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market Entry Strategy
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| Words: 1509 | Submitted: 10-Dec-2012
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Descriptionmy essay is about foreign market entry strategies.
Choosing the correct market entry strategy is critical to your long-term success. Most small companies use the direct exporting strategy by engaging an agent or distributor but there are a number of options for you to examine and these are discussed below in order of least costly and least control to most expensive and most control.
There are seven distinct market entry strategies for you to consider. The most appropriate one is determined by market potential, your degree of international expertise and experience and the resources that you can commit to entering your chosen international market. The strategy that you choose is also determined to a certain extent by the country you have chosen to enter as discussed in the section on market research.
Direct exporting is that the market entry strategy chosen by most small companies. The reason for this is quite straightforward. Direct exporting is the most basic entry into international markets. Direct exporting involves the use of agents or distributors. It is important to understand the difference between an agent and a distributor. An agent works on your behalf to sell your product into the country market you have chosen, for a commission. A distributor buys your product and then resells it in the market at a mark-up. In other words an agent is your salesperson and a distributor is your customer. When deciding on either an agent or a distributor it is important to remember that your final price in the market will be higher than if you just sold it directly in the market. Another drawback to direct exporting is that, because the firm makes few if any marketing investments in the new country, market share may be below potential.
Licensing, as a market entry strategy, is best used by those companies that have a component of intellectual property in their product although it can be used by any type of company depending on what they are wanting to license. You can license technology, a manufacturing process or the rights to market your product. While licensing can be complicated and intricate and as such it is important to have legal assistance in developing a licensing agreement, there are three distinct components of all licensing agreements. The first is that the agreement must be for a certain period of time that is negotiated by the licensor and the licensee. The more technologically advanced your product is and the degree of intellectual property buried in your product the shorter the time period of the license as advances in technology have changed the curve of the product life cycle. The second component of any licensing agreement revolves around the price of the agreement. The price is composed of two factors; the ...
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