The Direct Sales Approach The direct approach is the best-known method of entering a foreign market as it involves exporting and selling your products directly to foreign consumers. Licensing involves little expense and involvement.
The performance of one contract is not contingent on the other although the seller is in effect accepting products and services from the importing country in partial or total settlement for his exports. Countertrade can also be used to stimulate home industries or where raw materials are in short supply.
There are several possible entry modes, from direct selling to forming a joint venture with a local company.
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Normal ways of expanding the markets are by expansion of product line, geographical development or both. Figuring out what resources are available to you — you will need resources to enter the target market, especially if you adopt a "first to market" approach and attempt to crack markets that your competitors have not discovered yet. Also, these factors are important when considering a market entry strategy. On the institutional side positive schemes were put in place, including finance from the Development Bank and the cutting of red tape. Foreign and International Market Meaning Foreign markets are markets outside the home country of a business organization. Disadvantages: An obligation to share profits or pay intermediaries means a lower profit margin An investment of time and resources is required to maintain the relationship Risk of conflicting interests and misunderstanding Little incentive to learn the ropes yourself Business Acquisition Approach With a business acquisition approach, you enter a new market by acquiring all or part of a business that's already established in the target market, or by entering into a joint venture with such a company. Nali was able to grow into a successful commercial enterprise. Enforcement of contracts may be costly and weak legal integration between countries makes things difficult. Disadvantages include less market information flow, greater coordinating and control difficulties and motivational difficulties. There is a broad agreement that countertrade can take various forms of exchange like barter, counter purchase, switch trading and compensation buyback. This is true, say, in the export of cotton and other commodities. Every approach requires careful attention to marketing, risk, matters of control and management. These are ever growing in size. Other activities include country and market segment concentration - typical of Coca Cola or Gerber baby foods, and finally country and segment diversification. Where the seller has no need for the item bought he may sell the produce on, usually at a discounted price, to a third party.
No money is involved and risks related to product quality are significantly reduced. With this mode of entry, you are responsible for every single action related to the exporting of goods for sale overseas.
It can, also, give a basis for reciprocal trade.
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