Reference no: EM132275189
Give opinion: The objective of continued growth can lead companies to enter the global market. Entering the global market can be risky as well as beneficial. Understanding product goals, future costs, and new markets are essential in selecting the best approach to meting the global marketplace. The different strategies for global market infiltration include indirect exporting, direct exporting, licensing, joint ventures, and foreign direct investment (Finch, 2012). Each strategy has its benefits and limitation that must be considered when selecting the best approach for one’s brand. For example, indirect and direct exporting minimize risk and maximize flexibility, but can be more costly to customers and manufacturers. Licensing allows for easy entry into foreign markets with little investment, but limited participation, lack of marketing controls, and limited returns are the downside. Joint ventures provides a better understanding of the new market and reduces exposure to political uncertainty, but costs and investments are much higher with the potential to create a future competitor. Finally, foreign direct investment provides better market infiltration and help avoid tariffs, but is more risky and costly (Finch, 2012).
An example of a company that has been successful in entering foreign markets is Nike. Through strategic and careful sponsoring, the company has built demand in new markets. In 2010, Nike announced they planned to invest $500-$600 million in capital to develop direct to customer business over a five year span in global retail (Nike, 2010). Just examining the figures, we can see that the cost for internal operations is significant. However, the benefit can be more control and new market experience for Nike.
Other industries can learn from McDonald’s ability to adapt to the markets they enter. While maintaining their original options, McDonalds offers menu options that are similar to the local cuisine. During a recent trip to Thailand, I was able to experience they very different variety that is offered at McDonalds in Thailand. I believe Nike has approached foreign markets the same way by sponsoring select individuals in certain countries.