Foreign Market Strategies

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There are a number of different foreign market entry strategies, including exporting, outsourcing, licensing and direct investment. This paper will discuss the advantages and disadvantages of each. First, it needs to be said that outsourcing is not a market entry strategy per se, since the market in question is not necessarily being entered. Outsourcing is using the resources of another country to help with the company's existing business. Usually, this is framed in terms of human workers, but even something like switching from a coffee grower in Hawaii to one in Ethiopia would be technically outsourcing. However, it is also worth mentioning that occasionally outsourcing segues into market entry. This was the case with Wal-Mart. When the company realized so many of its suppliers were in China, it saw this as an opportunity to work more closely with the Chinese government. The result of that is that Wal-Mart goods for export to the US receive preferential status, but also that the company gained access to the Chinese retail market. Exporting is a common method of market entry. The main benefit is that it has low fixed costs, and allows a company to utilize pre-existing production, and eventually to improve economies of scale in production. There will be importers, agents and wholesalers on the foreign side who handle much of the work, mitigating certain cultural and political risks. The downside of exporting is that the company loses some control over its product and its
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