1. 3.4.4 The opportunities and problems of entering new markets abroad:

2. Why enter new markets and what are the risks?
Central Question
Why enter new markets and what are the risks?

3. Learning Outcomes
To understand the growth potential of new markets in other countries
To understand possible problems of entering foreign markets, e.g. cultural differences and lack of knowledge  
To evaluate the benefits and limitations of methods to overcome such problems, e.g. joint ventures

4. New Markets
Why would a business decide to enter new markets abroad?

5. Possible Reasons Declining or saturated domestic market
To extend the life cycle of the product
To expand and grow the business
To gain economies of scale
To increase reputation
To meet a need or a want
Increasing competition in domestic market
To gain first mover advantage
To spread risks

6. Potential Problems Communication barriers – language
Cultural barriers – religion, working practices
Foreign laws – need to adapt
Fluctuating exchange rates – can affect demand and profits
Possible increased risk of non payments
Corruption issues?
Ethics – cheap labor, poor working conditions?

7. Ways to Enter Overseas Markets
Selling exports directly to overseas buyers
Setting up a business unit in the target country
Use an Agent or a local distributor

8. Failures
Wal Mart into Japan
Starbucks into France

9. Successes

10. How to Reduce Risk Use Local contacts
Partial setup e.g. just manufacturing
Joint Venture with local business
DISCUSS THE STRENGTHS AND LIMITATIONS OF USING THE ABOVE METHODS

11. FEEDBACK / REFLECTION