Factors companies must consider before attempting to enter foreign markets
The company should have clear competitive advantages in terms of market knowledge, technology, portfolio of products, reliable partners and other relevant parameters.
Do not underestimate the effects of cultural differences. Factor Establish a direct or indirect method of export.
Economic factors affecting international marketing
Transaction costs also are a critical factor in building up a market entry strategy and can become a high barrier to international trade. According to Collett4 exporting requires a partnership between exporter, importer, government and transport. The three main ways are by direct or indirect export or production in a foreign country see figure 7. Some marketers initially sell their products to markets that are culturally similar, while some may look for similarities among consumers across various countries where they operate. It can be used to circumvent import quotas. They then result in giving reduced production incentives and cease to be demand or market orientated, which is detrimental to producers. Exporting can be defined as the marketing of goods produced in one country into another. An example of this is Indonesia, which only allows 60, tons of red onions to be imported into the country every 6 months. Usually contracts for no more than one year are concluded, however, if for longer life spans, provisions are included to handle exchange ratio fluctuations when world prices change. These forms of participation: exporting, licensing, joint ventures or ownership, are on a continuum rather than discrete and can take many formats. There is no business overseas for you unless you can locate customers first. The key is to learn how to minimise risks associated with the initial stages of market entry and commitment - this process of incremental involvement is called "creeping commitment" see figure 7. This is certainly an ambitious move if this is your first venture into a totally foreign market.
These are important indicators of the level of risk associated with the country which is being viewed as a prospective market. Because, in most agricultural commodities, production and marketing are interlinked, the infrastructure, information and other resources required for building market entry can be enormous.
Transaction costs also are a critical factor in building up a market entry strategy and can become a high barrier to international trade.
Factors influencing international market selection
Find good legal counsel in your country as well as your targeted international markets to help you with these formalities to provide your business with a smooth road to success. With all these factors taken into account, does this still leave room for competitive pricing and a decent profit margin? Trading specialists have also initiated the practice of buying clearing dollars at a discount for the purpose of using them to purchase saleable products. Normal ways of expanding the markets are by expansion of product line, geographical development or both. Studying the balance of payments situation, GDP, trade patterns and currency stability will give an idea about the economic prosperity and well being of the country. When pondering if international expansion is right for you, consider these four factors: 1. Just don't. Despite these problems countertrade is likely "to grow as a major indirect entry method, especially in developing countries. Transaction costs also are a critical factor in building up a market entry strategy and can become a high barrier to international trade. You should expect to adapt your product to some degree for sale outside your domestic markets before you make your first sale. Changes in government policies could spell difficulties for the profitability potential of the firm. Most western multinational corporations will realize that the huge markets of the developing countries are not for the products that they are selling at home, but for a far less sophisticated version at far less a price. This is certainly an ambitious move if this is your first venture into a totally foreign market. Huge investments may have to be undertaken, with the investor paying a high risk price, long before the full utilisation of the investment comes. Laws There are laws in some countries that will greatly affect your ability to do business in them or prohibit it altogether.
Other activities include country and market segment concentration - typical of Coca Cola or Gerber baby foods, and finally country and segment diversification. John Manzella advises business going overseas to do their homework diligently.
As such, producers are better supplying to local food processors. You may feel you can't afford these professional services, but you really can't afford to do without them.
Factors affecting international marketing pdf
You must also be aware of places that are regularly affected by such natural disasters as typhoons and earthquakes. Which market entry strategy should you choose? In the latter the attempt is made to "globalise" the offering and the organisation to match it. Decide on the best business model Is it totally necessary to establish and register a new local company, complete with a local office and local staff members? The results will be an intuitive mindset and behavior that will show the foreign marketplace that you know how to acclimate yourself and your company to their culture. But it would not be viable to market to such small country markets. It is interesting to note that Korey warns that direct modes of market entry may be less and less available in the future. Factor Prepare pricing and determine your landed costs. In direct exporting the major problem is that of market information. Buyers in the interested foreign country are usually very careful as they perceive transport, currency, quality and quantity problems. As you have seen from this article, in order to market your product or service internationally, there are many factors that your business and marketing team must consider before deciding which country or region you want to sell your goods or services to. The other aspect of culture shift is in the way business is conducted locally. Your friends in direct exporting are your agents and distributors. Moreover, entry strategies are often marked by "lumpy investments". But one thing gets tricky: what factors to consider or develop before going global.
Business case It is essential that the business case responds to the challenges, adversity and rewards of expanding overseas. Exporting can be very lucrative, especially 'if it is of high value added produce.
International expansion is the only way business can tide over saturated local markets.
based on 56 review