Understanding the entry modes in international business
The report helps in understanding the different entry modes in the export and import of goods and services in different countries. Direct export/import is the situation wherein the organization sells their products eucalyptus oil (Emu Ridge) directly to other customers who are residing in other countries. There are different kinds of procedures that are followed while direct export and import of goods and services. There are different political, economic, social, technological, legal as well as environmental impacts on the direct export and import of the different goods and services.
The main aim of the report is to understand the reasons behind choosing direct export and import technique for different products and services such as eucalyptus oil (Emu Ridge). The proper analysis has to be done regarding selecting the venture and reasons for being successful in the respective venture as well. Proper SWOT analysis has to be conducted in order to understand the core competencies of the firm. The main purpose of the report is to analyze the scope for expansion in the chosen market. The financial requirements of the capital have to be analyzed as well and staffing policy has to be ascertained properly.
The structure of the report is to analyze the selection of the entry mode and the reasons has to be stated properly on choosing the direct export and import entry mode over the other closest competitors. Proper corporate objectives as well as operational strategy have to be analyzed as this will help in understanding the decisions that has been taken.
The direct Import and Export mode has been selected over the other competitors for export of eucalyptus oil (Emu Ridge) to America such as licensing and franchising, direct investment as well. There are different reasons that have been taken into account for selecting this respective method that are as follows:
- The amount of potential profits are greater in nature as there are no presence of the intermediaries
- There is total control over the different aspects of all the transactions
- The trips related to business are efficient and effective in nature as the customers are directly met and total responsibility is on the owner as there is no presence of intermediaries
- It helps in developing a better understanding about the entire workplace
- There is full protection on the patents, trademarks as well as on the patents of the company as well
- There is a presence of greater and huge flexibility in the business in order to increase the efforts of the entire marketing
These are the different reasons direct import/export entry mode has been selected as this will help in making this respective strategy most efficient and effective in nature. The venture of the eucalyptus oil products such as eucalyptus oil (Emu Ridge) in Australia will be successful in nature as Australia has huge amount of Eucalyptus trees and they can export to the other countries. Direct export/import strategy will help in exporting the eucalyptus oil products to other countries without much intermediary costs (Hernández & Nieto, 2015).
Figure 1: Strengths and Weaknesses of Direct Export/Import
(Source: Created by author)
Direct entry mode for eucalyptus oil (Emu Ridge) export/import
From the above diagram, it can be analyzed that there are different strengths as well as weaknesses of direct import/export entry mode of eucalyptus oil (Emu Ridge) as this helps the respective strategy to be different and unique from other strategies and entry modes as well. From the strengths it can be analyzed that this kind of entry strategy mode has greater level of flexibility and this will help in enabling protection of the copyrights, trademarks as well as the patents of the products as well as services as well. This kind of entry mode strategy will help in creating faster feedback to their customers and this will make the system more efficient as well as effective in nature as well (Ang, Benischke & Doh, 2015).
Therefore, with the help of strengths in the business, it can be analyzed that the strengths of the direct export strategy of entry mode for eucalyptus oil (Emu Ridge) can help in generating success in the competitive market. This will help in making the direct export/import strategy much better than the other entry modes in the competitive market as well (Wach, 2014).
On the other hand, there are different weaknesses of the direct entry strategy wherein all the tasks have to be properly handled by the manager itself and there is no buffering zone. There are different disadvantages as well wherein the manager of the company cannot respond to different calls and queries of the customers, wherein if there was a presence of local agent, this would have made the task much easier in nature.
In case of eucalyptus oil products, the company in Australia has to export the different oil products to America and they need to handle entirely the different queries and the calls of the customers as there are no middle men or intermediaries in the organization. The entire burden is on the managers of the organization. The queries of the customers are not solved properly at times and this requires more time and cost of the entire company (Ferreira et al., 2014).
These weaknesses have to properly be solved by the respective company as this can hinder their performance of the company. Proper activities and ideas has to be properly set up as this will help in improving the entire performance of the company and the respective company can implement direct export/import sales strategy in the company:
- Proper establishment of the export department is essential in nature as this will help in making the sales department more self contained and this will help them in operating the direct activities independently as well
- Properly form a foreign branch of sales as this will help in handling the entire sales as well as understand the promotional efforts as well. The foreign branch of sales will be not being treated as the separate legal entity as well.
- Properly set up subsidiary of export sales as this will help in keeping the export activities separate from the other activities in the firm
A proper organizational structure is essential in nature as this will help the respective company in understanding the different departments that has to be created and this will help in creating departments as per the requirements. The global product, area, function as well as the customers has to be analyzed as this will help in making the organization much more effective and efficient in nature.
Aim of the report and analysis of advantages and disadvantages of direct export/import
Different types of eucalyptus oil products such as
- Skin care products made with mixture of eucalyptus leaves
- Hair care products made with eucalyptus leaves and extracting oil from it
- Special oil for the different age group of individuals in Australia (Martin, 2013)
- Different parts of Australia
- Opening and developing different stores in other states and countries as well
- Melbourne is the major area wherein the respective company is operating and it is required by the company to spread their business activities in other parts of the world as well
- Proper selection of the other stores of the respective company is required as this will help in providing more profits and revenues for the entire business
The company has to function globally in different parts of the world along with Australia. It is essential for the company to operate in different parts of the world as this will help in increasing their business in different parts of the world. This can be done only when the respective company is able to properly produce different amount of services that are required and desirable in nature as well. Proper ascertainments have to be made by the company in order to understand properly the different requirements that will make the company more efficient and effective in nature (Clarke, Tamaschke & Liesch, 2013).
The global customers have to be targeted by the respective company as this will help in making their reputation stronger in nature (Johanson & Mattsson, 2015). The key challenges will be properly understood by the respective company and this will have huge impact on the entire company as well. The customers will be selected by the company with the proper understanding of the tastes and preferences of the customers in the entire market. This will help in making the entire process successful and effective in nature as well. The global customers will be treated as the target customers of the company as this will help in increasing their customer base in rest parts of the world as well(Teece, 2014).
From the above intended organizational designs, it can be analyzed that proper design structure has to be properly made as this will help in making proper usage of the products and services. The respective company in Australia needs to expand their business of the eucalyptus oil products in America for the eucalyptus oil (Emu Ridge) as well. Proper expansion is essential in the business as this will help the company and the employees in the organization to properly analyze the different requirements of the business in America for eucalyptus oil (Emu Ridge)(Drogendijk & Martín, 2015). The respective company in Australia needs to function globally in the entire world as this will help them in increasing the percentage of sales and revenues in the competitive market as well.
Proper advancement in technologies is required in order to attract different kinds of customers in the different parts of the world. This will help in increasing the customer base for the introduction of their new product that has been launched in Australian market presently as well. The respective company needs to properly analyze the different kinds of product that will help in making the organization efficient and effective in nature (Swoboda, Elsner & Olejnik, 2015).
Financial requirements and staffing policy for Australian Ridge exporting eucalyptus oil to America
Proper organizational design as well as structure is essential in nature as this will help in influencing the different structure of leadership in the organization as well (Shaver, 2013). It is essential for the organization to have a proper and clear picture of the design of the organization as this will help in setting up different kinds of relationships that are essential in nature for the company as well as the employees of the organization (Bernard, Grazzi & Tomasi, 2015). The design of the organizational structure can help the officials of the organization in developing distinct competitive advantages as this will help in making the owners of the business aware about the different issues that are faced by the organization, so that proper changes can be made and implemented by the organizational hierarchies.
Proper adaptability is essential in nature in the organization as this will help in increasing the efficiency as well as effectiveness of the organization wherein it is required. Proper organizational design is essential as well as this will help in helping in the growth of the entire firm (Coviello, 2015). Proper relationships are essential in the organization as this will help in understanding the effects that has to be created in other places as well apart from Australia. Proper productivity as well as improvement in the performances can help to contribute towards the design of the organization (Brouthers, 2013).
The respective company in Australia has to implement proper strategies that will help in understanding the different concepts and the techniques that will help in increasing their sales in other parts of the world as well (Wild, Wild & Han, 2014).
- The company needs to establish a proper value proposition as this will help the business to sustain for a long time (Cavusgil, S. T., & Knight, 2015).
- Proper identification of the ideal customers is essential as this will help the company to understand the different tastes and preferences of the target customers of the company
- Proper verification of the different streams of revenue is essential in nature as this will help in making the business grow more stronger and larger in nature as well
- The company has to identify the competitors in the competitive market in Australia as this will help in making profits in the near future and this will help in excelling among the other competitors as well.
- Proper focus has to be provided on their strengths that help the company to be different from the competitors in the market and stand out of the entire crowd (Hohenthal, Johanson & Johanson, 2014). A proper growth strategy that has been applied by the company has to be properly ascertained as this will help in growing their business in the next few years as well.
- Proper investment in the talent is essential as this will help in developing a proper strategy of growth that will help the respective company in implementing proper strategies such as understanding the motive of the competitors in the competitive market. Proper understanding is essential in nature for the entire company to understand the different issues and the inefficiencies of the entire company (Hennart & Slangen, 2015).
- The inefficiencies has to be properly ascertained as this will help in making the entire process effective in nature and this will naturally lead to the overall growth of the entire company as well (Ambos & Håkanson, 2014)
Therefore, from the above strategies, it can be analyzed that proper implementation of strategies is essential in nature and this will help in understanding the different kinds of inefficiencies that are faced by the company and it can be properly sorted out with proper strategic decisions that are taken by the company as well (Daszkiewicz & Wach, 2014).
The scope is dependent on two factors as this will help in for two distinctive usages of the growth of the entire company. The scope can be based on both product as well as project of the entire company. The company has to analyze the different aspects of the growth of the different sectors as this will help in making the entire process successful in nature as well.
The functional requirements of the company has to be properly ascertained as this will help in making the work more score oriented in nature. Proper requirements of different kinds of cost along with other factors that are essential in nature as this will help in understanding the different issues in the company that will be faced by them in the future as well.
Exploring the scope for expansion in the chosen market
Proper requirement of the capital is essential in nature as this will help in understanding the sum of the entire fund that is required for the achievement of the goals for the entire company. When the startup costs, investments as well as other founding expenses are calculated together, this will help in understanding the entire budget that is required by the company. This will help the company and the employees of the company in understanding the different requirements in different fields as well. This will help in making the requirements successful in nature and this will help in enhancing the forecasting properly as well.
The marketing budget has to be properly ascertained by the company as this will help in preparing proper strategic plan of marketing for the entire marketing team. Secondly, the personnel budget has to be properly analyzed as this will help in forecasting the number of employees in the organization who will develop the different functional areas of the entire company as well. Proper forecasting of the facilities is essential in nature as this will help in understanding the cost of the equipments along with determining the cost of the ventures of the company as well.
Proper costs have to be separated as this will help in forecasting and analyzing the administrative and general expenses of the company (Stahl & Tung 2015). The accounting fees as well as the insurance and legal fees have to be properly forecasted in order to provide different information about the different essentials that are required in the business. Proper assumptions regarding the revenue have to be properly done as this will help in understanding the sales volume of the company as well (Wei et al. 2014).
The forecasting of the other costs such as rent, electricity used by the company helps in understanding the different usages of the capital in the respective company in Australia. The respective company requires proper ascertainments in order to understand the different revenues that are required in order to compute the total capital that is required for the start up of the business as well (Contractor et al., 2014).
There are different kinds of staffing policy that exists in the different companies around the world. Similarly, the respective company in Australia that is dealing with Eucalyptus oil products in their company is a medium sized business that is functioning in Australia. The main motive of the company is to establish their operations in different parts of the country as well.
Organizational design and structure for efficient global functioning
The ethnocentric policy is required by the respective company as this will help them in hiring good and educated managers for their headquarters that is situated in Melbourne rather than hiring local staffs for their company. This policy will help the company in hiring different individuals for the parent country itself (Mudambi, Piscitello & Rabbiosi, 2014).
Furthermore, the respective company in Australia can adopt polycentric policy wherein the respective company can hire different individuals for the host country and this will help in understanding the various requirements of the company as well as the other problems that has to be solved by the company in the future. Lastly, regiocentric policy can be applied by the company as this will help in hiring different individuals for the different regions wherein the company wants to establish their business in the future as well.
Conclusion
Therefore, it can be concluded that direct entry mode of exports and import is the best method than the other competitors in the market. This will help the company in analyzing the different entry modes and selecting direct entry mode as the competent from the other competitors. This will help the company in analyzing the different issues that has to be sorted out in order to understand that the potential profits are greater in nature and this will help in knowing the different customers as well. Proper protection will be received for the different trademarks, patents as well as copyrights of the company as well. The direct import as well as export mode will have the higher degree of control over the different aspects of the transactions in the company and this will help in running the business more efficiently as well as effectively in nature. It will help in developing a batter and proper understanding about the entire market place as well.
References
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