International Business Plan. The complete guide: How to internationalise your company by Global Marketing Strategies

International BusinessINTERNATIONAL Plan BUSINESS PLAN THE COMPLETE GUIDE: HOW TO INTERNATIONALISE YOUR COMPANY

ÍNDICE

INTERNATIONAL BUSINESS PLAN

CONTENTS

STRUCTURE OF THE PLAN

DEVELOPMENT OF THE STAGES

METHODOLOGY

CASE STUDY

INTERNATIONAL BUSINESS PLAN

STAGE I INTERNATIONAL DIAGNOSTIC

STAGE VI ECONOMIC PLAN

STAGE V INTERNATIONAL PROMOTION STRATEGY

INTERNATIONAL BUSINESS PLAN: STAGES

STAGE IV INTERNATIONAL OFFER

STAGE II MARKET SELECTION

STAGE III MARKET ENTRY METHODS

INTERNATIONAL BUSINESS PLAN

STRUCTURE OF THE INTERNATIONAL BUSINESS PLAN STAGE 1: 1.1 1.2 1.3 1.4 STAGE 2: 2.1 2.2 2.3 2.4

INTERNATIONAL DIAGNOSTIC Internal analysis (company) External analysis International SWOT analysis International Diagnostic MARKET SELECTION Concentration/Diversification Country grouping Selection of most favourable countries Selection of target markets

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INTERNATIONAL BUSINESS PLAN

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INTERNATIONAL BUSINESS PLAN Stage III: Market Selection

Development of the stages STAGE VI

STAGE V

STAGE I

FORMS OF ENTRY

STAGE IV

STAGE II

STAGE III

MARKET ENTRY METHODS

ALTERNATIVE MARKET ENTRY METHODS

SELECTION OF MARKET ENTRY METHODS

PROFILE OF THE IDEAL CLIENT/AGENT/DISTRIBUTOR/PARTNER

NEGOTIATION CONDITIONS

INTERNATIONAL BUSINESS PLAN Development of the stages 3.1

Stage III: Market Selection

Alternative Market Entry Methods

Choose between the following market entry methods that your company could employ to sell your products in the chosen market in sheet 2.4. Direct exports from your country to final client (DE) Exports via the Internet â&#x20AC;&#x201C; electronic commerce (EC) Commercial agent in the foreign country (CA) Importer and distributor in the foreign country (I/D) Purchasing centres/Large retail chains Trading companies (T/C) Piggyback agreements with foreign manufacturers (PG) Franchise agreements (FA) Licence agreements (LA) Establishment of a sales Branch(SB) Establishment of a sales subsidiary (SS) Establishment of a mixed company (MC)

INTERNATIONAL BUSINESS PLAN Development of the stages 3.2

Stage III: Market Selection

Selection of Market Entry Methods

From the following criteria select the form of entry; choose those which are considered the most relevant for your company, noting “X” in the left column. If you consider it necessary add three more criteria. Once you have chosen the criteria, value the four most favourable selected alternatives on the sheet 3.1, for each of the criteria. Give 5 points to the most favourable alternatives, 4 to the second most favourable, 2 to the third most favourable and 1 to the least favourable. SELECTION CRITERIA

I/D

Your company relies on a shortage of resources to access the foreign markets In your sector it is difficult to find qualified sales workforce for international sales Your product requires a foreign stock which your company does not wish to finance You wish to reduce foreign intermediation margins as much as possible The product requires demonstrations or a room of expositions for the clientele

The product requires a post sale service. You wish to negotiate directly with the final client You want to develop a brand policy in the foreign markets You do not want to assume the risk of unpayment of a large number of clients For your international strategy look for partnerships with reliable companies

TOTAL

DIAGNOSTIC

INTERNATIONAL BUSINESS PLAN

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INTERNATIONAL BUSINESS PLAN Stage III: Market Entry Methods

Methodology

STAGE VI

STAGE V

STAGE I

FORMS OF ENTRY

STAGE IV

STAGE II

STAGE III

STAGE III MARKET ENTRY METHODS

ALTERNATIVE MARKET ENTRY METHODS

SELECTION OF FORM OF ENTRY

PROFILE OF THE IDEAL CLIENT/AGENT/DISTRIBUTOR/PARTNER

NEGOTIATION CONDITIONS

Methodology 3.1

INTERNATIONAL BUSINESS PLAN Stage III: Market Entry Methods

Alternative Market Entry Methods

The main alternatives to commercialize your products abroad are the following:

Direct exports (D/E): the company has its own commercial team (director of exports/export executives) who perform direct sales with the clients. This is very useful for products where the final number of clients are limited (for example public work machinery or the sale of food and beverage products to large purchasing centres).

Electronic commerce (EC): consists of receiving orders over the internet. It requires a system of guarantee of payments and a logistic capacity to comply with delivery conditions. Overall it is commonly used in developing countries, mainly in export trade between companies and in the sales of certain consumer products (books, wine, gourmet food, etc.)

Commercial agent (C/A): the commercial agent operates representing the company but it has very limited powers. It is not a client but an intermediary who presents and negotiates the final offer with clients or distributors. It is useful when the final number of clients in a foreign country is too high to attend them from the country of origin (for example, this form of entry is used to sell home textiles or furniture in Germany).

Importer/Distributor (I/D): this is the most common way for SMEs which export. The distributor works with its own portfolio of clients and offers services such as transport, storage, after – sales service, etc. The distributor is a client, who buys directly except in some sectors, those which practice consignment sales (for example fruit sales in France), where the distributor operates more like an agent.

Purchasing centres (PC): these are corporations of distribution companies which group their purchasing in order to have a greater capacity to negotiate with the suppliers. Occasionally they operate as wholesalers. They are very demanding with regards to the quality of the product and the compliance with delivery conditions. It has a growing importance in the commercialization of consumer goods.

Trading companies (TC): these are import – export companies which specialise in foreign markets. They know the needs and capacities of consumption of the clients and distributors. Occasionally they can participate or collaborate together in the financial package of the operations. They have a special form of entry in 11

INTERNATIONAL BUSINESS PLAN

Japan, China and Eastern countries due to their importance of being such large companies.

Piggyback agreement (PG): this agreement is a collaboration between various manufacturers from non–competitive and complementary products in order to profit the most from the established distribution channels. The remuneration can be determined via a discount that the supplier (exporter) achieves through the carrier company (manufacturer in the foreign country) or by a commission depending on the sales as payment from the supplying company to the carrier company.

Franchise agreement (FA): this is a contract between the supplier, retailer or organization of services (franchiser) and a retailer (franchisee). It is based in the product, service or brand that the franchiser gives to the franchisee for its operation in agreement with some determined norms. The franchisee receives technical support and it benefits from institutional publicity and many other advantages. The franchiser obtains compensation through different mediums, principally a percentage of the sales or a contribution of the profits.

Licence agreement (LA): this agreement consists of an access to a technology or a certain way of manufacturing in exchange for a finance compensation which is carried out with the payment of royalties or commissions. The licenser has the technology and the know-how, and the licensee receives exclusive rights to produce and sell in markets. When the technical knowledge that they give is not protected by a patent we talk of “Technical Assistance”.

Sales Branch (SB): consists of the expansion of the company’s commercial department to a foreign market. In legal terms, the branch forms part of the head office, in this sense one does not depend on the operating facilities that a subsidiary requires.

Sales subsidiary (SS): it is a form of entry that you can use once you have reached a certain volume of sales in the market. It presents numerous advantages: a direct relationship with the client, independence to fix final prices, the elimination of commercial margins, greater agility in distribution and the possibility to offer a post sales service. The disadvantage is that it demands an unnecessary investment in market entry methods and it assumes a greater risk and a certain level of commitment.

INTERNATIONAL BUSINESS PLAN

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Mixed company. this is a company created by two or more companies from different countries for the common development of an activity. Usually they are companies of the same sector but with different competitive advantages. For example, the participation of one of the associates may consist of the transference of technology while the other may consist of an in-depth knowledge of the market and distribution network. It is a very useful form of entry for markets with difficult access (China, Eastern countries) which depends a lot on preferential finance and the support from international programs.

INTERNATIONAL BUSINESS PLAN Stage III: Market Entry Methods

Methodology 3.2

Select Market Entry Methods

If the company wishes to penetrate a new market it is vital to find an importer or a client before deciding how to penetrate the market. However, the chosen form of entry will be determined depending on the success in the short - medium term. Once the possible alternatives are chosen in the previous sheet one should select the most favourable and evaluate them on certain criteria. Below are a few examples demonstrating how to valuate this criterion. FAVOURABLE ALTERNATIVES

NOT FAVOURABALE ALTERNATIVE

Resource shortage

Commercial Agent Trading companies

Difficult to find qualified workforce for exports

Importer/ distributor Purchase centres

Direct exports Commercial delegation

Necessity of foreign storage

Importer/distributor Piggyback agreement

Direct exports Commercial agent

Reduction of intermediation margins

Direct export E-commerce

Importer/distributor Piggyback agreement

Requirement of demonstrations for the clientele

Importer/Distributor Delegation/Sales subsidiary

Direct exports Commercial agent

Need for after sales service

Delegation/Sales subsidiary, Licence agreement

Direct exports Commecial agent

Direct negotiation with the final client

Filial comercial Direct exports E - commerce Sales subsidiary

Commercial agent Importer/distributor Trading campaign

Sales Branch/Franchise

Piggyback agreement Trading campaign

One does not want to assume the risk of unpayment of a large number of clients

Trading campaign Licencsing agreement

Direct exports Commercial agent

Strategy of finding partnerships

Piggyback agreements Licence agreements Mixed companies

Direct exports Trading company

Development of brand policy

Mixed company

INTERNATIONAL BUSINESS PLAN Stage III: Market Entry Methods

Case Study STAGE VI

STAGE V

STAGE I

MARKET ENTRY METHODS

STAGE IV

STAGE II

STAGE III

STAGE III MARKET ENTRY METHODS

ALTERNATIVE FORMS OF ENTRY

SELECTION OF FORMS OF ENTRY

PROFILE OF IDEAL CLIENT/AGENT/DISTRIBUTOR/PARTNER

NEGOTIATION CONDITIONS

Case Study 3.1

INTERNATIONAL BUSINESS PLAN Stage III: Market Entry Methods

Alternative forms of entry

Choose between the following four market entry methods that your company could utilize to sell products in the chosen market in sheet 2.4. Direct exports from your country to final client (DE)

Exports via the Internet â&#x20AC;&#x201C; electronic commerce (EC) Commercial agent in the foreign country (CA)

Importer and distributor in the foreign country(I/D)

Purchasing centres/Large retail chains(P/C) Trading companies(CT)

Piggback agreements with foreign manufacturer (PG) Franchise agreements(FR) Licence agreements(LC) Establishment of a sales branch(SB)

Establishment of a sales subsidiary(SS) Establishment of a mixed company(MC)

INTERNATIONAL BUSINESS PLAN Stage III: Market Entry Methods

Case Study 3.2

Selection of forms of entry

From the following criteria select the form of entry; choose those which are considered the most relevant for your company, noting â&#x20AC;&#x153;Xâ&#x20AC;? in the left column. If you consider it necessary add three more criteria. Once you have chosen the criteria value the four most favourable selected alternatives on the sheet 3.1, for each of the criteria. Give 5 points to the most favourable alternatives, 4 to the second most favourable, 2 to the third most favourable and 1 to the least favourable.

SELECTION CRITERIA

I/D

Your company relies on a shortage of resources to access the foreign markets For your international strategy look for partnerships with reliable companies

Your product requires a foreign stock which your company does not wish to

The company does not have experience in the operational management of foreign trade

TOTAL

finance X

You wish to reduce foreign intermediation margins as much as possible The product requires demonstrations or a room of expositions for the clientele

The product requires a post sale service.

You wish to negotiate directly with the final client

You want to develop a brand policy in the foreign markets You wish to develop a brand policy in the foreign markets X

You do not want to assume the risk of unpayment of a large amount of clients For your international strategy establish the most suitable alliances with ither companies which seek intermediaries

DIAGNOSTIC

IMPORTER/DISTRIBUTOR

INTERNATIONAL BUSINESS PLAN

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