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Write a 3 pages paper on international business practices: of physical movement company.
Write a 3 pages paper on international business practices: of physical movement company. The first section will look at two entry strategies-indirect exporting and direct investment. Afterward, a set of recommendations in the implementation of the chosen strategy will be laid out.
In entering the global market, PM should decide on what market entry strategy to utilize. Among the present market entry strategies, PM can either choose to indirectly export or directly invest in its chosen countries Australia, Mexico, and Canada.
Indirect exporting the most common way through which companies expand to foreign markets. Indirect exporting involves less investment because the firm does not require an overseas sales force or set of contracts. In this type of market entry strategy, however, PM losses substantial control over the marketing process of its products. Out of the various ways of conducting indirect exporting, PM will be using an Export Management Company (EMC) to act as an external export sales department. This company will be tasked to perform the following services: perform market research and develop marketing strategy. use existing foreign sales agents to put PM's products into the foreign market. function as an overseas distribution channel and wholesaler. and take title to the goods and operates on a commission basis (Pierobon n.d.). PM hopes to gain faster entry into the overseas market, better focus on exporting as it gives priority to domestic problems, lower investment costs, and the advantage of employing an EMC's expertise. However, PM will lose control of its export strategy and post-sales service. The EMC can also prioritize more profitable products it has on its account and neglect PM's products.
Direct investment is the strategy where PM can have the biggest involvement in a foreign market. Direct investment involves the development of a foreign-based assembly or manufacturing facility. There are certain advantages in using this strategy. First, the company can take advantage of the lower production costs due to cheaper labor or raw materials, foreign government investment incentives, and freight savings. PM can also develop a closer relationship with its customers as it gains more information about its foreign market. However, there are main drawbacks like the volatility of exchange rates, falling markets, and government changes.
Recommendation
After briefly explaining the two prospective strategies which can be used in global expansion, it is strongly recommended that the company starts to establish its international presence by indirect exporting. This strategy will prepare the company by giving them more knowledge on the attractiveness of the foreign markets. As this is the first time that PM handles the pressure of working for global markets, it is imperative that it gain a significant amount of knowledge on global business processes by being indirectly involved with the initial investment. It should be noted that using an EMC in facilitating transactions between PM and foreign customers will be less risky for the company. It is also important to note that indirect exporting is the best alternative for PM given that it wants to expand in the three markets at the same time.
