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A company should enter fewer countries when:  ■ Market entry and market control costs are high.

 ■ Product and communication adaptation costs are high.  ■ Population and income size and growth are high in the initial countries chosen.  ■ Dominant foreign firms can establish high barriers to entry

A company’s entry strategy typically follows one of two possible approaches:

A waterfall approach, in which countries are gradually entered sequentially; or A sprinkler approach, in which many countries are entered simultaneously within a limited period of time. Increasingly, especially with technology-intensive firms, they are born global and market to the entire world right from the outset.

and local competition can be surprisingly stiff. These marketers are able to capitalize on the potential of developing markets by changing their conventional marketing practices to sell their products and services more effectively Economic and cultural differences abound. a marketing infrastructure may barely exist.  .

 The challenge is to think creatively about how marketing can fulfill the dreams of most of the world’s population for a better standard of living. .

 Many companies prefer to sell to neighboring countries because they understand these countries better and can control their costs more effectively .

and direct investment. Its broad choices are indirect exporting. . it has to determine the best mode of entry. direct exporting. joint ventures. Once a company decides to target a particular country. licensing.

  . Active exporting takes place when the company makes a commitment to expand into a particular market. Occasional exporting is a passive level of involvement in which the company exports from time to time. The normal way to get involved in an international market is through exporting. either on its own initiative or in response to unsolicited orders from abroad.

  . Companies typically start with indirect exporting— that is. they work through independent intermediaries. Domestic-based export agents seek and negotiate foreign purchases and are paid a commission. Included in this group are trading companies. Domestic-based export merchants buy the manufacturer’s products and then sell them abroad.

 Cooperative organizations carry on exporting activities on behalf of several producers and are partly under their administrative control.  Export-management companies agree to manage a company’s export activities for a fee. .

The investment and risk are somewhat greater. . Companies eventually may decide to handle their own exports. but so is the potential return.

   . Traveling export sales representatives. Overseas sales branch or subsidiary. or only limited rights. The sales branch handles sales and distribution and might handle warehousing and promotion as well. Foreign-based distributors or agents. Domestic-based export department or division. These distributors and agents might be given exclusive rights to represent the company in that country. Home-based sales representatives are sent abroad to find business. Might evolve into a self-contained export department operating as a profit center. It often serves as a display and customer service center.

and to build global brand awareness. to support existing customers who live abroad. . Electronic communication via the Internet is extending the reach of companies large and small to worldwide markets.  Marketers are using the Web to reach new customers outside their home countries. to source from international suppliers.

gov Bureau of Industry and Security.gov U.doc.bxa. a branch of the Commerce Department     .gov Export-Import Bank of the United States www. Department of Commerce’s International Trade Administration www.S. Finding free information about trade and exporting has never been easier: www.ita.doc.S.exim.gov U.sba. Small Business Administration www.

trade secret. Licensing is a simple way to become involved in international marketing. or other item of value for a fee or royalty. patent. The licensor issues a license to a foreign company to use a manufacturing process. trademark. The licensor gains entry at little risk.   . the licensee gains production expertise or a well-known product or brand name.

 Licensing has potential disadvantages. The licensor has less control over the licensee than it does over its own production and sales facilities.  . If the licensee is very successful. and if and when the contract ends. the company might find that it has created a competitor. the firm has given up profits.

 But the best strategy is for the licensor to lead in innovation so that the licensee will continue to depend on the licensor. To avoid this. . the licensor usually supplies some proprietary ingredients or components needed in the product (as Coca-Cola does).

 . the firm hires local manufacturers to produce the product. Contract manufacturing gives the company less control over the manufacturing process and the loss of potential profits on manufacturing. with less risk and with the opportunity to form a partnership or buy out the local manufacturer later. In contract manufacturing. However. it offers a chance to start faster.

the franchisee invests in and pays certain fees to the franchiser. which is a more complete form of licensing. In return. a company can enter a foreign market through franchising. . Finally.  The franchiser offers a complete brand concept and operating system.

. or the foreign government might require joint ownership as a condition for entry. physical. Foreign investors may join with local investors to create a joint venture company in which they share ownership and control.  A joint venture may be necessary or desirable for economic or political reasons. The foreign firm might lack the financial. or managerial resources to undertake the venture alone.

and the other partner might want to declare more dividends. The partners might disagree over investment. . One partner might want to reinvest earnings for growth. Joint ownership has certain drawbacks.   Joint ownership can also prevent a multinational company from carrying out specific manufacturing and marketing policies on a worldwide basis. or other policies. marketing.

The foreign company can buy part or full interest in a local company or build its own facilities. The ultimate form of foreign involvement is direct ownership of foreign-based assembly or manufacturing facilities.  .

and freight savings. the firm secures cost economies in the form of cheaper labor or raw materials. foreign production facilities offer distinct advantages. First. If the market appears large enough. foreign government investment incentives.  .

local suppliers. customers. Third.  . the firm develops a deeper relationship with government. the firm strengthens its image in the host country because it creates jobs. Second. enabling it to adapt its products better to the local environment. and distributors.

Fifth. Fourth.  . the firm assures itself access to the market in case the host country starts insisting that locally purchased goods have domestic content. the firm retains full control over its investment and therefore can develop manufacturing and marketing policies that serve its long-term international objectives.

worsening markets. because the host country might require substantial severance pay to the employees. The firm will find it expensive to reduce or close down its operations. . or expropriation. The main disadvantage of direct investment is that the firm exposes a large investment to risks such as blocked or devalued currencies.

Standardization of the product. International companies must decide how much to adapt their marketing strategy to local conditions. and distribution channels promises the lowest costs . communication.  At one extreme are companies that use a globally standardized marketing mix worldwide.

.  Between the two extremes. competitive forces. brand development. many possibilities exist. At the other extreme is an adapted marketing mix. where the producer adjusts the marketing program to each target market. Most brands are adapted to some extent to reflect significant differences in consumer behavior. and the legal or political environment.

Cultural differences can often be pronounced across countries . Satisfying different consumer needs and wants can require different marketing programs.

 Kotler. and Keller. . K. (2006) Marketing Management. Inc. Pearson Education. Twelfth Edition. P. Prentice-Hall.