FOREIGN MARKET

Market Entry Strategies

You have already identified your best potential market. You know that your service can meet the standards required in the market. Now you want to decide exactly how you are going to enter the market. Your options can be broadly categorized as:

• exporting directly: you negotiate, contract and work with the foreign end user
  
• exporting indirectly: you negotiate, contract and work with an intermediary who negotiates and contracts with the end client
  
• entering into a partnership or alliance, whether formal or informal, comprising two or more parties, all local companies or local plus others

Direct Exports

• You have a unique skill or knowledge.
  
• You have the resources, the cultural and language skills, and the commitment to work directly, probably on-site, with clients in a foreign market.
  
• Your clients may be in government, business or the general public.

Government clients

If you have identifed foreign government departments as potential clients:

• The government web site for the target country will provide you with initial contact names.

• For the US Federal government - the world’s largest purchaser - contact your Embassy in Washington for the current contact list. For US State governments contact the US "National Association of State Purchasing Officials" in Lexington, Kentucky to order "How To Do Business with the States: A Guide for Vendors" and the "Contract Cookbook for the Purchase of Services" and to register for the annual National Assiciation of State Purchasing Officials (NASPO) conference’s workshop on "Marketing to State Governments".

• If your clients are in developing countries, you may find information about requirements and clients through the in-country Representatives of the International Financial Institutions and UN Agencies.

• For government clients in any country, contact the Trade Commissioner in the your Embassy or High Commission for advice on the correct approach. In almost any country, a government introduction to a government client is a good starting point.

Business Clients

Use your Business Association, and business associations in your target market to obtain dates of conferences, dates of trade shows if your service has a visual component, and publications (directories or periodicals) to which your potential clients would refer.

General Public Clients

An example here is the provision of educational services by local teachers to students who remain in their home country. At one end of the scale are the thousands of individuals who teach from a few months to many years, often in Asia. At the other end are the educational institutions and professional organizations that establish courses, often in cooperation with a partner institution in the target country.

Succeeding in Direct Exports:

• Use referrals whenever possible, either from other clients in the same country, or from clients with similar mandates in other countries

• Participate in activities in your target market organized by Sectoral Associations, local Chambers of Commerce, service clubs, or other business organizations.

• Identify opportunities to meet individually in a social or professional context, with potential clients. The social introduction is particularly important when working in Asia, Latin America or Europe, just as membership in Rotary or the right golf club is important in North America.

• Ensure that you are listed in professional or trade directories, on Foreign Trade Online.

• Be prepared to spend time understanding the client’s needs and focus on those needs rather than on promoting your expertise.

• Be sensitive to the culture into which you intend to provide your service.

• Be prepared to provide a "sample" of your service

• Be sure to talk with the financial decision makers as well as with the technical experts

• Work with your commercial bank before finalizing your pricing or the terms and conditions of your contract.

Indirect Exports

Your service is world class. You have identified target markets. Because you prefer to focus on your technical expertise, you decide to work with or through other companies that have strong marketing, cultural and language skills and sufficient resources to market internationally. You have the ability to work within the target market in cooperation with:

• a "lead" exporter;
• a local-based agent, representative or Trading House;
• a foreign agent, representative, or Trading House.

Identifying "lead" exporters:

• For both developing and developed countries, your local Trade Commissioner posted in the country may be able to help identify companies that are already active in the market and might be strengthened by adding your expertise to their existing capabilities.

• Lists of current exporters (contractors) can be obtained from the International Financial Institutions.

Marketing to the "lead" organization:

• Participate in activities organized in your locality by bilateral business councils or by sectoral associations in your target market. Identify opportunities to meet individually in a social or professional context, with exporters already operating in your target market.

• Ensure that you are listed in professional or trade directories, on Foreign Trade Online.

Identifying agents, distributors, and trading houses

• Contact provincial, regional and national Trading House organizations
• Contact officers in sectoral departments and local governments to describe your interests and capabilities and obtain advice about potential local or foreign partners.

Search the web, using key words such as "exporter, importer, distributor, agents, technology transfer, negotiator, representative" and your target country. Narrow the search by including your service offering in the search.

Working with a lead organization

• Inform your potential clients how your involvement can help them to achieve their aims and satisfy their clients.

The costs of preparing a proposal are often high. When this work is undertaken by the lead organization in the hope of gaining a contract, find ways to contribute your expertise to this work as part of your upfront contribution. This will provide the lead company with a sample of your work, demonstrate that you see international work as a cooperative effort and position you as a team player.

Entering the Market Through Partnerships and Alliances

This is the optimum method of providing services in most markets. It can provide solutions to many of the issues regarding:

• cultural and language sensitivity
• professional accreditation
• competitive pricing
• breadth of technical expertise
• creating links and synergy between providers of goods and services
• mobility of personnel
• taxation
• legal status in the target market
• eligibility to bid on target contracts

The variety of partnerships and alliances is as great as the number of companies involved. There are various types of partnerships:

• Horizontal Alliances
• Vertical Alliances
• Business Network
• Teaming Agreement
• License Agreement
• Joint Venture
• Strategic Alliance

When applied in the international context, the range of options becomes even greater as partnership may incorporate primarily local companies, a combination of local and target market companies, or a group including third country participants. Participants may find themselves in a more competitive position as they: a) bring together strengths in the technical aspects of the services to be provided; b) gain benefits from operating together in the target market; c) find it easier to finance the project and, d) find ways to better handle the issues of long-term management.

Selecting the Right Partners

• Identify the strengths needed for the tasks or project.
• Identify clearly your strengths and weaknesses and what you bring to the partnership.
• Seek partners to complement your strengths and weaknesses.
• Be appreciative and open in recognizing the contributions of your partners and seek the same.
• Be open about your aims and your understanding of the collective and separate aims of all participants.

Your eventual choice of market entry method will depend on:

• your overall aims for that market
• your resources and capabilities
• the market conditions
• availability of potential agents, distributors, trading houses, partners etc.

You may well select different market entry strategies for different markets, and may evolve from one strategy to another over time in any market.

As a first step you can start to evaluate the most appropriate market entry strategy for each market according to the following guidelines:

Your Most Important Asset

As a provider of services, your reputation is your most important asset. That is equally true for the service companies with which you will wish to work, whether directly, indirectly or as a partner. It is better to move cautiously than to jeopardise one or more reputations by selecting an inappropriate market entry strategy, by moving too quickly, by entering into an inappropriate partnership, or by failing to nurture a good partnership carefully enough.