Routes to Market Overseas

Routes to Market Overseas

Whitney - August 26, 2017

In general, there are exactly four routes a company could take when willing to enter a new market and they all differ based on a few factors such as the risk the company is willing to take, the investment that it could make, the profit it is aiming for and so on. In order to pinpoint which, one would be best; a thorough market analysis should be done. Only after taking consideration all of the respective factors could you choose one of the four.

Selling Through Agents and Distributors

The first way is to find companies which already operate on the market and would be glad to take your products at a lower price but at a much higher quantity. You wouldn’t have to send a parcel to Malta for example. The distributor will handle the goods as per the contract; however, the negative side of this route is that you lose the local representation of your product. Once the distributor takes your product, he takes all of the risk but also can sell at a price of his desire and construct a negative image.

Selling Directly

As per the example above, you have opted in to sell your products directly on the market. Nowadays that does not mean that you would need physical representation in the country. You could simply lead a strategic marketing campaign online, and after the sell, you could simply send a parcel to Malta to the respective customer. The Department of Trade and Industry (DTI) offers a variety of different services meant to help and support you along the path of entering the new market.

Opening Up an Overseas Operation

Right off the bat, we would recommend that you don’t even consider that option unless you are an enormous company. The investments required to set up a local operation are huge and would heavily depend on the country’s economical state, political state, and the cultural differences. It does hold the best long term benefits, but the risks are the biggest as well. Unless you are aiming to conduct business in the respective country for decades, you should look into the other alternatives.

Selling Franchise Rights or Signing Up a License Deal

As you are probably aware, that would basically mean to sell the rights of your brand to another company operating in a different country. The two deals generally have the same concept; however, the franchise is a bit extended as it also requires that you would find a particular location for the franchise shop to be set up as well. They are long term deals, and the original company sells the rights but also the risks that come with entering the market on their own. Generally, franchises are sold only by extremely developed businesses.

These four possible routes spread across all possible ways in which a company could enter a foreign market. Each of them has its respective responsibilities, risks, and benefits, which should be weighed upon each other before making a decision.

 

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