Foreign Market Entry Strategies Essay

When an organization has do a decision to enter an afield market, there are a contour of options open to it. These options vary with speak to, risk and the grade of control which stack be exercised all over them. The simplest salmagundi of entry strategy is export using either a intention up or in claim method much(prenominal) as an agent, in the case of the former, or countertrade, in the case of the latter. More multiform forms embroil abroad instantly investments which whitethorn remove joint ventures, or export processing zones. Having decided on the form of export strategy, decisions have to be do on the specific channels.Many plain products of a raw or good nature use agents, distributors or involve Government, whereas processed materials, whilst not excluding these, rely more(prenominal) heavily on more innovative forms of access. These are discussed in this paper. The three important ways are by target or indirect export or production in a foreign s phere. Exporting Exporting is the most handed-down and well established form of operational in foreign markets. Exporting can be defined as the trade of goods produced in one country into another.Whilst no direct manuf operateuring is required in an abroad country, significant investments in marketing are required. The tendency may be not to obtain as much precise marketing information as compared to manufacturing in marketing country however, this does not vary the need for a detailed marketing strategy. Here the manufacturing is home based thus, it is less(prenominal) risky than overseas based. anyway bounteous an opportunity to learn overseas markets onward investing in bricks and mortar, it also reduces the strength risks of operating overseas.Exporting methods include direct or indirect export. In direct exporting the organization may use an agent, distributor, or overseas subsidiary, or act via a Government agency. The disadvantage is in the main that one can be at the mercy of overseas agents and so the need of control has to be weighed against the advantages. For example, in the exporting of African horticultural products, the agents and Dutch bloom auctions are in a office to dictate to producers.According to Collett3 (1991) exporting requires a partnership betwixt exporter, importer, government and transport. Without these 4 coordinating activities the risk of failure is increased. Contracts between buyer and seller are a must. Forwarders and agents can play a life-sustaining role in the logistics procedures such as booking air space and put documentation. Foreign direct investment Besides exporting, other market entry strategies include licensing, joint ventures, contract manufacture, ownership and troth in export processing zones or free trade zones.Licensing Licensing is defined as the method of foreign operation whereby a firm in one country agrees to permit a company in another country to use the manufacturing, processing, tr ademark, know-how or some other skill provided by the licensor. It is quite similar to the franchise operation. coca Cola is an excellent example of licensing. In Zimbabwe, United Bottlers have the licence to begin Coke. Licensing involves little expense and involvement. The only cost is signing the agreement and policing its implementation.