Choosing the best option
Before choosing a market entry strategy take the time to evaluate your business and its strengths and weaknesses. Ask yourself the following questions:
- How is business conducted in your industry sector and in the target market?
- What export experience does your company have?
- How much finance do you have available?
- How much after sales support or service is needed?
- What degree of control are you happy with?
- What level of resource commitment are you prepared to make?
- What is your current level of ability to increase capacity?
- How much time can you spend travelling to the market?
- What entry option is best suited to your product or service?
Common entry options
Direct exporting – Contacting potential customers overseas directly and selling to them. This can include exporting online, regular trade visits and establishing an overseas office to sell or manufacture locally. This is the option that allows the greatest control for your business but is generally the most expensive.
Indirect exporting via distibutor – Company sell to a distributor(s) who then re-sells, at a profit, to the end user or an additional intermediary.
Indirect exporting via agent – Using an in-market representative to procure and negotiate sales. Agents take a percentage of the sales as payment for their services.
Partnerships – Partnering with a local company in the form of strategic alliances and joint ventures. They may on-sell, represent or manufacture your product for you.
Licensing, franchising and royalties – A licensing agreement authorises another company to use your intellectual property (IP). They then have the right to use your IP to manufacture using your technologies and/or operate your business model and brand. Royalties are typically a percentage of sales derived from use of the licensed IP.
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