Q&A - What methods can a business can use to expand into international markets?
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Selling into international markets is increasingly attractive for UK businesses. For example because of:
• Stronger economic growth in emerging economies such as China, India, Brazil and Russia
• Market saturation and maturity (slow or declining sales) in domestic markets
• Easier to reach international customers using e-commerce
• Greater government support for businesses wishing to expand overseas
The four main methods of investing in international markets are summarised briefly below:
Exporting direct to international customers:
- The UK business takes orders from international customers and ships them to the customer destination
Selling via overseas agents or distributors:
- A distribution or agency contract is made with one or more intermediaries
- Distributors & agents may buy stock to service local demand
- The customer is owned by the distributor or agent
Opening an operation overseas:
- Involves physically setting up one or more business locations in the target markets
- Initially may just be a sales office – potentially leading onto production facilities (depends on product)
Joint venture or buying a business overseas:
- The business acquires or invests in an existing business that operates in the target market
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