Direct exporting Essay
When QueenLand Sugar decides to use direct export entry strategy, it has to directly participate in marketing and selling of its products in the Abu Dhabi Market, this is because the company is the one carrying out the export work. This will therefore call for the formation of an export department within the company that will have to carryout duties like: market contract, market research, export documentations, distribution and pricing of the products (Child and Faulkner, 2001, 87).
This method of market entry carries the following disadvantages to the company, it will have to use more resources in terms of human resources and capital and at the same time it has higher risks. However, it has a number of advantages, which includes: Increased volume of sales, better marketing information better control of its operations in the foreign market and increased.
To carry out a direct exporting approach, the company will as well be required to have its representatives in the new markets. The company can achieve this through several ways, as listed below:
International sales representatives: QueenLand Sugar can send these representatives to North Korea so as create business contacts as well as to directly negotiate business deals for the company.
Independent local distributors: The Company can also use these distributors when directly exporting its products to Abu Dhabi Market. In this case, the independent distributors will purchase products from the company and resale them on their domestic market, this can be exclusively or non-exclusively.
Commercial subsidiary: in this approach, QueenLand Sugar will create a wholly owned commercial subsidiary with the intention of having more control over the operations in Abu Dhabi Market. In many instances, the commercial subsidiary is formed as a joint venture with a local company to create accessibility to local business relationships.
This is a market entry strategy that has very minimal risks as well as market control. Indirect sales can be carried out, using these methods:
Domestic sales organization: this is the easiest way of dealing with foreign sales. For instance, QueenLand Sugar can get an unsolicited sales order form a client in Abu Dhabi Market and agree to supply the product requested on a one-off agreement, this means getting involved in an informal exporting. Similarly, a foreign company may come directly to QueenLand Sugar and buy form its domestic plant. Then, the company will later resale the products in its foreign market (where it is located).
This method of selling is likely to arise in a situation where a foreign branch or department has created a buying office in the domestic country of QueenLand Sugar. It is then important that QueenLand Sugar follow up the sales through a continuous marketing promotion to make future sales.
Export Management Company: This is another way of indirect exporting. In this arrangement, an exporting company operating in the same nation as QueenLand Sugar will perform similar duties as that played by an export department of another company. This method as one major economic benefit, the export management company carries out the export duties for many companies. QueenLand Sugar can then create closer business ties as well as get immediate foreign business contracts and skills.
QueenLand Sugar will as well be spared the expenses of forming in-house capability in exporting. Another thing about this method is that it entails commission as the form of payment and this commission can vary according the products being exported. As explained by Hill, (2009) export management companies deal with varied but matching product lines, this means that they can usually benefit from better foreign market representation as opposed to one producer.
As it has been discussed, there are various foreign market entry approaches that QueenLand Sugar can use when entering a new market. Each approach carries a certain level of risks as well as obligation from Apple Inc. Generally, entering a foreign market is a process that can only be achieved through various stages. Normally a company starts with indirect exporting to assess its product’s performance on the foreign market, if the performance is good, the company then gets into more commitment which can be through foreign manufacturing of its products (Mellahli, 2004).
The best method will be based on the benefits the entry method offers, and the extent at which QueenLand Sugar wants to have its presence in Abu Dhabi Exchange Market
Bartett, C, Ghoshal, S & Beamish, P. (2008): Transnational Management: Text Cases and Readings in Cross Border Management. 5th Ed.
Child, J & Faulkner, D. (2001): Strategies of Cooperation: Managing Alliances and Joint Ventures: Oxford University Press.
Gannon, M.J. (2006): Understanding Global Cultures: Metaphorical Journeys Through 28 Countries: Sage Publications, Inc.: Thousand Oaks, CA.
Hill, C. W (2009): International Business: 7th Edition, McGraw-Hill Higher Education
Mellahli, K (2004): Global Strategic Management: Oxford Higher Education.
Subject: Direct exporting,
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 27 September 2016
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