International Market expansion strategies (200)
Overseas expansion can be an exhilarating prospect for most of the businesses as through these processes the business can capture and tap new markets for generating fresh revenue streams. The companies can achieve high returns on further investments into these markets. International expansion can be useful in revitalising product development and many organisations strive hard for seizing the moment to expand their global footprint (Oh and Hwang, 2018). In this context, international expanding businesses should follow tips and guidelines for appropriately capturing foreign markets and generate growth and development of their businesses.
International expansion can be regarded as formal strategies, which work at multiple levels in the businesses in order to enter foreign markets. International expansion strategies can be quickly established by the organisations for developing a growing presence in the foreign markets and become profitable within a short span of time. Foreign expansion strategies help in the structural as well as sustainable growth of the organisations (Abalkhail, 2019). The plans should be properly composed for mitigating expansion risks and encouraging efficient utilisation of resources, timelines as well as capital in global expansion. Some of the core elements can be included in these strategies such as internal business audit, competitor analysis, market analysis, a top-down budget and a timeline.
Resource allocation as an international market expansion strategy (150)
Resource allocation is a vital process through which optimum resources are allocated to people having the right expertise and skills. The organisations should ensure whether they have the right people in the business for generating sufficient resources. The organisations should also be willing to invest in a geographic expansion and should plan out their quality and quantity of resources accordingly (Gökşen and Karabacak, 2018).The businesses should understand the cost structure, both in terms of resources as well as people. After this, they should weigh these costs against opportunity for ensuring best allocation of people over the best opportunities. However, the process of resource allocation might falter due to certain reasons such as erroneous objectives of the management, lack of one-directional strategy and incorrect decision making of the authority. These elements must be kept into mind, while formulating strategies of resource allocation.
International involvement as a market expansion strategy (150)
International involvement can be defined as a phenomenon through which companies enter new markets for achieving more significant opportunities of market growth and diversification. According to a survey, it has been noted that 87% of US firms have planned to adopt international involvement as a part of their business strategy for achieving long-term growth in the market. International involvement leads to the formulation of various market entry strategies that will offer a chance to conquer new territories (Pierre, 2016). Through this way, the companies can reach a large number of customers and witness a growing trend of their sales figure. Another important reason for international involvement can be diversification of assets. This can be a very good technique for protecting a company against unforeseen events, which might otherwise harm the financials. Another important reason for international involvement can be access to talents, where the companies can make appropriate use of the talents pools in the market.
Detailed analysis of foreign market entry strategies (150)
Before a choosing a global market entry strategy, the firms approach international marketing very cautiously. In this process, the firms analyse the opportunities of the market for understanding the internal capabilities prevalent in the market. Through the investigation of these capabilities, the companies determine the best approach of entering foreign markets. In most of the situations, the organisations start with a strategy that will be less risky for the business and slowly move on to other strategies, which will require additional investments in the process (Herrera and Botero, 2016). These strategies might have greater risks embedded in them, and might also earn greater returns for the companies. A common market entry strategy can be exporting, where the companies send goods from one country to another. The former country is the manufacturer of these goods and the second country purchase these goods. The company behaves a mediator in the process.
Direct and indirect exporting (140)
Direct exporting can be defined as a process in which the producer or supplier directly sells the products to the foreign markets. This process may or may not involve intermediaries. These intermediaries can be sales representatives, distributors or might be foreign retailers. In this process, the companies conduct market research for locating appropriate markets for the products as well as distribution channels for the products internationally.
Intermediaries are inevitable components of indirect exporting, where the goods and services are sold to them by the companies. These intermediaries later sell the goods or services to either the wholesalers or the customers (Fang et al. 2016).The intermediary can be present locally in the foreign market, which can make this process easy and convenient. Indirect exporting might also relate to selling of goods and services in the home country.
Contractual (licensing, franchising, and counter-trade agreement) (200)
Licensing
Licensing is a kind of market-entry strategy, which is a sophisticated and a formal arrangement between the licensee and the licensor. In this process, a company transfers the right of using a product and a service to another firm (Dutta et al. 2017). The former company is known as the licensor, while the latter one is known as the licensee of the system. It is a useful strategy for gaining a considerable market share in a foreign market.
Franchising
The process was first applied by the North Americans for rapid market expansion in different parts of the world. This process requires firms to open franchises in foreign markets for gaining knowledge and exposure to the new environment. This strategy works well in companies, which have a repeatable business model and can be easily transferred to new markets for expansion. The business model should be flexible enough to sustain in the new market.
Counter-trade agreement
Counter-trade can relate to exchanging of goods and services with other goods and services. This process may or may not involve monetary transactions (Boudreau et al. 2016). Firms can suitably implement this strategy for exchanging goods and services with local firms of the untapped markets. Through this process, the firms can develop competitive advantage in its own market and also gain knowledge about the local goods and services of unknown markets.
Investment market entry strategies (joint venture, strategic alliance, foreign direct investment, greenfield investment, merger and acquisitions) (500)
Joint Venture
A joint venture can be defined as a partnership between a domestic and a foreign firm, where both the parties invest money in the business. Ownership is shared equally between the two partners and the risk is shared equally between them. The foreign firm shares the insights about the foreign market to the domestic firm (Holtbrügge and Berning, 2018). The foreign firm also shares various business connections and networks with the domestic firm, which will be helpful for the growth of the business. Joint ventures get various tax advantages for operating in multiple areas across boundaries. These ventures can spread across various countries and expand their reach in multiple markets.
Strategic Alliance
A strategic alliance can be called as an arrangement formed between two companies, when they take up mutually beneficial projects. In this process, two companies retain their independence in carrying out their operations. Unlike joint venture, strategic alliance is a less complex process, which involves less binding between the two companies (Kamau, 2019). The business entities are kept separate, and different resources are pooled out in the process. Firms enter strategic alliances for expanding their market share into new markets. This process also helps in improving the portfolio of products and develop a competitive edge over the competitors.
Foreign Direct Investment
A foreign direct investment can be a form of investment, where a firm controls a foreign market by opening a subsidiary in the new market. The control of ownership of the firm is direct and the firm should be located in another country. A foreign direct investment significantly differs from a foreign portfolio investment, where the portfolio is controlled indirectly by the owners of the parent firm. Sometimes, a parent firm might wish to buy a company in the target market and expand inorganically or might expand its operations in the target market through organic expansion.
Greenfield Investment
Greenfield investment is a type of foreign direct investment in which a company enters a foreign country for operational expansion. Under such a strategy, a company constructs facilities in the foreign markets. These facilities could be sales office, manufacturing facilities and many other facilities. A Greenfield investment is generally adopted by an organisation if it aims to achieve the highest degree of control in the foreign markets (Arslan and Larimo, 2017). Through this process, the organisations aim to achieve minimum intermediary costs in their business operations. The organisations can achieve both economies of scope and economies of scale in terms of marketing, research and development and production process through this strategy.
Mergers and acquisitions
Mergers and acquisition (M & A) is a general term which is given to the consolidation process of the companies or the assets of the companies under various methods. The different kinds of methods that fall under this broad concept are mergers, acquisitions, and consolidations, purchase of assets and management acquisitions and tender offers (Jalal, 2018). A merger describes a consolidation of two firms, which are equal in size and are renamed as a single entity after the process. An acquisition can relate to the taking over of a small firm by a comparatively large firm, where the small firm ceases to exist after the process.
Part 3 (1000)
International marketing mix programme (250)
Marketing mix is an important component of marketing, when the companies formulate appropriate features of products, pricing strategies, promotional methods and distribution plan for launching their business into the foreign markets. According to basic marketing theory, a company should sell more products for meeting up the needs of the customers in the target market. International markets require consideration of a number of factors that include the demographics of customers, their consumption patterns and personal disposable income levels (Blut et al. 2018). Through an examination of these attributes, a company can adapt its products and strategies of marketing mix, such that they cater to the needs and demands of the local customers. Many companies such as McDonalds have operated globally, however, have customised their products according to local needs and preferences.
Many arguments have been proposed against standardisation of products in the foreign markets. These arguments have suggested that the companies might be benefitted by adapting to the local culture, but only for a short period of time. In the long-term this strategy might ultimately destroy the global brand image of the companies and also increase the overall cost of production of these products (Kim and Kim, 2018). However, in recent days, the concept has been modified mainly favouring to the current business policies and regulations. Consumers, now a days, travel more and have greater access to technology and communication. The consumers communicate and shop internationally with the help of the internet. Therefore, the consumers are aware of the products offered by the companies in all the regions across globe.
Global Product policies (250)
Product policy decisions can be regarded as the cornerstone of every global marketing mix programme. The multinational companies are required to constantly formulate these policies and make amendments according to the current trends of the market (Siddiqui et al. 2019). Four important policies can be important in this process that is standardisation and customisation, multinational diffusion, development of novel products in the global market, and global product development.
Standardisation is an approach by which the companies try to adapt to varied cultures and preferences of the customers for the purpose of promoting their products. Due to the international basis of marketing, the markets are gradually becoming similar to each other and in such a situation, standardisation can be considered a key to survival. In contrary to this, customisation involve proposing a marketing strategy that will be tailored specifically to a particular country. In this case, products are customised according to local tastes and preferences.
Many theories have been proposed by scholars, for describing new product development in the global marketplace. According to the theory of new product development, it can be stated that a product can be suitably launched into a new product through the coordination of manufacturing, engineering and research and development department (Sarker, 2019).The marketing department should make an assessment or propose an idea about the new product, after which a cross-functional team puts on efforts for the development of this product. The 7Ps of marketing mix can be useful in creating basic strategies for product development in the global marketplace.
International distribution channels (250)
At the international platform, setting up of suitable distribution channel can be a cumbersome technique as developed by the marketers. Manufacturers adopt a variety of methods for reaching the suitable bases of customers in the global marketplace. The type of method to be applied by the organisations can depend upon factors like availability, cost, and success of the product models and the procedural techniques (Pan et al. 2019). Local and international distribution methods are used by the manufacturers for finding the most effective way of reaching the customers. Some of the important distribution methods as used by the manufacturers can be zero level channel, level one channel, level two-channel and level three-channel. All these channels have been observed to be quite useful at the global marketplace for reaching the customers.
Zero level channel is described as the direct distribution channel, which does not involve any intermediary. In this process, the manufacturer directly sells the products to the targeted customers. In level one channel, there is an involvement of a middleman in the chain of operation. It can be an excellent option for conducting simple transaction at the international phenomenon (Zaveri and Amin, 2019). In level two-channel, there is the presence of more than one intermediary. Such a distribution channel is mostly observed in large wholesale companies, which produce large volumes of products. In level three distribution channel, there is involvement of a sales agent in the process. All the dealings are done between the sales agent and the manufacturer.
Global communications (250)
Global marketing is the process of taking commercial advantages of the operational differences, similarities as well as opportunities persisting in various countries for expanding the business on a worldwide scale. Marketing communications are defined as messages and related media, which are used for communicating with the market. Marketing communications are a part of the promotion part of marketing mix, which involves the four P’s, that is, product, price, place and promotion (Akhoundi et al. 2018). Global marketing communications are used for acquiring new customers of the unexplored markets for creating brand awareness and encouraging trial. Through global marketing communications, the brands can try to retain their existing customer bases through the reinforcement of their purchase behaviour. This can be done by providing additional benefits of the current products that will increase their value proposition among customers.
Another goal of global marketing communication can be development and reinforcement of relationships between the customers, prospects, retailers, and other internal people of the organisations. There could be many elements of a successful global marketing communication. Sound management decisions are required in this process that will bring about coordination between the different aspects of the promotion mix (Yang et al. 2019). Some of the elements of marketing communication at the global platform can be advertising, sales promotion, public relations, direct marketing and personal selling techniques. In this new era, internet has become a very powerful tool, which can easily reach important customers within a fraction of a second. Many companies are opting for digital marketing tools in their communication strategies.
References
Oh, H.M. and Hwang, Y.W., 2018. Internationalisation knowledge and market expansion: how Korean firms grow in foreign markets. International Journal of Multinational Corporation Strategy, 2(2), pp.176-191.
Abalkhail, T.S., 2019. Entry and Expansion Strategies for Burberry in Oman by Applying Porter’s Five Forces Model. Indian Journal of Marketing, 49(1), pp.25-35.
Gökşen, Y. and Karabacak, S., 2018. Marketing Expansion Strategies in Multinational Marketing: The Role of e-Business. In Economy, Finance and Business in Southeastern and Central Europe (pp. 675-688). Springer, Cham.
Pierre, D., 2016. Three Essays on the Influence of Political Connections on Firms International Expansion Strategy (Doctoral dissertation, Paris Saclay).
Herrera, J.G. and Botero, J.F., 2016. Resource allocation in NFV: A comprehensive survey. IEEE Transactions on Network and Service Management, 13(3), pp.518-532.
Fang, F., Zhang, H., Cheng, J. and Leung, V.C., 2016. Energy-efficient resource allocation for downlink non-orthogonal multiple access networks. IEEE Transactions on Communications, 64(9), pp.3722-3732.
Dutta, D., Shinde, R., Banerjee, S. and Spiegel, E., Cisco Technology Inc, 2017. Resource allocation mechanism. U.S. Patent 9,535,764.
Boudreau, K.J., Guinan, E.C., Lakhani, K.R. and Riedl, C., 2016. Looking across and looking beyond the knowledge frontier: Intellectual distance, novelty, and resource allocation in science. Management Science, 62(10), pp.2765-2783.
Holtbrügge, D. and Berning, S.C., 2018. Market entry strategies and performance of Chinese firms in Germany: The moderating effect of home government support. Management International Review, 58(1), pp.147-170.
Kamau, J.M., 2019. The Relationship between market entry strategies and financial performance: a case of international companies in Kenya (Doctoral dissertation, Strathmore University).
Arslan, A. and Larimo, J., 2017. Greenfield entry strategy of multinational Enterprises in the emerging markets: Influences of institutional distance and international trade freedom. Journal of East-West Business, 23(2), pp.140-170.
Jalal, A., 2018. Strategic Decision Making: External Factors Influencing Foreign Market Entry. Journal of Higher Education Service Science and Management (JoHESSM), 1(1).
Blut, M., Teller, C. and Floh, A., 2018. Testing retail marketing-mix effects on patronage: A meta-analysis. Journal of Retailing, 94(2), pp.113-135.
Kim, M.S. and Kim, J., 2018. Linking marketing mix elements to passion-driven behavior toward a brand. International Journal of Contemporary Hospitality Management.
Siddiqui, B.A., Hoque, A.S.M.M., Awang, Z., Jeko, N.A. and Rahman, A., 2019. Marketing Mix Effect on Impulse Buying Behavior: An Empirical Analysis on Bangladeshi Customers. In International Postgraduate Research Conference (2 nd IPRC 2019), Universiti Sultan Zainal Abidin (UniSZA), Gong Badak Campus, Kuala Terengganu, Malaysia, December.
Sarker, R.H., 2019. Service Marketing Mix and its impact on Bank’s Marketing Performance: A case study on Janata Bank Limited.
Pan, Y., Torres, I.M. and Zúñiga, M.A., 2019. Social media communications and marketing strategy: A taxonomical review of potential explanatory approaches. Journal of Internet Commerce, 18(1), pp.73-90.
Zaveri, B.N. and Amin, P.D., 2019. Global Marketing Strategy in Digital Era: Global Online Presence. In Breaking Down Language and Cultural Barriers Through Contemporary Global Marketing Strategies (pp. 103-112). IGI Global.
Akhoundi, M., Osman, S. and Nezakati, H., 2018. Global marketing activities exposure and consumption behavior. Lambert Academic Publishing.
Yang, K.C., Kang, Y. and Wang, R.P., 2019. Integrating Social and Mobile Media in Environmental Marketing Communications in China.