Market Entry Strategy
Introduction
Anna’s Car is one of the top automakers in the United States that is currently planning on selling its new revolutionized Smart Cars to two foreign countries, Japan and Germany. The company believes that the increasing trend of going green and concerns about the environment in Japan and Germany will merge significant profits shortly after entering those two markets. Anna’s Car has evaluated various market entry strategy alternatives and is now hesitating between direct exporting or foreign direct investment for Germany and franchising or joint venture for Japan.
Direct Export The main advantage of direct exporting for Anna’s Car is going to be fact that the company will be able to produce Smart Cars in the United States and then sell them to customers in Germany. Anna’s Car would have a great control over the entire export transactions and would gain the freedom as far as deciding which target buyers to approach or who to use to distribute the cars in Germany. There is also potential for higher profits and a better chance to build a closer relationship with the German marketplace and its buyers. However, Anna’s Car will have to devote more time, personnel, and company’s resources to ensure a smooth and successful endeavor. Many internal organizational changes will be necessary in order to support more complex functions. The important step will be to choose the best channels of distribution and make business connections in order to sell Smart Cars. However, before exporting cars into Germany, Anna’s Car will need to go through custom procedures which involves filling out customer declarations. Furthermore, the company will need to ensure it carries a CE (“Communaute Europeenne” which stands for European Community) marking that “indicates that the respective party has successfully assessed the goods for compliance with European safety standards which has to be accompanied by a signed Declaration of Conformity (DoC)” (German Business Portal, 2010).
Anna’s Car is one of the top automakers in the United States that is currently planning on selling its new revolutionized Smart Cars to two foreign countries, Japan and Germany. The company believes that the increasing trend of going green and concerns about the environment in Japan and Germany will merge significant profits shortly after entering those two markets. Anna’s Car has evaluated various market entry strategy alternatives and is now hesitating between direct exporting or foreign direct investment for Germany and franchising or joint venture for Japan.
Direct Export The main advantage of direct exporting for Anna’s Car is going to be fact that the company will be able to produce Smart Cars in the United States and then sell them to customers in Germany. Anna’s Car would have a great control over the entire export transactions and would gain the freedom as far as deciding which target buyers to approach or who to use to distribute the cars in Germany. There is also potential for higher profits and a better chance to build a closer relationship with the German marketplace and its buyers. However, Anna’s Car will have to devote more time, personnel, and company’s resources to ensure a smooth and successful endeavor. Many internal organizational changes will be necessary in order to support more complex functions. The important step will be to choose the best channels of distribution and make business connections in order to sell Smart Cars. However, before exporting cars into Germany, Anna’s Car will need to go through custom procedures which involves filling out customer declarations. Furthermore, the company will need to ensure it carries a CE (“Communaute Europeenne” which stands for European Community) marking that “indicates that the respective party has successfully assessed the goods for compliance with European safety standards which has to be accompanied by a signed Declaration of Conformity (DoC)” (German Business Portal, 2010).
References: Coltman, M. (2009). Franchising: Pros and Cons. Self-Counsel Press. Retrieved July 29, 2010. German Business Portal. (2010). Federal Ministry of Economics and Technology. Retrieved July 29, 2010, from http://www.german-business-portal.info/GBP/Navigation/en/market-entry.html Germany Trade & Invest. (2010). FDI Reputation. Retrieved July 29, 2010, from http://www.gtai.com/homepage/german-business-location/foreign-direct-investment/fdi- reputation/?backlink=0 U.S. Chamber of Commerce. (2010). Retrieved July 29, 2010 from http://www.uschamber.com/default