What are the Various Ways to Enter a Foreign Market?
What are the various ways to enter a foreign market? Selecting the mode of entry into a particular export market is one of the crucial decisions to make. The entry method has significant implications for a wide range of international marketing concerns. When choosing an entry method, the exporter should consider the similarity of the foreign market to the home market, level of service required, tariffs and shipping, lead time requirements, brand awareness, and competitive advantage. There are two main options for market entry: direct exporting and indirect exporting. Direct exporting
With direct exporting, the manufacturer exporter undertakes the entire export process and does not use any intermediaries. By becoming a direct exporter, the firm takes responsibility for the entire range of export activities, starting with identifying the customer through to collecting payment. In order to export directly, the firm may have to establish an export department independent of the domestic sales division which could be funded on the basis of its requirements. Direct exporting has several advantages such as; 1) the firm has complete control over the exporting process; 2) the firm increases its profit margin by saving on payments to an intermediary; and 3) the firm develops a closer relationship with the overseas buyer. On the other hand, direct exporting may also imply; 1) the possibility that the time and resources needed to create a successful overseas market would outweigh the benefits the exporter could gain from exporting directly; and 2) the exporter would be exposed to more direct risk. One form of direct exporting is for SMEs to join together to form Export Consortiums. Governments often allocate special benefits to small exporters who form a cooperation with other SMEs. This type of arrangement can be especially advantageous in the initial years for a first-time exporters. Indirect Exporting
A firm wishing to export but not having the required personnel or
With direct exporting, the manufacturer exporter undertakes the entire export process and does not use any intermediaries. By becoming a direct exporter, the firm takes responsibility for the entire range of export activities, starting with identifying the customer through to collecting payment. In order to export directly, the firm may have to establish an export department independent of the domestic sales division which could be funded on the basis of its requirements. Direct exporting has several advantages such as; 1) the firm has complete control over the exporting process; 2) the firm increases its profit margin by saving on payments to an intermediary; and 3) the firm develops a closer relationship with the overseas buyer. On the other hand, direct exporting may also imply; 1) the possibility that the time and resources needed to create a successful overseas market would outweigh the benefits the exporter could gain from exporting directly; and 2) the exporter would be exposed to more direct risk. One form of direct exporting is for SMEs to join together to form Export Consortiums. Governments often allocate special benefits to small exporters who form a cooperation with other SMEs. This type of arrangement can be especially advantageous in the initial years for a first-time exporters. Indirect Exporting
A firm wishing to export but not having the required personnel or