Choosing Best Entry Strategy
Christopher Rocas
November 16, 2012
International Business
Choosing The Best Entry Strategy
Abstract
Gliders is a small firm that manufactures sneakers with an embedded wheel that allows the person wearing them to skate. Gliders has brand recognition and is constantly innovating to produced upgraded wheels, fashions, and comfort features. While Gliders is still in its infant stages, it has already generated $56 million US dollars in sales last year. While the company continues to increase domestic sales it has determined a next step for the company is expansion globally. Based on market research, Gliders has decided to target Europe and have its first launch be Germany. The company management will do extensive analysis determining the best medium to break into the market. They have the following options: Indirect Exporting, Direct Exporting, Licensing, Wholly-Owned Foreign Direct Invest and a joint venture.
Alternative 1: Indirect Exporting
Pros
No Initial Investment
Low Risk
Low Reversibility
Cons
Low Revenues
Low Profit
-------------------------------------------------
Low Control
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It is fantastic that this option provides not initial investment, low risk and ease of reversing the indirect exporting. Expanding internationally for a company in today’s economy can be an extremely risky move. The reason I strongly advise this option is due to the fact the risk is near zero. If the Gliders aren’t taken well overseas there has been minimal investment into the expansion besides time (which all will require). This Indirect Exporting strategy is a great way for the company to experiment with overseas and sees if monetary investment and increased amount of effort are worth it.
The opposite side of this is that Indirect Exporting will result in low profits, low revenues and very little control of how the sales takes place in Europe. They will be risking a 5-year time frame of having
November 16, 2012
International Business
Choosing The Best Entry Strategy
Abstract
Gliders is a small firm that manufactures sneakers with an embedded wheel that allows the person wearing them to skate. Gliders has brand recognition and is constantly innovating to produced upgraded wheels, fashions, and comfort features. While Gliders is still in its infant stages, it has already generated $56 million US dollars in sales last year. While the company continues to increase domestic sales it has determined a next step for the company is expansion globally. Based on market research, Gliders has decided to target Europe and have its first launch be Germany. The company management will do extensive analysis determining the best medium to break into the market. They have the following options: Indirect Exporting, Direct Exporting, Licensing, Wholly-Owned Foreign Direct Invest and a joint venture.
Alternative 1: Indirect Exporting
Pros
No Initial Investment
Low Risk
Low Reversibility
Cons
Low Revenues
Low Profit
-------------------------------------------------
Low Control
-------------------------------------------------
It is fantastic that this option provides not initial investment, low risk and ease of reversing the indirect exporting. Expanding internationally for a company in today’s economy can be an extremely risky move. The reason I strongly advise this option is due to the fact the risk is near zero. If the Gliders aren’t taken well overseas there has been minimal investment into the expansion besides time (which all will require). This Indirect Exporting strategy is a great way for the company to experiment with overseas and sees if monetary investment and increased amount of effort are worth it.
The opposite side of this is that Indirect Exporting will result in low profits, low revenues and very little control of how the sales takes place in Europe. They will be risking a 5-year time frame of having