licenses for patents and trademarks to foreign operations, even when they are fully owned.
Also, high transportation costs and tariffs may make imported goods uncompetitive. Trading specialists have also initiated the practice of buying clearing dollars at a discount for the purpose of using them to purchase saleable products.
Contact ISS to find out if Franchising or Licensing are the right market entry methods for your business. Basically two separate contracts are involved, one for the delivery of and payment for the goods supplied and the other for the purchase of and payment for the goods imported.
Countertrade is the modem form of barter, except contracts are not legal and it is not covered by GATT. With licenses usually limited to a specific time period, a company has to guard against the situation in which the licensee will use the same technology independently after the license has expired and therefore turn into a competitor.
Global Market Exit Strategies Circumstances may make companies want to leave a country or market.
Experience suggests that alliances with two equal partners are more difficult to manage than those with a dominant partner. Furthermore, a thorough sensitivity analysis must be incorporated.
In job employment the results have been startling, as at78, were employed in the EPZ. As a defensive move, foreign companies begin assembly operations to protect their markets. Without these four coordinating activities the risk of failure is increased.
Generally no middlemen are involved. Ensuring a uniform quality requires additional resources from the licenser that may reduce the profitability of the licensing activity.
The duration of these transactions is commonly one year, although occasionally they may extend over a longer time period. Strategic Alliances A more recent phenomenon is the development of a range of strategic alliances. The financial data can be adjusted to reflect each new set of circumstances.
In marketing products from less developed countries to developed countries point iii poses major problems. Despite the potential for problems, joint ventures are common because they offer important advantages to the foreign firm.
One of the biggest is language. In particular, it is important to recognize that the needs and aspirations of partners may change over the life of an alliance and do so in divergent ways. Franchising Franchising is a special form of licensing in which the franchiser makes a total marketing program available including the brand name, logo, products and method of operation.
Sales, costs and assets levels have to be estimated before. Since local production represents a greater commitment to a market than other entry strategies, it deserves considerable attention before a final decision is made.
In effect, the Grain Marketing Board in Zimbabwe, being commercialised but still having Government control, is a Government agency.
Also, the exporting company may establish its own sales subsidiary as an alternative to independent intermediaries.What is the end goal?
Once these questions are answered, research is needed to create a comprehensive market entry strategy.
Market selection: First and foremost. Global Company Profile, Euromonitor International For a successful market entry strategy, there is a whole range of questions to be answered around the product, the marketing. Holland & Barrett is launching a beauty website and a TV campaign talking up its beauty range as it looks to promote healthy beauty and the idea that people can both look and feel good.
Holland & Barrett looks to become go-to retailer for natural beauty. “There is an opportunity in the market to do something around feeling good and. Holland & Barrett: a healthy approach to retailing. Like many retailers, Holland & Barrett previously operated a binary promotional strategy whereby it would run consecutive four-week promotions on certain products, but as the company has expanded the frequency and complexity of these campaigns has increased.
Start studying Chapter 9: Global Market Entry Strategies. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Whilst selling health foods to a nation of health-conscious consumers sounds like a recipe for retail success, Holland & Barrett’s entry into the Chinese market looks destined to fail.
Weaning Chinese consumers off traditional Chinese medicine is already a challenge in itself and one that requires. “The mode of entry is a fundamental decision a firm makes when it enters a new market because the choice of entry automatically constrains the firm’s marketing and production strategy.
The mode of entry also affects how a firm faces the challenges of entering a new country and deploying new skills to market its product successfully.”.Download