Do you intend to take your company into new markets abroad? Fantastic. What is your detailed business plan for doing so in terms of worldwide marketing? If you're still unclear, that's okay; we'll clarify some foreign market entry tactics for you to think about. Additionally, even if you think you know how to address the problem, it always helps to consider other solutions to be sure you're taking the best approach.
Let's begin by reviewing the definition of foreign market entry methods and some variables that could influence your choice of foreign markets to enter. After addressing them, we will explore nine tested methods for breaking into international markets.
Market Entry Strategy
What is a market entry strategy? The term market entry strategy describes a company's marketing plan of attack when entering a new market. This plan describes how the business will compete with other companies that are already in the new market, as well as the steps it will take to offer its goods and services. Researching the new market share, locating possible clients, and selecting the most effective means to contact them are all potential components of the plan.
Motives Behind Joining A New Market
A company may consider entering a new market for three significant reasons: diversifying risk, expanding its client base, and lacking room for expansion in its already-occupied industry.
We Are Expanding The Clientele
Businesses may see an increase in their potential customer base with a thorough and well-thought-out plan for the new market they wish to enter, particularly if the market has the ideal product-market fit. Their income may increase as a result of this.
There Are No Prospects For Growth In The Market They Are In
Businesses may eventually find it difficult to grow in the market they are now in; for this reason, it would be more advantageous to search for and enter a new market where they may find new chances that would enable them to flourish.
Spread Out Your Risk
Businesses run too great of a risk if they narrowly concentrate on one industry and don't diversify. Certain industries have times when they do better or worse than others. Isolating one industry to offer goods or services would result in concentrated risk.
Strategy For Entering International Markets
Strategies for breaking into foreign markets can be difficult and dangerous. In order to determine whether enough target customers would likely buy the goods or services, businesses must investigate the market circumstances in these new markets.
Additionally, businesses must be informed on labor laws, consumer trends, and local rules and regulations. A product or service's popularity in the US does not guarantee it will have the same appeal abroad.
Growing a business internationally can come with a lot of fees. Businesses looking to establish factories and retail locations in new nations need to commit substantial resources to make sure everything runs well. Hiring legal teams and ensuring that all local, regional, and federal rules pertaining to the new market are being followed will incur significant legal costs.
Businesses frequently use joint venture strategy and wholly-owned subsidiaries to enter foreign markets in order to assist mitigate some of this risk and give themselves enough time to adjust to the new market.
After that, the entering firm can alter the local firm whenever and to whatever degree it pleases. Some new businesses might not try to change the WOSes branding since they want to benefit from its profitability. Others might gradually alter the branding to gauge the response of regional customers.
Assume businesses wish to expand into a new market but cannot pay cash for local businesses. Then, if the business is a corporation, they are able to purchase the majority of the stock and take over as the parent company.
Read More: Mastering Market Trends 2024: Elevate Business By 250%
Different Strategies For Entering Foreign Markets
Let's now examine nine tried-and-true foreign market entry strategies. We'll also review their benefits and drawbacks, which you should consider when determining which strategy is best for your target audiences, available resources, and corporate strategic goals. Here we have outlined the important strategies for foreign markets:
Exporting Directly
Selling goods or services directly to clients in another nation, frequently via regional distributors or agents, is known as direct exporting.
For instance, the US unit of German multinational automaker BMW Group exported about 260,000 automobiles made in South Carolina. The foreign company sold these automobiles to over 120 nations, with China, Germany, South Korea, Canada, and the United Kingdom being its most significant export destinations.
Obtaining Licenses
If you choose the licensing option, you'll give a nearby company permission to sell or use your intellectual property in return for payments, also referred to as royalties. Your patents covering your exclusive inventions or your trademarked company emblem are examples of this type of intellectual property.
For example, the American coffee chain Starbucks and the Swiss multinational food and drink company Nestlé struck a license contractual agreement that granted Nestlé the eternal right to market Starbucks' products worldwide.
Collaborative Enterprises
A joint venture is an arrangement whereby two or more companies work together to accomplish a common business goal, such assisting one in breaking into a new market. The businesses will split the gains as well as the risks of the joint venture.
Travelers from China would be happy to learn that the Fliggy travel app offers special discounts at Marriott hotels across the globe. These benefits result from a partnership between American multinational hospitality giant Marriott International and Chinese multinational technology company Alibaba, which owns Fliggy and has assisted Marriott in breaking into the Chinese market.
Master Franchising
Using the franchising business services to reach international markets, you can ask companies in your target market "franchisees" to operate your business model under your brand name in exchange for a franchise fee. These costs might include a recurring percentage of the prospective franchisee's earnings and a franchise agreement fee for using your trademarks.
A prime illustration of franchising in action is provided by Subway. Due to the establishment of an international franchise business model in a variety of restaurant formats, including drive-thrus, inline outlets, and free-standing restaurants, the American sandwich chain has become a household name throughout the world.
Purchasing A Business
Purchasing an established company in the marketing strategy and rebranding it as your own might be better than trying to develop yourself from scratch. This is how buying a firm functions as an international market entry strategy. Such foreign direct investment (FDI) in the target business can be made in one of two ways. One method is a merger, in which two firms merge to form a new company. The other is an acquisition, in which you fully assume control of the other company.
An example of a business acquisition is the case study of the Dutch multinational food delivery company Eat Takeaway.com, which acquired American food ordering and delivery platform GrubHub. In an attempt to join the US online food delivery market, Eat Takeaway.com purchased all of GrubHub's shares.
Collaborating
In a partnership, you and a nearby company will establish a strategic alliance to further each other's objectives. For instance, while the local partner company works to do the same for your home market, you may use their reach and customer loyalty to develop your customer preferences inside the local market. Joint ventures and partnerships are different in that joint ventures often involve more limited, shorter-term engagements, while partnerships are typically more long-term.
Check out the strategic relationship that the international insurance services provider McLarens developed with the Egyptian loss-adjusting company Egypt Global Adjusters for an illustration of a partnership in work. As a result of the collaboration, Egypt Global Adjusters was designated as McLarens' exclusive affiliate in Egypt, assisting McLarens in offering insurance to customers nationwide.
Investments In Greenfields
Building operations in the target market from the ground up or, to put it another way is another market entry strategy, venturing into a new area of opportunity is the process of making a greenfield investment. These activities are frequently placed under a brand-new, wholly-owned subsidiary of the leading business.
German wafer producer Siltronic stated that it would be constructing a second 300 mm wafer fabrication plant at its Singapore site as part of a greenfield investment to accommodate the increasing demand for silicon wafers.
Complete Projects
A turnkey project is one in which you hire a nearby company to construct and furnish a facility on your behalf. The local company will deliver the facility to you when it's ready; all you need to do to get things going is put the key in the right keyhole and turn it.
Just consider how American-Irish oilfield services provider Weatherford International was hired by Saudi Aramco, the kingdom's petroleum giant, to provide drilling and intervention services. Weatherford would organize and manage all aspects of this turnkey project on Saudi Aramco's behalf, delivering to the latter 45 wells annually.
Taking Advantage Of Others
If you've ever piggybacked someone, you know that the process involves one person using the other's back to travel a distance more quickly. The idea is also applicable in the business sector when your company will enter the tax market by utilizing a nearby company's resources or current distribution channels, frequently through a joint venture or partnership agreement.
Which Foreign Market Entry Approach Is Best For You?
Choose the foreign market entry plan that best suits your company from the nine that are covered below, taking into account your unique goals, demands, and target market. You might even choose to choose a mix of tactics. Using multiple strategies to reach overseas markets, such as direct exporting through distributors, foreign direct investment, or other approaches, a study discovered that many enterprises surveyed did so.
Want More Information About Our Services? Talk to Our Consultants!
Conclusion
Although going global is not a simple task, the Indian strategy assessment services can be streamlined if your company adopts the appropriate foreign market entry plan. In your new areas, localizing your products might also help you attract more clients and increase revenue. In order to expedite the localization process and start your new international operations sooner, make the appropriate tool investments.
