The benefits of exporting and licensing products
Assignment Details
Marketing professionals need to understand the international conditions for entering a new market because it can help the company expand globally and gain a competitive advantage.
You are a consultant to a U.S. food products company that is looking to sell its new plant-based “meat substitute†internationally in a country where a vegetarian lifestyle is popular. There are several modes of entry that the company can follow to sell internationally, but it does not know which option to pursue.
Watch the following video to learn about modes of entry:
Methods of Entering International Markets
You are to convince your client that they should sell the product in an international market by providing a rationale for doing business in a foreign country.
Download this assignment template. Then, in a 3–5-page paper, respond to the following:
What are the benefits of exporting and licensing products?
What is the benefit of a foreign direct investment?
What steps might you take to help your client understand the differences between exporting and licensing products and making a foreign direct investment?
What recommendation would you provide your client based on your rationale?
Sample Solution
Prompt:
Task: Convince a U.S. food products company to sell its plant-based "meat substitute" internationally in a country where a vegetarian lifestyle is popular.
Requirements:
- Watch a video on "Methods of Entering International Markets"
- Write a 3-5 page paper
- Address benefits of exporting, licensing, and foreign direct investment
- Explain the differences between these methods
- Provide a recommendation for the company
Proposed Paper Outline
Introduction
- Briefly introduce the U.S. food products company and its plant-based "meat substitute"
- Highlight the potential of the international market for this product, especially in a country with a popular vegetarian lifestyle
- State the purpose of the paper: to recommend a suitable mode of entry for the company
Modes of Entry
- Exporting:
- Define exporting
- Discuss the benefits of exporting for the company, such as lower investment costs, minimal risk, and flexibility
- Highlight potential challenges, such as tariffs, trade barriers, and cultural differences
- Licensing:
- Define licensing
- Discuss the benefits of licensing, including lower investment costs, access to new markets, and potential for revenue sharing
- Highlight potential challenges, such as loss of control over the product, risk of intellectual property theft, and limited profit potential
Full Answer Section
- Foreign Direct Investment (FDI):
- Define FDI
- Discuss the benefits of FDI, such as greater control over operations, potential for higher profits, and long-term market presence
- Highlight potential challenges, such as high investment costs, political risks, and cultural barriers
Comparison and Contrasting of Modes of Entry
- Create a table or chart comparing the three modes of entry based on factors such as investment costs, risk, control, and profit potential
- Discuss the key differences between the modes and how they might impact the company's decision
Recommendation
- Based on the analysis of the benefits, challenges, and comparative factors, provide a clear recommendation for the company's mode of entry
- Justify the recommendation by explaining how it aligns with the company's goals, the characteristics of the target market, and the specific advantages of the chosen mode
Additional Considerations
- Cultural Factors: Research the cultural nuances of the target market to understand consumer preferences, dietary habits, and potential challenges in product adaptation.
- Market Analysis: Conduct a thorough market analysis to assess the competitive landscape, consumer demand, and regulatory environment.
- Risk Assessment: Evaluate the political, economic, and social risks associated with each mode of entry and develop strategies to mitigate them.
- Partnerships: Consider partnering with local companies or distributors to leverage their knowledge and networks.
By following this outline and addressing these additional considerations, the paper will provide a comprehensive analysis and a well-informed recommendation for the U.S. food products company's international expansion.