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Entering new market abroad (Threats (Lack of knowledge (The business may…
Entering new market abroad
Methods to overcome
Joint ventures: Allow businesses to gain important local knowledge about cultures and customs
Limitations: manage conflict between two businesses and profits need to be shared
Licensing: gives permission for another company in the new market to produce the branded or patented products under license save time and transport costs
Limitations: Quality problems and license need to access information
International franchising: foreign franchises are used to operate a business's franchise abroad
Limitations: Quality problems or poor service, training and support will need to be provided by franchiser
Localizing existing brands: increasing sales make common brand image that adapted to local tastes and culture
Limitations: less successful and expensive to change packaging, promotion,....
Opportunities
Have much greater growth potential than existing markets
Home markets might be saturated and new market give chance for higher sales
wider choice of location to produce products and encourages business to sell as well as produce
Trade barriers have been lowered in many parts of world, easier and profitable to enter markets
Threats
Lack of knowledge
The business may not aware of competitor or how most of consumer like on the market
Cultural diffences
some products won't sell in another market in some religion or culture
Exchange rate changes
if the exchange rate is not very stable then exchange rate changes can mean the products can become too expensive to sell in the new market. (exchange rate is the price of one currency in terms of another currency)
Import restrictions
if there are tariffs or quotas on imported products then the prices of these products may be higher than domestically produced goods
Increased transport costs
longer to transport the product will increase the price that cost to transport
increased risk of non-payment
method of payment may difference in new market and it may be more difficult to be certain that payment for imported goods will be made
Examples:
Success
Apple
Amazon
Failed
Mc Donald in Bolevier
Walmart in Germany
Walmart in Germany