International markets have the greatest potential for business growth, due to the cost advantages of overseas 
production, revenue opportunities from foreign sales, and potential new technologies that may be leveraged. International sales can be a very important part of a business plan, especially with the marketplace becoming increasingly globalized, and knowing how to enter a new international market is essential for your business. Some proven strategies for market entry include exporting, joint ventures, licensing, and establishing an overseas facility. However, in reality, it is the objectives and characteristics of a firm which decides your optimal approach.
Before entering a new market, understand the market’s unique requirements, such as the regulatory and cultural environment, tax laws, employment contracts and local business customs. Conduct a comprehensive cost-benefit analysis before moving to the new market. It’s also important to have reliable estimates of how long the establishment of a legal entity in the new market would take. It’s important to have reliable cost and timeline estimates before moving into a new market.
One of the methods of market entry is Direct Exporting. In this instance, you sell directly into the market you have chosen, often through agents or distributors (who take ownership of the products or services) who work closely with you to represent your interests.
On the other hand, there are also contractual strategies that can be employed, such as licensing and franchising.
Under a licensing agreement, you transfer the rights to the use of your property to another firm. Commonly licensed property includes patents, copyright, formulae, designs, trademarks, and brand names. Licensing generally reduces risk and the likelihood of products appearing on the black market. This is a useful strategy to engage in if the other firm has a large market share in the new market. However, licensing agreements should be carefully examined as they have the potential to restrict your future activities, reduce global consistency of your product, and can reveal details of strategically important property to a potential future competitor.
Franchising is when a company supplies intangible property and assistance for a set time. It can be a low-cost, low-risk mode of entry that can lead to rapid geographic expansion. However, if expansion is too rapid, franchisors can lose organizational flexibility. Intangible property and assistance are provided to franchisees over an extended time with the payment of fees or royalties.
Equity strategies such as strategic alliances or joint ventures are also possible.
Strategic alliances involve two or more businesses working together to achieve strategic objectives in the short, medium or long-term. You can establish this with a company, or suppliers and even competitors.
Joint ventures are formed by firms creating a separate jointly-owned company to achieve specific business objectives. JVs can reduce the cost and risk of international expansion and can even help you enter a market that may be otherwise closed.
In order to enter a new market, your firm can also own and control a wholly owned subsidiary through foreign direct investment, by purchasing an existing facility or developing an entirely new investment. Through a wholly owned subsidiary, you have complete control of operations in your target market, and you can acquire processes and technologies, however, the cost of owning a subsidiary may be prohibitive for small to medium companies and the exposure to risk higher.
Many organizations do not have the knowledge required to go global. It’s important to learn how to grow your business internationally and to understand the advantages and disadvantages of several foreign market entry techniques. Expert speaker Douglas Cohen will discuss 5 proven foreign market entry techniques to help your organization navigate the pitfalls and opportunities of foreign expansion in an online webinar.
