14 Aug Global Marketing Management
· Watch the video titled, “From new technologies to trade opportunities”, (5 min 21 s) located below. You may also view the video at http://youtu.be/MoJp0rgREOY. As you have learned there are many strategies an organization can pursue to conduct business in other countries. Choose a product or service that you would like to sell globally and then describe the mode of entry you would select. Provide support for why you chose that specific mode of entry.
· Preparing an exit strategy is one of the most important sections of a business plan. If you oversaw this global expansion, state three (3) factors that would trigger your exit strategy. Next, determine how you would know if this was the right decision. Provide support for your responses.
Response 1 (Edwin) :
The global food market has become competitive more than ever. However, we cannot deny the potential of high profitability in the industry. Food services, precisely fast food, are exponentially growing in popularity, and people are continuously eager to try new foods. Having a small, simple yet unique restaurant in the town, the prospect of expanding business overseas appears quite promising. Franchising is the most suitable mode of entry for the restaurant business. The strategy is built around initiating one franchise in a foreign country and then expanding reach by adding more franchises in nearby regions. Franchising will allow the service to gain leverage over local services of the area and has become one of the most popular ways for businesses to break into new markets. Just like any other global expansion, this franchising plan needs a solid contingency plan. A suitable exit strategy would be to sell the business as soon as peak revenue is reached. This means that the company needs to be in operation well after the breakeven point has been reached. The three main factors that would trigger the exit strategy are market saturation, peak revenue point, or a highly attractive opportunity for acquisition. If the market becomes saturated, a business may not continue to flourish no matter how unique the service claims to be. Once other businesses start emerging with the same goal to spread variety and ethnicity in the food market, the market may become saturated. Another trigger is a highly attractive acquisition opportunity, which would mean that a bid might be offered that provides more value for the company than anticipated. Peak revenues can be reached any time after the breakeven point, signifying the need for exiting once maximum profitability has been achieved. The exit strategy must be accurately timed to get the most value out of business. The decision for when to implement the contingency plan will be justified if the value of the business reaches its potential. This implies that the owners are satisfied with the amount of profit generated since the initiation of the business.
Response 2 (Jasmine) :
· Watch the video titled, “From new technologies to trade opportunities”, (5 min 21 s) located below. You may also view the video at http://youtu.be/MoJp0rgREOY. As you have learned there are many strategies an organization can pursue to conduct business in other countries. Choose a product or service that you would like to sell globally and then describe the mode of entry you would select. Provide support for why you chose that specific mode of entry.
I would like to sell merchandise from my clothing line in Europe. My fashion line consists of trendy women’s business casual attire that have mix and match classic pieces that are stylish in the U.S. and U.K. Exporting would be the best mode of entry for the apparel industry because clothing can be made and shipped to the U.K. or it can be produced there. It is the most common entry mode for small businesses. I would specifically utilize the direct export method to handle my company’s own export organization with the middleman in the foreign market as the distributor. Instead of manufacturing in the most common countries for apparel such as China or Mexico, I would try the U.K. for convenience.
· Preparing an exit strategy is one of the most important sections of a business plan. If you oversaw this global expansion, state three (3) factors that would trigger your exit strategy. Next, determine how you would know if this was the right decision. Provide support for your responses.
Three factors that would trigger my exit strategy would be sustained losses, volatility, and ethical reasons. The most significant one is sustained losses. If my company doesn’t show growth or profitability in the selected country within five years, it would stop business there. If the expansion is financially harming the company more than it is helping it in the expected time frame, it would be wise to leave. Volatility of threatening risks in the economy or political environment of the foreign country would be another reason my business would exit. War and recession are some examples of events that can cause a nation to struggle. Ethical reasons such as unsafe work conditions would result in my business relocating to a more ethical nation. An example of that would be from the text when Levi stopped making jeans in China and later returned years later after finding plants with better ethical standards.
Kotabe, M., & Helsen, K. (2017). Global marketing management (7th ed.). Hoboken, N.J.: John Wiley & Sons, Inc.
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