Marketing Business Plan Examples

Published: 2021-06-22 00:31:51
essay essay

Category: Knowledge, Business, Company, Strategy

Type of paper: Essay

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Expanding the business from the US into Western Europe requires proper analysis of the market entry strategies. This paper evaluates three of the strategies - exporting, licensing, and direct investment - and recommends the best strategy.
Exporting is the marketing and direct sale of the product in another country. Manufacturing is home based (the product is manufactured in US) thus no investment is required in foreign production facilities. Most of the costs are in the form of marketing expenses. Exporting is less risky as it reduces the potential risks associated with operations in Western Europe. There is speed of entry - it is the fastest way of entering the new market. Besides, exporting is cheaper when there are high production costs in the target countries. It uses the existing facilities, thus maximizes scale. The disadvantages of exporting include high transportation costs, trade barriers and tariffs, limited access to local information, and poor adaptation as the company is viewed as an outsider.
Licensing permits a European firm to manufacture and market the product in Europe. It is less risky and less costly. There is speed of entry, and the trade barriers can be minimized. Besides, it has high return on investment. The disadvantages include lack of control over the use of assets; the partner develops the know-how (knowledge spillovers) which shortens the license, and sooner or later, the licensee becomes a competitor; and limited license period. Licensing may also lead to loss of the potential returns from manufacturing and marketing.
Setting up a wholly owned subsidiary in Europe is best suitable when there are import barriers, and high sales potential. It minimizes the knowledge spillovers. There is better adaptation as the company has greater knowledge of the local market. The company can as well be viewed as an insider. It’s however the most risky of the three entry strategies. It requires more commitment and resources. It may also be difficult to manage the local resources.
In this situation, exporting is the best entry strategy that the company can employ. Despite the challenges, it gives the company an opportunity to learn the market before investing.

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