Marketing Strategy: The Opportunities And Problems Of Entering New Foreign Markets (Copy)
Cheat Sheet: 4.3 Entering New Foreign Markets
Growth Potential of New Markets
| Factor | Explanation | Example |
|---|---|---|
| Larger Customer Base | Access to more buyers | Samsung selling in Africa & Asia |
| Higher Sales & Profits | Expanding = more revenue streams | Starbucks expanding into China |
| Diversification | Reduces reliance on one country’s economy | Toyota selling globally |
| Economies of Scale | Larger production volumes reduce costs | Apple mass-producing iPhones |
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Business Studies Full Scale Course
Problems of Entering Foreign Markets
| Problem | Explanation | Example |
|---|---|---|
| Cultural Differences | Different tastes, religion, customs | McDonald’s avoiding beef in India |
| Language Barriers | Miscommunication in ads/labels | Brand names mistranslated |
| Legal Restrictions | Laws vary by country | Stricter labour laws in EU |
| Lack of Market Knowledge | Poor understanding of demand | Company fails to research local tastes |
| High Costs | Setup, transport, promotion | Building factories abroad |
| Exchange Rate Risks | Currency changes affect profit | UK exporter loses money if pound appreciates |
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Business Studies Full Scale Course
Overcoming Problems
| Method | Benefits | Limitations | Example |
|---|---|---|---|
| Joint Ventures | Share knowledge, reduce risk, split costs | Conflict between partners, profit shared | Car makers partnering with local firms in China |
| Licensing | Local firm produces/sells product, earns royalty | Less control, risk of imitation | Disney licensing products worldwide |
| Franchising | Quick expansion with local operators | Quality control harder | KFC franchises abroad |
| Local Agents/Distributors | Access to local knowledge, easier entry | Commission costs, less control | Cosmetics firms using local distributors |
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Business Studies Full Scale Course
Quick Revision Bullets
- Opportunities = larger market, growth, economies of scale, diversification
- Problems = culture, laws, costs, exchange rates, lack of knowledge
- Solutions = joint ventures, licensing, franchising, local agents
- Each method reduces risk but may limit control or profits
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Business Studies Full Scale Course