Business
Mode of entry:
§represent the supplier and are based in the new market
§ earn a commission based on a percentage of sales generated
§ agent places the orders for customers, business sends direct to customers and gets payment direct from customer
§ provides advice to business re: most appropriate sales price
§ may be exclusive or represent multiple brands or products
International Agents
Mode of entry:
A formal business arrangement where two or more independent businesses create a new business, entity or project to achieve a specific goal.
Each partner contributes resources (capital, technology, expertise etc) and owns a portion of the new venture – which is a separate legal entity
Joint Ventures
Measures the total value of all goods and services produced within a country during a specific time period – from quarterly to yearly.
GDP
(Gross Domestic Product)
Mode of entry:
§Buys goods from the business then re-sells to wholesalers, retailers or consumers in the new market
§ carry complementary or competing products lines and often offer after sales service
§ paid fees by adding profit to the sales price, which are higher than agents
§ often extend credit to customers and are responsible for marketing, among other added responsibilities
International Distributors
Mode of entry:
A formal agreement between two or more independent businesses to work together in the short or long-term for mutual benefit to achieve shared objectives, while remaining separate legal entities
Strategic Alliances
Mode of entry:
The license may be held by multiple parties and the licensor could even enter the market in their own right.
Non-exclusive licensing
A series of small improvements that occurs over a period of time.
Expansion through innovation
It is a smaller market that focuses on a specific demographic, product or service and can be strategically developed by the business or can evolve organically.
Niche Markets
Mode of Entry:
It’s a contractual agreement allowing one business to use another’s Intellectual Property (e.g patents, brands, designs or business knowledge) and allows a business to enter a new market with limited risk.
The local business pays fees and in return receives the necessary branding, equipment and operational procedures.
Franchise - Licencing
Mode of entry:
Are the most common form of license.
Allows a business to commercialise its IP and sell it to domestic and international markets at the exclusion of all other businesses (e.g. sell Coca Cola products, but not Pepsi) in a certain area, for a certain product or within a time period.
Exclusive Licensing
The activities that a business engages in to develop new, improve existing or evolve its services or products to gain a competitive advantage.
Expansion through research and development
When products and services are manufactured in their home country and then sent off to another country.
It is an entry-level introduction to global expansion and international business activities.
It doesn’t require a large capital investment, as operations remain in home country.
Exporting
This growth strategy is when a business increases or expands its geographical reach by selling to new customers in new locations by replicating a successful product, service or business model.
It may involve:
Selling the current products in a new market
Making slight adaptations of the existing product to increase revenue
Acquiring other businesses
Horizontal Integration (Growth)
Has operations worldwide, and it does not identify any home country.
It operates facilities and business activities in many countries around the world, using the same coordinated brand in all markets.
Global Business
Often described as ‘breakthrough technologies’ that are likely to shape our lives in the near future.
They can disrupt industries, drive business growth, facilitate expansion and create niche markets.
Expansion driven by Emerging Technologies
This strategy of the Ansoff matrix:
Focuses on expanding sales of existing products in the existing market.
(In other words, getting your existing customers to purchase more)
Examples include - price drops, marketing campaigns, improved distribution networks and increased customer service.
Market Penetration
This growth strategy focuses on increasing customers and sale opportunities by taking over processes such as production (manufacturing) and distribution that the business may not currently manage.
Vertical Integration (Growth)
Operates within the boundaries of one country and is generally a micro or small business
For Example: a hairdresser, fruit market or
café that buys its resources and
sells its products and services in
the local or interstate market only.
Domestic Business
This strategy from the Ansoff matrix:
Focuses on introducing a new product into an existing market.
Examples include - designing a new, environmentally friendly product to meet the changing needs of consumers e.g. hybrid and electric vehicles. Apple developing consumer electronics iPad, iPod, iPhone, Apple watch, Air Pods
Product Development
Have a decentralised approach: marketing, R&D and decision-making powers are given to each of several individual foreign and independently operated centres around the world.
Transnational Business
This strategy from the Ansoff matrix:
focuses on putting an existing product into an entirely new market.
Examples include - opening a new store in a new location or country or expanding to sell online as well as in a physical location.
Market Development
What are the 5 levels of Business expansion?
-Domestic
-International
-Multinational
-Transnational
-Global
Based in one country but imports from, or exports to, other countries to obtain resources or revenue.
Most large companies that have no
investment outside of their home country,
but engage in business activity across
multiple countries
International Business
This strategy from the Ansoff matrix:
Focuses on entering a new market with a new, unrelated product or service.
Examples include - expanding the scope of the current business into an unrelated market to widen the reach of goods and services offered.
E.g Virgin Records, Airlines, Money and Credit Cards
Are generally structured with a headquarters in its country of origin but has expanded with subsidiaries or production facilities in several other countries.
There is some limited de-centralisation of decision-making, but a number of key areas (HR) are managed through headquarters. E.g Flight Centre Travel Group and Michael Hill International Ltd.
Multinational Business