A business analysing the options suggest by the Ansoff Matrix might well be tempted to focus on the bottom-left quadrant (market development) and try to enter international markets as part of a growth strategy.
Selling into international markets is increasingly attractive for UK businesses. For example because of:
The main methods of investing in international markets are:
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
Whatever method is used, a business looking at international expansion needs to consider some specific risk factors:
Cultural differences: a business needs to understand local cultural influences in order to sell its products effectively. For example, a product may be viewed as a basic commodity at home, but not in the target overseas market. The sales and marketing approach will need to reflect this.
Language issues: although the common business language worldwide is now English, there could still be language issues. Can the business market its product effectively in the local language? Will it have access to professional translators and marketing agencies?
Legislation: legislation varies widely in overseas markets and will affect how to sell into them. A business must make sure it adheres to local laws. It will also need to consider how to find and select partners in overseas countries, as well as how to investigate the freight and communications options available.
Each of the above methods has benefits and drawbacks, as summarised below:
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