Question

Describe techniques companies may use to enter or grow markets in other countries. As a group, evaluate the benefits and pitfalls of several of these tactics.

Answer 1

If you have used the opportunity in the market, it is natural to think about new opportunities. However, adapting to a new culture, a new regulatory environment and new competition can make it difficult to enter a foreign market. There are many ways to enter a foreign market, and it is easier than the other.

The five main ways to access foreign markets are joint ventures, license agreements, direct exports, online sales and foreign real estate purchases.

1. Joint Venture:-

One of the most popular merge methods is to set up a joint venture where two companies gather resources to sell a product or service. Business partnerships provide foreign companies with experienced foreign market partners, but managing such partnerships can be difficult and requires profit sharing.

2. License Agreement

As an access license, the company enters into a contract with a foreign company called an "authorized" company, and the foreign company legally produces and sells its products. Manufacturing and licensed companies can enter the market at a quick and low price but have little control over overseas marketing and product sales.

3. Online sales

Many companies are trying to reach foreign markets indirectly, targeting foreign consumers on the Internet. When the business enters into an online contract with local business, it receives the customer request directly.

4. Purchasing foreign assets

Instead of starting a new business in a foreign market, many companies will simply buy or invest in a foreign company.

Advantages

1. Selling online is low cost in this method. The downside is that it is more effective than building a real presence in a foreign market.

2. The advantage of this opinion is that the company prohibits the cost of establishing a business in a new country.

3. Working with local companies is a way for local companies to better understand the local culture, markets and business practices than outside companies. Members are especially valuable if you have a famous and trusted brand in the country or have a relationship with a customer.

Pitfalls

1. The cost of transportation to and from the exporting country is very high and can negatively affect the environment.

2. Meanwhile, the disadvantage of the association is that there is no direct control and the partner's goal is different from the company's goal.

3. The target country has strong rules and business contracts, licenses, franchises or partnerships that can be an ordinary approach and no more risky or expensive than other options.