Making Your Entry to a Foreign Market: What to Do
The global market is a diverse space that is risky to take but will be worth the try. You can choose from various options to enter this broad market, which this article will tell you about later. Meanwhile, you have to think big for your business. You must help with its growth and exceed its current state. That includes planning to enter a foreign market once you are ready.
Your business doesn’t have to be stagnant. You have to think out of the box to see how far your firm can go. That includes choosing the mode of entry to a foreign market. This way, you can ensure that your business will go a long way. Method selection requires careful study since it can significantly impact how the company will be in the global market.
Your Entry to Global Market
You have various methods to choose from on how you can penetrate the global market. The choice is yours to make to have the chance to work for another market. However, you also have to think about your global payment solutions to ensure cost-effective transactions. You must ensure that your global clients can transfer funds from any part of the world.
Meanwhile, here are the modes of entry that you can consider to start conquering a foreign market for your business growth:
Among all the methods there is, exporting has the lowest risk and the most common. It involves selling your products or service directly to a specific country. In this case, you need to consider the shipping costs, which continue to increase over time. Aside from the shipping costs, it also involves third parties that you also have to pay. That includes an importer, a transport provider, and the country’s government where you will export.
This method involves an agreement wherein another company will use your intellectual property. It can be a patent, brand, design, or know-how, which they will pay in return. Meanwhile, this mode of entry also involves a low investment amount, but you can expect a high return on investment. Aside from that, your licensee is in charge of the manufacturing and marketing costs that will build awareness in the foreign market.
You can also try this attractive mode of entry. It also requires little financial investment, similar to licensing. However, the franchisee has to note down the rules to carry out business in the foreign market. A few examples of that are the processes or components in manufacturing the product. In general, a global franchise is an extreme and profitable way to enter foreign markets.
- Joint Venture
This mode of entry involves being partners with a firm located in a foreign country. Afterward, they will decide to establish a jointly-owned business. In this case, both of these companies share control of the newly-established business. Choosing this mode requires a clear agreement about who will invest and how to split profits. In effect, you can limit the risks of developing issues in this venture.
- Foreign Direct Investment
It involves investing in a business located in another country. In this case, you can also choose to establish a new company or take over an existing company. You can also put your money into assets that are in another country. The effect of this mode of entry is creating stable and long-lasting links between economies.
The modes of entry above have their pros and cons. You have to balance them all to ensure that you make a wise choice. Aside from that, your choice will depend on your market research. It is best to research first to know if the target market is open enough to accept your products and services. Meanwhile, you also have to learn why an entry into the foreign market can take you to an advantage, which you will read next.
Benefits of Entering Global Markets
Here are a few reasons why you have to take the risk of taking your business to the global market:
- With excellent market research, you can end up in a country with low operating costs.
- Aside from that, your business will be welcoming a new market. In effect, you can reach new clients who can be your potential loyal customers.
- Your entry into a foreign market can also help you secure your company against unforeseen events.
- Furthermore, you will also get the chance to work with international talents, helping you grow even more.
- It also makes your company build a competitive edge among your rivals. In this case, you have to build your name in a country before your competitors do.
Given these points, it can be a wise move to enter foreign markets for your business. So, think about it and decide for your business growth.