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Different International Market Entry Strategies (Partnering (Advantages…
Different International Market Entry Strategies
Partnering
Advantages
Might be a neccessity in some areas
Provides resources that you might not have
Local Knowledge
Local Contacts
Disadvantages
If you choose poorly
Could be a forced arrangement
Direct Exporting
Advantages
Control
Initial presence is YOU
Pick your own representation
Disadvantages
Growth can be tricky to scale up
Might make a mistake in your choice of representative
Lose control as you grow
Buying a Company
Advantages
Established customer base
local knowledge present in the firm
Established local presence immediately
local government considers you also as a local
Disadvantages
Often a costly option
Difficult to get good valuation of company
Franchising
Advantages
Well established and understood model
Needs to be a scale-able, repeatable business
Needs to have well established branding
Disadvantages
Can suffer from lack of brand loyalty
You are potentially creating and training your next competitor
Licensing
Advantages
Quick transaction that can get large market entry
Can cover both products and ideas/concepts
Disadvantages
You have little control over how the product is then sold/marketed
Joint Ventures - similar to Partnerships
Advantages
Same as Partnering positives
May be greater than the sum of the parts - 1+1=3
Risks are shared
Disadvantages
Same as Partnering issues
Profits are shared
Piggybacking
Advantages
Less risky - using the established firm to create entry
less costly - looks more like a domestic sale to your systems
Disadvantages
Your product might suffer from lack of focus by the partnering firm
Turnkey Projects
Advantages
Works well for Service type firms IE: Consulting, Engineering
Often working with governments, so defaults on payment are less likely
Disadvantages
Government regulations and Red Tape issues
Greenfield Investments
Advantages
Not sure there is one, often due to no other choice
Disadvantages
Often costly due to need to buy land, build, etc
Highest risk because of the extensive cost investment