INTERNATIIONAL MARKETRING
Abstract
An organization that aims at entering into the oversea market must be aware of the geographical and historical
information about the target market. An organization may aim at entering into the foreign market because of the of an increase in sales turnover. There are several market entry models that an organization that aims at venturing into a foreign market can adopt. The report will give illustrate on market entry model such as licensing and franchising. It will also provide a highlight of the on the non-tarrif barrier in which a mechanism that various nations use to restrict goods exporting and importing. Various countries can control trade through imposing importing charges and quotas as a means of restricting trade. The report, therefore, gives the marketing director the main factor that they need to address as they plan to enter into the oversea market.
nn
Table of Content
j
Introduction
When an organization is planning to enter into an international market, it is essential to put into consideration various factors. Geographical and historical elements are essential information that an organization should be aware of before going entering a new market. It is also essential to be aware of various restrictions imposed by the government to control exporting and importing in the oversea country. What may be allowed in one country may be restricted in another. The report will give various models that an organization can adopt while entering a foreign market. It can enter the foreign market through licensing, franchising or exporting. The report will also give a highlight on the non-tariff barriers, which are the mechanism that the government in a foreign market used to control how goods are imported and exported in a country.
Historical and Geographical Factors
Cowboy is one of the fastest-growing organization in Belgium that aims at entering new markets. It innovated the electric bike which targets urban riders. The main goal of the organization is to provide a faster means of commuting in urban areas (Javalgi, R.2018,720). The high rate of traffic in the developed and developing country limit commutating from one place to another. Cowboy using the electric bike ensures that the environment is conserved, people health improved and faster means of commuting. It plans to enter foreign markets such as China and India, which is highly populated. Cowboy, therefore, is required to put into consideration various factors such as government restriction, and the historical and geographical factors of the foreign market.
As Cowboy aims at venturing into China, it is essential to have the historical factors about this market. In China, both women and women are allowed to work in various industry. Therefore, an electric bike can be beneficial in commuting from one location to another. In India, there is a large market due to the high population of people who work in various place (Roggero, M.2019,409). Knowing that a large population of the working groups are health and middle-aged individual, an electric bike can readily be embraced in China. Due to a high rate of innovation in China, Cowboy can decide to use the licensing model as a means of venturing into a new market. Licensing allows some of the local companies in China to manufacture and even sale some of Cowboys product. Through this Cowboy will grow due to an increase in sales hence an increase in revenue.
It is also vital to put into consideration the geographical factors of the foreign market. Having good weather is essential in using Cowboy product. An individual will only not use the electric bike if it is raining, snowing or when the sun is too hot (Rana, S.2020). In China, most of the days of the year are hot meaning an electric bike will be highly appreciated. Geographical factors are also significant while considering the distribution of products. In China, the place is highly populated, and due to the high rate of urbanization, the distribution of a product is fast. Cowboy can quickly sale its electric Bike in China in consideration to the Historical and geographical factors
Market Entry Strategy
Cowboy can expand its business by operating oversea. However, they are various market entry strategy that Cowboy can adopt while venturing into the international market. First, Cowboy can decide to export electric bikes (Hoekman, B.2018,13). Exporting this bike can be direct where Cowboy manufactures the Bikes in Belgium and ships them to China and India. Direct exporting is useful when the product being shipped is small due to the cost of transportation. Indirect exporting can also be used as Cowboy will select an organization in India and give them the license to operate in India or China. It is an easy way of marketing the product since customers seem to purchase goods from companies; they are familiar.
Secondly, Cowboy can also use manufacturing abroad as a market entry strategy. It entails Cowboy setting up a manufacturing site in the host country and manufacturing its product in that place. Adopting this market entry strategy is effective in China because the organization will be escaping the high taxation rate that comes with exporting (Niu, Z.2018,703). It will also get cheap labour, primarily due to the high population of people In China. Cowboy will use material and labour from China which is very affordable and readily available. Cowboy will also avoid the high transportation cost that is incurred while shipping the electric bikes from Belgium to China.
Thirdly Cowboy can also adopt franchising, where an independent business owner takes the logo of a parent company in return of a fee. Cowboy can offer its logo or trademark to a Franchisee in China who will manufacture and sell the electric bikes in China. Cowboy will provide various training, resources and operational advice to the franchisees in China. Although it takes a longer time compared to licensing, it is more effective in term of political cost (Marette, S.2018,2). Franchising leads to a less political cost since it entails a local independent business owner who uses the organization logo to produce the electric bike. The high risk associated with shipping and lack of acceptance of a product in a foreign market is also eliminated. More customers will easily buy the product in China since the product is locally manufactured. The other benefit of Cowboy franchising is the increase in income which comes in term of royalties and renewals (Yang, M.2018,1050). The major disadvantage of this mode of market entry is the risk of the company becoming a competitor of Cowboy. Franchising entails training a local independent company in China how to manufacture the electric bike. It, however, remains independent as long as they pay, they royalties and renewal. Cowboy will also not have a control on what the organization does since it remains independent. This can affect the goodwill of an organization, especially when the organization does not use specific material while manufacturing the electric bikes.
Lastly, Cowboy can enter into the foreign market through a joint venture. A joint venture entails Cowboy working with another organization in China or India to produce the electric bike (Alon, I.2019). They agree on common goals and this help in the expansion of the business. Just like franchising there is a risk of the company becoming a competitor. A joint venture will entail Cowboy sharing detailed information of their knowledge of manufacturing and decision-making strategy with the other organization. In case of a disagreement between the two organization, it can lead to a considerable loss. It can also lead to the use f the knowledge acquired to become a competitor by producing the product of almost similar nature as Cowboy. Therefore, Cowboy can enter into the foreign market using various methods as long as it adds more value to the organization and reduces the risk associated with venturing into the international market.
Strategic options open to Marketing Firm
Entering into a new market can be faced with a lot of barriers imposed by the government. The non-tariff barriers are restriction placed by the government in the various nation on the goods imported and exported. The government uses this restriction to have control of goods that get and out of the country. In developed countries, products that get imported are tested before being allowed to be sold in the nation. Products are tested if they are fit for human consumption and a license granted before being allowed in the nation. An example of the non-tariff barrier imports quotas, which limits the number of goods imported in a country (Grashuis, J. 2018,652). In Us, there is an import quota in the textile industry to restrict the number of goods imported in this industry. The restriction ensures that it promotes the local textile industry in the country as a means of creating employment opportunity and promotion of local goods. The other non-tariff barrier is an export quota that limits the amount of product that can be exported. The government places this restriction to ensure that the demand of a nation is fully covered before being shipped to other nation. Companies without such limitation can export goods to other nation to earn more profit, and this may lead to a shortage in their country.
The other form of the non-tariff barrier is the Embargo which prohibits trade with various nation. A nation can impose such restriction due to political differences that exist between the country. An example id the 50 years of the Embargo placed by Us that restricted trade of any form with Cuba (Vrtana, D.2020,1037). All this restriction placed by the government can hinder a company from venturing into the foreign market. However, they are various strategic options that an organization such as Cowboy can adopt to ensure that the effects of the non-trade barriers get reduced.
First, when dealing with non-tariff barriers, protection must be done by following the custom tariff and not the import Quotas. When an industrialized and a developing nation are in business together, it is essential to come up with an agreement that smoothens trade (Rosado-Serrano, A.2018,239). Using a joint platform, two nations can agree to remove various barriers that limit trade, and this can lead to mutual growth in both countries. An example is a ban placed on the Philippine, a developing country, mangos and Banana. The U.S. refused to consume the mangoes and bananas from the Philippines because they do not meet the strict requirement on phytosanitary. Therefore, the two-nation can come up with an agreement that ensures that both sides win. Since in Us the labour is expensive while in the Philippines the labour is readily available and cheap. In exchange for the labour, the restrictions can be lowered. Using such joint platform trade is made possible hence organizations like Cowboy grow since few restrictions are made.
Another means is an organization discuss with the government about various trade quotas. A company can present to the government the number of losses they experience due to the quotas place in a given industry. A company can explain how the removal of various non-trade barriers can lead to an increase in profit hence an increase in growth of the nation. Depending on different forms of restriction placed by a government, a company can still negotiate for these restrictions to be lowered or completely removed. An example is the export quotas that a nation may place on the agricultural product (Tauman, Y.2018,230). A country may limit the export of agricultural product such as sugar cane. However, a company may produce surplus sugarcane enough for a country and export. However, due to the restriction placed by the government, a lot of losses may experience although a country is fully supplied. A sugar company can, therefore, present such matter to the government, and the export quotas can be removed (Andersson, S.2018). Through such measures, a company may be able to trade with other countries and make a large profit which helps in the growth of a nation through trade. Therefore, as Cowboy aims at venturing into the foreign market, it should be aware of various trade barriers place in a nation. It should follow all the legal requirement while exporting the electric bikes to China. However, it should also not trade with countries that Belgium may forbid to avoid breaking the law. It can also negotiate with the various government to ensure that the trade barriers are removed to allow a smooth flow of trade among the nation.
Conclusion
The report focuses on the international market showing how an organization can venture into a new market. The historical and geographical factors are key factors that an organization should put into consideration before venturing into a new market. The historical data provides information on whether a given product will be viable in the international market (Cateora, P.2020). An organization aims at entering into the international market to expand. It can adapt to various form of market entry depending on a model that works in a given industry. Market entry modes such as licensing, joint venture and franchising allow an organization to enter into a new market due to increase in sales turnover which leads to the achievement of economies of scales (Soon, B.2020). Entering into the international market can be faced with a lot of hurdles, including dealing with various non-trade tariffs place by the government. Therefore, when an organization wants to venture into an international market, it can do should put into consideration the historical, geographical aspect and the legal factor in a foreign company.
References
Andersson, S., 2018. The effect of sanitary and phytosanitary measures on E.U. exports: The case of agri-food products.
Alon, I. and Kruesi, M.A., 2019. The enigma of franchising in China. Journal of Business Strategy.
Cateora, P.R., Meyer, R.B.M.F., Gilly, M.C. and Graham, J.L., 2020. International marketing. McGraw-Hill Education.
Grashuis, J., 2018. An exploratory study of cooperative survival: Strategic adaptation to external developments. Sustainability, 10(3), p.652.
Hoekman, B. and Nicita, A., 2018. Non-tariff measures and trade facilitation: W.T.O. Disciplines and policy space for development. Non-Tariff Measures, p.13.
Javalgi, R.G. and La Toya, M.R., 2018. International marketing ethics: A literature review and research agenda. Journal of Business Ethics, 148(4), pp.703-720.
Marette, S., 2018. Illegitimate or Legitimate Non-Tariff Measures. Journal of Agricultural & Food Industrial Organization, 16(2).
Niu, Z., Liu, C., Genessee, S. and Milner, C., 2018. Non-tariff and overall protection: evidence across countries and over time. Review of World Economics, 154(4), pp.675-703.
Rana, S., Prashar, S., Barai, M.K. and Hamid, A.B.A., 2020. Determinants of an international marketing strategy for emerging market multinationals. International Journal of Emerging Markets.
Rosado-Serrano, A., Paul, J. and Dakota, D., 2018. International franchising: A literature review and research agenda. Journal of Business Research, 85, pp.238-257.
Roggero, M., Kähler, L. and Hagen, A., 2019. Strategic cooperation for transnational adaptation: Lessons from the economics of climate change mitigation. International Environmental Agreements: Politics, Law and Economics, 19(4-5), pp.395-410.
Soon, B.M. and Thompson, W., 2020. Non-tariff barrier on chicken imports into Russia: Impact on production, trade and prices. Journal of Policy Modeling.
Tauman, Y., & Zhao, C. (2018). Patent licensing, entry and the incentive to innovate. International Journal of Industrial Organization, 56, 229-276.
Vrtana, D. and Gogolova, M., 2020. Marketing strategy applied in the environment of an international company. In S.H.S. Web of Conferences (Vol. 74, p. 01037). EDP Sciences.
Yang, M., 2018. International entrepreneurial marketing strategies of M.N.C.s: Bricolage as practised by marketing managers. International Business Review, 27(5), pp.1045-1056.