For the development of your export marketing plan one of the most important decision that you have to make is your market entry strategy that how u enter in a market. A little mistake can cost time and money in this process. So, you have to be sure in every aspect. Market entry strategy worth a lot because it really important for an organisation as it provides the structure the penetration of market that how you enter in a market.
Exporting means the goods which are produced in the country are sold to another country. Exporting also related to the marketing of the goods. Exporting is one the important method to introduce your product in the foreign markets.. The goods produced in the country sold to another country.
Licensing is also an important strategy for an international market entry. Licensing permits a company to use intangible property of a licensor in target country. Intangible property means the use of trademarks, patents and production techniques of the licensor and the licensee pays a heavy fee in order to have a right to use these intangible things. For example AT&T and Verizon communication have licensing agreement that they will build and operate India's telephone system.
Franchising is also a kind of licensing. Franchising mean to open a franchise of successful running firm in other country and the franchise holder is provided with all the training and equipment. Franchising allows the firms to penetrate the international market without any heavy foreign investment. The recent relaxation in entry barriers allows many firms to do the business in foreign markets. For example like MacDonald, Subway and pizza hut that are owned and run by the local resident in the foreign markets.
Joint venture
Sometimes it happens that there is always a risk to enter in a foreign market. So in order to overcome this risk it is really important for two organisations to come together to form a new company in foreign country. These two companies can share the knowledge and each other expertises for the development of the company in the new country and the profit will also have to be shared.
Contracting
Another form of entering into a foreign market is contacting. The manufacturer of the product make a contract with the another company in foreign country to manufacture the product on their behalf. This can save the cost of exporting goods to the foreign market.
Manufacturing abroad
Manufacturing abroad is another form of entering into a market. It means that the manufacturing plant of the company is established in foreign country. In this case the government of foreign county can give some relaxation in the tax in order to attract the foreign investment. (www.quickmba.com)
(www.learnmarketing.net)
Different examples
Sony Ericson marketing strategy
Sony is Japanese Electronics Company and on the other hand Ericson is Swedish telecom equipment maker. These two companies use the market entry strategy joint venture to enter in market. In October 2001 these two companies merge together to form a joint venture in order to compete with other companies like Motorola and Nokia. The nature of the joint venture is 50:50. The main aim of both the companies is to provide best mobile to its customers all over the world. Sony Ericson emerged as one of the best mobile company in recent few years.
Toyota marketing strategy
Toyota Motor Corporation uses the manufacturing abroad marketing strategy to capture the foreign market. For example Toyota has built it manufacturing plant in North America to supply its product in United States. Toyota uses this marketing strategy in order to compete with the Ford and some other automobile corporations. TMC is using this strategy to provide better quality and customer satisfaction to its customers. Toyota is going to invest almost $1.3 billion and this will create 2,000 new jobs in that region.
Market conditions
There are different market conditions which a business must have an eye on it. It is really important for an organisation that it keep an eye on the development that can affect their business and the organisation is quiet quick to respond to change it is necessary.
However there are few things that an organisation must have an eye on it.
They should know about general trading concept
They should know about that what their competitors are doing
You should know who is your new competitor
They must have knowledge that new technologies and innovation can change the demand and market for their product. (www.businesslink.gov.uk)
Different risks
An organisation has to face many risks for the establishment of business in the global or foreign markets. Every country has its own values, tradition, rules and regulation. So, sometime there is risk involved for locating the business in the foreign market. So, organisation must keep an eye on these risks. Some of these risks are:
Strategic risk
Sometime it happens that some forces impact the competitiveness of an organisation or firm. The firm has to develop strategic decision in the response of these forces. Porter defines them as supplier power, buyer power, competitive rivalry, threat of substitution and the threat of new entry.
(www.mindtools.com)
Operational risk
This risk is caused by the assets and financial capital which is needed in day to day transactions. The production process can be affected by the breakdown of machinery, supply and demand of available resources and the shortage of goods and services.
Political risk
The political problems in a country can create problems for the firm to operate effectively and efficiently in this country. A firm cannot operate at its full capacity under these political crises.
Technological risk
In order to do the business at the international level the firm need to adapt to the new technology. Sometime it happens that firm do not progress quickly because they don't adapt to the new technology.
Environmental risk
Sometime it happens that the health of the citizens is affected by the air, weather and environmental pollution. This can also affect the reputation of the company because people make complain about the firm.
Financial risk
It is affected by the currency exchange rates and the government policies to allow the firms to send back the profits or the funds outside the country. Inflation also affects the firm operations. Most countries make it difficult for the firms to send back the funds or the profit and forcing them to invest at less favourable level.
Terrorism risk
Sometime it happens that the firm has to face the terrorism problem in a foreign country. These terrorism problems may be due to the religious matters or the political instability in the country.
Cultural factors
Culture is the way in which we usually do our daily works. Culture can have a great impact on our daily life. Everybody knows that nobody in this world is born with a culture, it is always learned. Culture includes the values, traditions, religion and beliefs on a nation. If you are going to introduce your product in the international market then for the marketing of the product you must take into account the culture of that foreign country. There are so many cultural factors that can have an impact on the international marketing of the product like language, religion, values & attitudes, education, law & politics, technology & material cultural factor and social organisation factor. If you are going to introduce your product in foreign market then must study these cultural factors of that foreign country. (/marketingteacher.com)
(marketingteacher.com)
References
International maketing 2006
Jeff Madura International financial management page no 7, 8, 9 and 9th edition
G Johnson, Kevan scholas and R Whittington, exploring corporate strategy 2008 2nd edition page no 3
Paul fifield, marketing strategy 1998 2nd edition page no 20, 21, 22, 23
http://www.learnmarketing.net/international%20marketing%20entry.htm (retrieve on 25/03/2010)
http://www.quickmba.com/strategy/global/marketentry/ (retrieve on 27/03/2010)
http://www.businesslink.gov.uk/bdotg/action/detail?r.s=scHYPERLINK "http://www.businesslink.gov.uk/bdotg/action/detail?r.s=sc&r.l1=1073858790&r.lc=en&r.l3=1073924632&r.l2=1084596842&type=RESOURCES&itemId=1073791112"&HYPERLINK "http://www.businesslink.gov.uk/bdotg/action/detail?r.s=sc&r.l1=1073858790&r.lc=en&r.l3=1073924632&r.l2=1084596842&type=RESOURCES&itemId=1073791112"r.l1=1073858790HYPERLINK "http://www.businesslink.gov.uk/bdotg/action/detail?r.s=sc&r.l1=1073858790&r.lc=en&r.l3=1073924632&r.l2=1084596842&type=RESOURCES&itemId=1073791112"&HYPERLINK "http://www.businesslink.gov.uk/bdotg/action/detail?r.s=sc&r.l1=1073858790&r.lc=en&r.l3=1073924632&r.l2=1084596842&type=RESOURCES&itemId=1073791112"r.lc=enHYPERLINK "http://www.businesslink.gov.uk/bdotg/action/detail?r.s=sc&r.l1=1073858790&r.lc=en&r.l3=1073924632&r.l2=1084596842&type=RESOURCES&itemId=1073791112"&HYPERLINK "http://www.businesslink.gov.uk/bdotg/action/detail?r.s=sc&r.l1=1073858790&r.lc=en&r.l3=1073924632&r.l2=1084596842&type=RESOURCES&itemId=1073791112"r.l3=1073924632HYPERLINK "http://www.businesslink.gov.uk/bdotg/action/detail?r.s=sc&r.l1=1073858790&r.lc=en&r.l3=1073924632&r.l2=1084596842&type=RESOURCES&itemId=1073791112"&HYPERLINK "http://www.businesslink.gov.uk/bdotg/action/detail?r.s=sc&r.l1=1073858790&r.lc=en&r.l3=1073924632&r.l2=1084596842&type=RESOURCES&itemId=1073791112"r.l2=1084596842HYPERLINK "http://www.businesslink.gov.uk/bdotg/action/detail?r.s=sc&r.l1=1073858790&r.lc=en&r.l3=1073924632&r.l2=1084596842&type=RESOURCES&itemId=1073791112"&HYPERLINK "http://www.businesslink.gov.uk/bdotg/action/detail?r.s=sc&r.l1=1073858790&r.lc=en&r.l3=1073924632&r.l2=1084596842&type=RESOURCES&itemId=1073791112"type=RESOURCESHYPERLINK "http://www.businesslink.gov.uk/bdotg/action/detail?r.s=sc&r.l1=1073858790&r.lc=en&r.l3=1073924632&r.l2=1084596842&type=RESOURCES&itemId=1073791112"&HYPERLINK "http://www.businesslink.gov.uk/bdotg/action/detail?r.s=sc&r.l1=1073858790&r.lc=en&r.l3=1073924632&r.l2=1084596842&type=RESOURCES&itemId=1073791112"itemId=1073791112 (retrieve on 03/04/2010)
http://ezinearticles.com/?Risks-in-International-BusinessHYPERLINK "http://ezinearticles.com/?Risks-in-International-Business&id=1331702"&HYPERLINK "http://ezinearticles.com/?Risks-in-International-Business&id=1331702"id=1331702 (retrieve on 03/04/2010)
http://marketingteacher.com/Lessons/lesson_international_marketing_culture.htm (retrieve on 04/04/2010)
http://wiki.media-culture.org.au/index.php/Sony_Ericsson_Mobile_Communications (retrieve on 05/04/2010)
B PART
Franchising
Introduction
The term franchising is comes in the French history which means to hold a particular licence or right. It is believed and also a common thinking among the people that ALBERT SINGER founder of the sewing machine was the inventor of franchising. It was the general concept among the people that he was the person who introduces this word franchising. After the end of World War 2 the term franchising appears as the business format franchising. In the 1960 and 1970 franchising expand rapidly. During this period many companies were underfunded and badly managed this all lead to the bankruptcy or insolvency of the companies and the franchisees has to face the problems. This all lead to the formation of international franchise association (IFA) in order to control the franchising industry. (franchises.about.com)
Franchising
Franchising is a continuing relationship in which a franchisor provide license or certify the franchise to do business. He provide assistance to carry on the business and for also give instruction that how to manage the business. It is a business strategy to capture the market. In order to keep the customer this strategy is very important. In short "we can say that franchising is a planned association between two groups of people who come together to achieve their goals and to capture the market". (www.franchising.com)
Business model
Business model is a method by which an enterprise can easily sell their goods and services to the end customer. A business model describes the method by which the business has to operate. If we look at the history of the franchise business model then we find that it was traced in 1850. USA has introduced franchising to rest of the world with high profile franchise businesses like coca cola and road side motels are the best example of the franchising.
Franchise business model
If you look closely at the franchise information you receive from the franchisor then you will find that the franchise which you have buy form the franchisor is just a readymade business and you have to do nothing special. The main thing is that you do not have to invent a new process or anything special. You just have to stick to the same concept and have to make a huge financial investment. When you are going to buy a franchise then you must have to look that how the franchise is performing. The business model has some unique features like
Fast start up means that the franchise can be started within days after getting license. You have to be sure that you are satisfied with the franchise and are comfortable to make the investment.
Franchise business can be expand at a very high speed depending upon the size of the market and also depend upon the brand of the franchise. No knowledge required
In some cases there is no need of special knowledge to operate the franchise. The franchisee is provide with the full assistance that how to operate the franchise and its operation.
Franchisee has to pay the cost of the franchise at the start when he buys the franchise and on the other side the franchisee has to pay make payments to the franchisor every year.
As a franchisee you have certain powers within your own business and you are not the owner of the franchise. Franchisor has to look the development and control system you are just running the franchise on their behalf. (www.abusinessfranchise.co.uk)
Business format franchising
For a business it is quiet important to meet the criteria of business format franchise in order to offer a genuine franchise opportunity. A business must fulfil these requirements.
The franchisor need to have registered, confined, and safe property rights in relation to their brand name, then provide them with the legal right to use registered brand name.
The people who investing in the franchise must trade under the real name of the business they are not allowed to choose their own safety name.
The franchisor provides the initial training and assistance in order to carry on the franchise operation. The franchise makes profit with the brand name and more people around the world want to make investment. (www.theukfranchisedirectory.net)
Franchising allows firms to expand
Franchising is a business strategy that allows firms to expand rapidly in foreign markets. Franchising is growing at a high rate and both the parties are getting benefits from franchising. Franchisee enjoys the benefits like his use of trademark and brands that people use to like and some other benefits as well, From the franchisor point of view franchising allows the faster growth of business in the foreign markets without any heavy investment because investment is made from the franchisee side besides this franchisee has to pay annual amount of payment to the franchisor. Franchisor can open new outlets by using the franchisee capital and rapid expansion can be achieved without incurring any overhead. (www.franchisedirect.com)
Franchisees are more motivated
When a franchisor is going to open franchise in foreign market he finds a team of local investors who wants to invest to run their own business for profit. Franchisees are more motivated because they have invested their own money and look for profit but on the other hand an employed manager just works for the salary. The annual NatWest/BFA franchise survey has shown that the biggest thing for the franchise development is to look for potential franchisee who is motivated to business. Sometimes it happens that after the success of business/franchisee the franchisee lost its interest in the business. So, it's the responsibility of franchisor to motivate the franchisee at every step. So that he remain on the right track. The research has shown that franchisee motivation is driven by success satisfaction and freedom. More than 60% of the franchisee are motivated because they always look to earn profit from their business which motivate them. (www.howto.co.uk)
Knowledge of local market
Franchisee from a foreign country always has a good knowledge about the local market. Communication between franchisor and the franchisee is very important and it plays an important role to choose franchisee. The franchisor must know that how their partners will fit into the organisation strategy. What are the conditions of the local market? He must have potential of franchisee. Franchisor always likes to choose a person who understand the brand, have special knowledge about the firm and besides this he has wide knowledge about the local market. The best example of this holiday inn hotel because they always try to follow these strategies. They always try to select a partner from the local country who has knowledge about the local market. (www.franchisedirect.co.uk)
Potential advantages from franchisor
Franchisee always uses the brand name and trademark of franchisor. For franchisee there is nothing to do himself. He always gets a readymade business from the franchisor side. Franchisor provides the franchisee with all the assistance for the start of the business. Franchisee has to just invest money and to work on a proven format. It shows that franchising is good for the business expansion in the foreign markets and franchising has lots of benefits like:
There is a better chance of success in franchising because people always look for the better brand name or trademark to invest.
In franchising only a proven business can only offer the franchise to the different franchisees
Technical support is provided by the franchisor to start the business and it helps to grow the business
Sometime you might face some problems and franchisor is always there to provide the technical support
Franchisor also discusses different aspects of business with the franchisee that could help to check the progress of business. (www.franchisebusiness.co.uk) (mydirex.info)
