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Essay on International Marketing

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International Marketing

Introduction

The organization that I have chosen for this assignment is the Lancashire Farm Dairies, which produces a range of stirred, and set yoghurts. The firm has grown from very humble beginnings to one of the leading producers of natural yoghurt in the UK. It has managed to get listings in all the main supermarkets in the country which include Morrissons, Tesco, ASDA, and Sainsbury. Besides, it supplies to foodservice businesses, wholesalers, and food manufacturers. The business has been ambitious but has always kept a low profile. However, it has managed to set a new record, in yoghurt production, thus challenging the big industry players in the country. As the firm aim is to undergo a complete transition to a mainstream producer, it will be important to consider other markets outside the UK.

International market refers to a market that is beyond the international borders of the country, in which a company is a citizen. A company is considered to have a legal entity and belongs to the country in which it is organized. The international market involves a company conducting its economic transactions across its country’s borders, and with the rest of the countries in the world. Local market on the other hand is considered to be the type of business where a business conducts its economic transactions within its country’s geographical boundaries. The selling procedure in the local market is simple, and unaltered whereas in the international market the selling procedure keeps on changing. Also, in the local market transactions are done using a single currency whereas multiple currencies are used in the international market. Market restrictions are high in the international market as compared to the local market. Moreover, the risks involved in the international market are relatively high as compared to the risks in the local market. Besides, capital investments in the international market are huge as compared to fewer capital investments in the local market (Czinkota and Ronkainen, 2013).

Key Concepts, and Scope of International Marketing

International marketing is a constructive commercial, and economic activity which is essentially beneficial, and useful to all business, and countries that are participating. It is an instrument of development, and growth worldwide. Its scope includes exports to foreign markets. The scope of international marketing also involves various activities that need to be performed by the exporter which includes, the establishment of a processing branch in the foreign market to enable assembling and packaging of goods as per the market needs. The exporters may also be required to form collaborations, and joint ventures with foreign firms to work together in manufacturing, and marketing products in the foreign markets. Besides, exporters make licensing arrangements with foreign enterprises where they grant them the right of using the know-how of the company, its patents, trademarks, and processes. The scope of international marketing also covers consultancy services that an exporter may be offering, in projects that they undertake in foreign countries. The company that is exporting sends experts, and consultants in another country, to direct, and guide manufacturing activities. It also includes the managerial, and technical know-how that the exporting company provides. Lancashire farm dairies feel the need to market internationally to diversify and expand their revenue sources by introducing their quality products in other countries. The business has already covered a significant market area in the UK, and its only available option of expanding, and growing is going international. Bides, the expansion will cushion the firm in case of any kind of sluggishness in the domestic economy, or other unforeseen effects on the domestic market.

Routes to Entering the International Market

One of the routes is through acquisition where a firm takes over another firm and controls it through the purchase of its stock, exchanging its stock for another company’s stock, or paying a price to purchase the firm in case it is privately owned. There has been a dramatic rise in cross-border acquisitions in modern times due to the increasingly flat world. The acquisition is of great benefit as it gives a company a ready market that is established, and quick. However, the strategy is quite expensive, thus does not favour small companies. Another route is the establishment of a company’s subsidiary that it has complete ownership of, and new in the particular country. The company that establishes this subsidiary is in a position to have maximum control over the subsidiary and to enjoy returns that are above average. However, the risks and the costs involved are high as a company is establishing this subsidiary in a foreign country. Another route involves a firm creating a strategic alliance and partnerships with partners in the foreign county whose market is aiming to penetrate. The strategy involves two or more firms entering into a contractual agreement, committing to cooperate in specified ways for a specific period to achieve defined goals. Each firm benefit from the value that their partner or partners bring. Local firms help foreign firms as they have a better understanding of the local market and culture. Another route that is available to a firm is exporting whereby a business sells products and services that have been sourced from its country of origin to foreign countries. It is considered to be the easiest route, and it helps the firm to avoid most expenses especially those that are involved in the establishment of operations in another country. Lancashire firm dairies should enter the international market through establishing strategic alliances, and partnerships with other successful dealers in dairy products in various foreign countries. Selling daily products will require a better understanding of the culture of the foreign market, and the firm may also benefit from the facilities of its strategic partners instead of investing in more facilities in the foreign market (Terpstra et al.,2012).

Selection Process, and Key Criteria to be Used by a Company when Considering the International Market to Enter

The firm needs to start by ascertaining its objectives in joining the international market. It may choose a particular market depending on the objective that it aims to achieve. This should be followed by the selection of parameters to use in the selection and the evaluation of the market. The parameters that may be used include the situation of the market, firms’ resources, government policy, competition, and the international environment. The next step involves preliminary screening where markets with less or no potential are eliminated. Then the markets are shortlisted, by screening them further using the available additional information to ensure that only the markets with the highest potential remain. The step that follows is the evaluation, and selection using the feasibility study, and cost-benefit analysis. This stage involves ranking the markets in terms of overall attractiveness and choosing the best one. This is then followed by test marketing which involves product launch in a small section of the market to assess the consumer response about the product. Finally, in case the test is successful the company starts the mass production of the product in the specific markets. This stage may involve the introduction of minor modifications to the product mix (Doherty,2009).

Definition of a Market Entry Strategy

It refers to a planned method of delivery, and distribution of goods, and services to a new target market. In the case of exports, and imports it can be described as the establishment, creation, and managing of foreign country contracts.

Advantages, and Disadvantages of Market Entry Strategies

Exporting involves marketing goods produced in one country to another country. Its advantages include the reduction of risks that are associated with operating overseas. Also, it gives a firm a chance to gain knowledge of the overseas market before it makes the decision of investing in infrastructure, and brick and mortar. The main disadvantage of this strategy is the firm risks being at the mercy of agents who are overseas, thus risks losing control. Another strategy is licensing which involves an agreement to allow a firm in a foreign country to use the know-how, trademark processing, manufacturing, and other skills that the licensor may provide. Its advantages include linking the interests of the receiving partner, and the parent thus ensuring all parties benefit from the arrangement. It also provides a perfect start to a firm’s operations in a foreign country, and establish manufacturing relationships that are low risk. Besides, the firm’s capital does not get tied up in operations in a foreign country. Its disadvantages include the potential loss of returns from manufacturing and marketing. Also, there is a high possibility of the firms that have been given the licenses becoming competitors. Also, this type of arrangement requires considerable planning, fact-finding, and interpretation. Joint ventures are another strategy that involves the sharing of ownership by investors. The advantages of this strategy include strengthened financial power as firms come together. It also involves sharing of ability, and risk to combine the knowledge with foreign partners who have the technological know-how. The disadvantages include the fact that it may not be possible to recover the firm’s capital when needed. Also, partners lack management full control, and partners may differ on their expectations of the benefits (Masiero et al., 2017).

Critical Evaluation on Adaptation of Marketing Strategies

As organisations enter a foreign market, they experience pressure with advertising, and marketing strategies to employ. As their knowledge of the market increases, they are motivated to start developing improved products that the local market needs. The decision to adopt, and the extent by which to adapt depends on the cost that a firm incurs to develop a localized strategy, and the benefit that the firm gains by serving local markets better. As a firm venture into a foreign market, it seeks to have leverage on the position that it has on the domestic market, to achieve scale economies. However, it faces strategic options that are different as it enters the foreign market. The formulation of an organisations entry strategy is influenced by conscious consideration of a firms resources, objectives among other factors. Lancashire farm diaries should on entering the international markets develop, and refine their marketing strategies to capture the global aspect of its business. It should adopt strategies that help it to expand its business in the new markets by ensuring that it meets the specific needs of the locals, and upgrade to the level of the local competition, or even outgrow it. Besides, the firm should be concerned with the utilization of the local assets, and the knowledge that it has acquired aimed at extending its product development or line that can use the distribution channels that already exist. Its strategy should also focus on the standardization of the product to reduce the cost of developing the product. The firm will also be in a position of facilitating the development of the quality product that is uniform, and developing a strong brand in the foreign markets (Ryans et al.,2003).

Conclusion

Lancashire diaries consideration to join the international market is timely and well thought. It will enable the firm to expand its possibilities of gaining revenue as the local market continues to shrink giving it fewer opportunities for growth, and expansion. However, the firm needs to consider the effective strategies that will guide it in making decisions and developing policies in the international market to ensure that its entry into the global market is successful, and adds value to its business. The choice of the firm’s entry strategies needs boldness, and creativity to ensure that it survives in the battles that it will face in the global market, and prevail ahead of the competition. Therefore, it is critical for the firm to critically consider the entry strategies, and develop strategies to overcome any form of complexities to ensure success in this important consideration.

Recommendation

My recommendation is that Lancashire dairies use the strategic alliance’s entry strategy to venture into the international market, as it will be easier, faster, and highly beneficial to the company considering the nature of the firms’ products. Also, this strategy will be quite useful to the company as it will learn about the foreign market at a faster rate and put it in a position where the risk of venturing into the market is significantly low. However, the firm needs to follow the strict process of researching and screening the various aspects of the markets that it is interested in to ensure that in the end, the chosen markets will lead to good returns on the investments made. Thus, the right strategy and thorough research on markets in foreign countries will be key in determining its success and overcoming the international market challenges.

Reference List

Czinkota, M.R. and Ronkainen, I.A., 2013. International marketing. Cengage Learning.

Doherty, A.M., 2009. Market and partner selection processes in international retail franchising. Journal of Business Research, 62(5), pp.528-534.

Masiero, G., Ogasavara, M.H. and Risso, M.L., 2017. Going global in groups: a relevant market entry strategy?. Review of International Business and Strategy.

Ryans, J.K., Griffith, D.A. and White, D.S., 2003. Standardization/adaptation of international marketing strategy: Necessary conditions for the advancement of knowledge. International Marketing Review.

Terpstra, V., Foley, J. and Sarathy, R., 2012. International marketing. Naper Press.

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