David Farca of Scottsdale, Arizona, is a serial entrepreneur whose business endeavors have crossed the realm to international sales and distribution. David currently heads International Business Group, which assists companies looking to expand into the global market. In the following article, David Farca discusses various market entry strategies, such as exporting, joint ventures, and franchising, to help businesses efficiently expand beyond US borders, and ensure a well-charted course to international success.
Growth and sustainability: these are the two biggest reasons why businesses venture beyond domestic borders.
Market entry strategies provide the roadmap on how this can be done, enabling enterprises to enter international markets effectively. Since every business is different, choosing the best strategy that aligns with the company’s goals, product type, and target market is crucial.
David Farca Details Going Beyond Borders
Market entry strategies comprise methods that companies use to plan, distribute, and supply goods to international markets.
The strategy that companies choose is usually based on their budget, type of product or service, product value, any special handling procedures for shipping, market competition, and consumer needs.
David Farca of Scottsdale, Arizona says that more importantly, there are three primary factors that affect a business’s choice of market entry strategy:
- Marketing: Careful research is done about which countries consist of their target market and what marketing strategies would be effective in that country.
- Sourcing: Businesses consider whether to purchase the products, produce them locally, or source them from an overseas manufacturer.
- Control: Companies contemplate whether to enter the market independently or collaborate with international businesses to introduce their product to the new markets.
The Importance of Market Entry Strategies
David Farca explains that penetrating an international market and selling a product to a new audience requires careful planning and maintenance processes, that’s why a sound market entry strategy should be in place.
These strategies allow business owners to remain organized before, during, and after entering a new market. Choosing the right strategy that fits a business’s personal needs will make the whole process smoother.
Global Reach: 5 International Market Entry Strategies
Exporting
Direct exporting is promoting and selling products that a business manufactures in an international market in which it intends to sell, often without any involvement from third parties. Companies that have past experience in selling globally or brands that sell luxury products typically opt for this strategy.
David Farca notes that as an alternative, businesses that are yet to enter international markets opt for indirect exporting wherein they enlist the services of agents and international distributors. While businesses have to shell out money for these services, this strategy often results in return of investment (ROI) because the agents know the new market very well.
Joint Ventures
Entering an international market is a risk that companies have to take in the hopes of expanding their business. To minimize the risks involved, some companies choose to create joint ventures with other businesses that also plan to expand globally.
David Farca says that small businesses that collaborate have the potential to earn more individually, as joint ventures often operate like one large independent company. However, both parties should be careful about working together and establishing fair processes to avoid issues.
Franchising
David Farca of Scottsdale, Arizona reports that franchising is a method wherein a franchisee is granted access to a franchisor’s business processes, strategies, and trademarks. It provides businesses with the opportunity to expand globally, either by
franchising an established brand overseas or having an international company franchise a local brand, provided that it has strong brand recognition.
Most entrepreneurs work in their business, but there comes a point that where they need to delegate to work on their business and franchising is a great way for companies to grow exponentially.
Piggybacking
If a company knows other businesses that already sell their products in international markets, they can try the
piggybacking strategy. They can ask these businesses whether their products can be added to their overseas inventory.
David Farca says that once agreed, the profit for each sale will be divided between the two parties. Many companies opt for this market entry strategy as it also minimizes the risk of entering an international market by having a partner who handles selling and marketing their products in overseas markets.
Licensing
This market entry strategy occurs when a company gives another company the right to sell or use its product.
David Farca of Scottsdale, Arizona says that businesses typically opt for licensing when one of their products is in demand and the company asking for a license has a large market. One example would be a production company that has a hit movie; they may sell the right to use characters and images from the movie to a school supply company that will use the images on notebooks, lunchboxes, or backpacks.
There is no best way for businesses to enter an international market - companies should choose the right market entry strategy that aligns with their goals and suits their needs. Each strategy offers distinct advantages, ensuring that companies remain adaptable no matter whey they choose to expand.
