How to Enter Foreign Market

Once a Company decides to target a particular country it has determine the best mode of entry. Its broad choices are indirect exporting, direct exporting, licensing, joint ventures and direct investment.

Indirect Export: Companies typically start with indirect exporting, that is, they work through independent middlemen. Four types of middlemen are available to the company.

  1. Domestic-based Export Merchant: – This middleman buys the manufacturer’s products and sells it abroad on its own account.
  2. Domestic-Based Export Agent: – This agent seeks and negotiates foreign purchases and is paid commission. Included in the group are trading companies.
  3. Cooperative Organization: – A Cooperative organization carries on exporting activities on behalf of several producers and is partly under their administrative control. This form is often used by producers of primary products fruits, nuts and so on.
  4. Export-management Company: – The middleman agrees to manage a company’s exports for a fee.

Direct Export: A Company can carry on direct exporting in several ways.

  1. Domestic-Based Export Department or Division: – An export sales manager carries on the actual selling and draws on the market assistant as needed. It might involve into a self-contained export department performing all activities involved in export and operating as a profit centre.
  2. Overseas Sales Branch or Subsidiary: – An overseas sales branch allows the manufacturer to achieve greater presence and programme control in the foreign market. The sales branch handles sales distribution and might handle warehousing and promotion as well. It often serves as a display centre and customer service centre.
  3. Traveling Export Sales Representatives: – The Company can send home-based sales representatives abroad to find business.
  4. Foreign-Based Distributors or Agent: – Foreign Based Distributors would buy and own the goods; Foreign based agents would sell the goods on the behalf of the company. They might be given exclusive rights to represent the manufacturer in that country or only general rights.