There are several ways businesses can sell their products in international markets. The most appropriate method will depend on the business, its products, the outcome of its Marketing Environment analysis and its Marketing Plan.
Direct Export
The organization produces their product in their home market and then sells them to customers overseas.
Indirect Export
The organizations sell their product to a third party which then sells it within the foreign market.
Licensing
Another less risky market entry method is licensing. Here the Licensor will grant an organization in the foreign market a license to produce the product, use the brand name etc. in return that they will receive a royalty payment.
Franchising
Franchising is another form of licensing. Here the organization puts together a package of the ‘successful’ ingredients that made them a success in their home market and then franchises this package to overseas investors. The Franchise holder may help out by providing training and marketing the services or product. Mcdonald's is a popular example of a Franchising option for expanding in international markets.
Contracting
Another form of market entry in an overseas market which involves the exchange of ideas is contracting. The manufacturer of the product will contract out the production of the product to another organization to produce the product on their behalf. Clearly contracting out saves the organization from exporting to the foreign market.
Direct Investment
Multinational organizations may choose to engage in full-scale production and marketing abroad by directly investing in wholly-owned subsidiaries. As opposed to the previously mentioned methods of entry, this type of entry results in a company directly owning manufacturing or marketing subsidiaries overseas. This enables firms to compete more aggressively abroad because they are literally “in” the marketplace. However, because the subsidiary is responsible for all the marketing activities in a foreign country, this method requires a much larger investment. It’s also a risky strategy because it requires a complete understanding of business conditions and customs in a foreign country.
Joint Venture
A joint venture is a partnership between a domestic and foreign firm. Both partners invest money, share ownership, and share control of the venture. Typically the foreign partner provides expertise about the new market, business connections and networks, and access to other in-country elements of business like real estate and regulatory compliance. Joint ventures require a greater commitment from firms than other methods because they are riskier and less flexible. Joint ventures may afford tax advantages in many countries, particularly where foreign-owned businesses are taxed at higher rates than locally-owned businesses. Some countries require all business ventures to be at least partially owned by domestic business partners. Joint ventures may also span multiple countries. This is most common when business partners team up to conduct business in a world region.
Example: Toyota’s Progression into Global Business
Toyota Motors started out as a domestic marketer in Japan. Eventually, it began exporting its cars to a few regional markets. As it saw greater success, Toyota became adept as a multinational marketer, and today is a true global marketer. Today Toyota operates manufacturing plants in foreign countries with local labour, using local ad agencies, and pursuing marketing strategies that appeal to each country’s market segments and consumer needs. As Toyota progressed through each stage of global expansion, it revised its attitudes and approach to marketing and its underlying philosophy of business
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