• What are the main methods of entry?
• What are the decision criteria?  Definitions?
• What does the government require?  See Exporter’s Encyclopedia for requirements for foreign investment
• Identify whether the country has an official web site for the development of foreign trade
• Identify what the U.S. embassy recommends
• How can companies cooperate to facilitate market entry?
• Local Content Decisions as a key: tariffs, classification, reduction of vulnerability
• Advantages and disadvantages of each

Case Countries

1. Campbell Soup in Japan:

• Change in market entry strategy in order to learn about the market
• Gained local market knowledge
• Product adaptations through ongoing marketing research

• Entered with a product that was not modified
• Linked with numerous local companies
• Developed a multi-local strategy
• Gained distribution advantages

• Developed new innovative product with universal appeal
• Partnered with 3M corporation for access to multiple markets
• Note similar core competencies
• Used decision rules for selection of markets to pursue

Some Firms Have Critical Indicators

• McDonalds: prefers a market similar to Us in consumer lifestyles and needs
• Whirlpool: must consider the infrastructure for appliance use
• Assign values to each indicator.  Which is most important? Least? Consider Ziploc case
• Franklin Root - Logical Flow Model - a systematic assessment
• .Exporting information on The Tradeport Web site:  http://www.tradeport.org/
• Breaking into the Trade Game helps identify markets: http://www.tradeport.org/ts/trade_expert/infobase/breaking/ch02.html
• A Basic Guide to Exporting. This source provides you with information on sources for the country indicators, plus evaluations of opportunities and trends in selected markets. It also provides an in-depth consideration of the types of market entry
• http://www.tradeport.org/ts/trade_expert/infobase/basic/index.html

 

Production at Home or Overseas:

• Decision Criteria
• Take a checklist approach:  costs and benefits for each market and for each region
• Multiple market entry methods are common depending on needs, regulations
• Rate the countries in terms of all indicators, or weight your most important indicators
• Attempt to build models which are correlated with success in other similar markets
• “Breaking into the Trade Game” provides a detailed overview and case examples
• http://www.tradeport.org/ts/trade_expert/infobase/basic/index.html

Opportunity Matrix

• Consider the relationship between market opportunities, and business/political risk
• Consult PRS to determine risk scores
• Look at EE to determine needs
• Bosnia is a market which needs food and medicine
• Bosnia is a market with substantial political risk
• According to EE, foreign control is defined as more than 10 percent of the capital or the voting rights held directly by foreign investors.  Foreign investors must register with the Ministry of Foreign Trade
• Look at the EE to determine what business forms will ensure your successful entry while minimizing your risk.

Size of Company
Capital available
Skills to build what new market needs
Capital to build what new market needs
Is your firm a serious entrant to the market?
Will your firm work with the government for mutual benefit?

Product lines
Special needs for production in new market?  Are there certain raw materials?  Natural resources, like water?
Raw materials? local skills?
Adaptations? How dramatic are the changes?  New packages? New design?
Shipping and transportation realities
Tariff and non-tariff costs:
Cif and price escalation
Classification
Pricing (EE handout)

Corporate culture and personnel
Experience in global markets
Match of corporate cultures?
Personnel strengths and skills
Commitment from Home Office
Adaptability of business to new market- e.g. longer planning horizons

Competitive Environment
Competition
Cooperative Opportunities:
Similar companies
Venture partners
Are there Cross-border strategic alliances?

Plus???
What forms of business are required by law?
Investment Requirements? by gov.? by multinational group?
Documentation (workshop)
What forms of business lessen our vulnerability? What might a gov’t want to accomplish?
increase employment, sell local materials
Political risk:  level of takeovers of businesses
EE tells us:  The Saudi govt is required by law to give preference in awarding contracts to Saudi companies or joint ventures with more than 50 percent Saudi participation.
 

Indirect Exporting

• Trading companies: sell similar goods, even those of competitors, vs. local knowledge and wide coverage, local reputation, less risk vs. less control
• EMCs:  like your own marketing dept overseas, your reputation:  your letterhead and name, establishes an identity, may face barriers if unknown, local knowledge, more control
• Cooperative methods
• Webb-Pomerenes:  economies of scale, commodities, lower costs, research
• ETCs:  export arm of several manufacturers
• Piggyback:  combine your products with those of other co.’s to complete your line

Direct  Exporting

• Choice of export markets:
• Usually planned, controlled growth
• Often by region or country grouping
• Documentation (Export Documentation Handbook - terminology)
• Foreign Distributors
• Local knowledge and relationships
• Check out reputation! Reliability!
• Agents
• Overseas Marketing Subsidiaries

Foreign Production

• Reasons:  requirement, lower costs, lower vulnerability, local adaptation, costs too much to transport, breakable if transport, dangerous to transport
• Contract Mfr.: find a plant to produce for you
• Licensing:  buy rights to your product, name, production method, adv., etc.
• Control of quality?
• Create a competitor?
• Assembly: parts are shipped, “CKD”, mixing
• Joint Venture: shared equity
• Strategic Alliances

Drivers Behind Successful International Joint Ventures
Pick the Right Partner
Establish Clear Objectives from the Beginning
Bridge Cultural gaps
Top Managerial Commitment and Respect
Incremental Approach Works Best
 
 
 

 

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