The techniques that companies can use to enter the market in other countries would include the following: indirect/ direct export, licensing, joint ventures, direct investment, and acquisition (Kotler, Keller, Goodman, Brady & Hanson, 2019). All these listed techniques have both pros and cons when It pertains to a company’s ability to enter other countries. The three techniques that will be examined further in this discussion board is Indirect/direct export and licensing benefits and pitfalls.
Benefits
Indirect export benefits are it requires less investment needed to operate as well as less risk since the seller already as relationships abroad. For example, Summersby Beer was founded in Europe and since 2008 has been imported to other countries such as New Zealand, Australia, Malaysia, Hong Kong, Taiwan, South Korea, Canada, and the United States.
Direct import benefits have a huge potential return by utilizing the following methods to help the company enter other countries markets including; domestic-based export department, overseas sales branch or subsidiary, traveling export sale representatives and foreign-based distributor or agent (Kotler et al, 2019).
Licensing benefits helps companies by utilizing its business strategies in franchises that provide all the brand concepts to the franchisee for a cost. (Kotler et al, 2019). A prime example would be companies like McDonald’s, or Subway organization conducting business around the world gaining more market shares and profits.
Pitfall
Indirect export pitfalls include the product/service not selling, which causes the company to lose money that had been invested in selling product/service from an international distributor (Kotler et al, 2019).
Direct import pitfall the company losing money that was invested in building store space, warehouse in an overseas country and the business fails to lead the company to take a huge loss because they were not strategic in the roll-out of entering into that countries market (Kotler et al, 2019).
Licensing pitfall would be making sure all the franchise follows the same rule, regulations, and processes. Additionally, the issue would be that from an operational standpoint challenge would be to get all the franchising stores to follow and live by the functionality of the core business.