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Entering new markets abroad (Threats (Cultural differences (religion or…
Entering new markets abroad
Threats
Cultural differences
religion or culture may mean that some products won't sell in another market.
Exchange rate changes
not stable
Lack of knowledge
the business might not be aware of competitors or the habits of consumers in these market
Import restrictions
tarrifs or quotas may be higher
Increased risk of non-payment
method s are different
Increased transport costs
the cost of getting product abroad to market will increase
Opportunities
there is wider choice of location to produce products -> encourage business as well as produce, business have more info about the market and be better placed to sell
trade barriers have been lowered in many parts of the world -> easy to enter these new market
home market might be saturated -> give the chance for higher sales
markets in other countries might have much greater growth potential than existing market
Methods to overcome
Licensing
Advantages: Don't need to be physically transported. Saves time and transport costs and get round trade restriction
Disadvantages: inexperienced licencee could damage brand reputation. Licensee has access to information--> could become a competitor
International franchising
Advantages: Local knowledge is used to choose the best place to sale
Disadvantages: Quality problems or bad services offer could lead to bad brand reputation. Training and support will be needed from the franchisor
Joint ventures:
Advantages: To gain important local knowledge. risks entering the market is reduced. Shared between the partner business
Disadvantages: Management conflict between the 2 businesses. Profit shared
Localising existing brands
Advantages: A common brand image. adapted the local tastes, therefor increase sales.
Disadvantages: May be less successful than a new product made to meet local cultures. expensive to change packaging, promotion, and so on for each market the product is sold in
example of successful international business
Apple
Samsung
Google
2 examples of failed international business
Taco bell
One buy