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Trade Routes: International Markets the Right Way
By: Michael Wynne
Posted: August 7, 2007, from the August 2007 issue of GCI Magazine.
page 2 of 3
This example is exaggerated, but not by much. You would be amazed by how many companies’ entry into international markets takes place in a similar fashion. Most companies have backed into international markets rather than stepping forward in an organized and analytical way.
Once in an international market, inertia usually sets in, and no one ever asks if it is the right market to be in. The fact is that there are right markets and right market entries for every product, service and company. Unfortunately, analysis rarely takes place in most companies, even among the huge multinationals.
So, what is the right way to enter international markets? The logical approach is to first define the criteria of a right market for your product. Once the criteria are defined, it is relatively easy to compare countries, markets and entry strategies to determine which seem more appropriate.
Of course, significant homework should be done to learn as much as possible about the countries, their markets and best market entry strategies before conducting the analysis and comparison. There is a wide variety of market entry strategies. Most companies, however, tend to focus on the easiest first: exporting.
While exporting can be quite profitable, I refer to it as “the lazy man’s way to international business.” Why? Because, most exporters ignore the full potential of the markets to which they ship their products to. They often don’t know how their product is being distributed, sold, promoted and used in these countries. The potential market is usually far larger than what is being sold by exporting alone.