Dry Wall Rx approaches the foreign

market

Maysun Peters

What are my options when approaching the foreign market?

• Exporting- selling directly into the market. • Franchising – a network of interdependent business

relationships that allows a number of people to share a brand, a method of business or system.

• Licensing- a firm transfers the rights to the use of a product or service.

• Sub contracting- employ a business or person outside the county to do the work in the other country.

• Joint ownership- partnership that involves the creation of a third party independently managed company.

• Direct investment- is a controlling ownership in a business enterprise by an entity based in another country.

Advantages and disadvantages of exporting

Advantages • The profits are greater

because you are cutting out the middle man. You are handling the market research, foreign distribution, logistics of shipment and collecting payments yourself.

• You have greater control over all aspects of transactions.

• It is the most traditional and well established form of operating in foreign markets.

Disadvantages• It’s going to take more of your time

and energy dealing with it directly. • You are held accountable. • Lack of market information.• Production adaption.

Advantages and disadvantages of franchising Advantages• Proven trade mark, you'll have a

recognized brand name. which helps with advertising.

• You pay someone to come up with a business model so that’s something you don’t have to deal with.

• Franchises offer the independence of small business ownership supported by the benefits of a big business network.

• The franchisor gives you support, and helps you with training. Helps you understand the market.

Disadvantages• Costs may be high. The initial

costs of buying the franchise while also paying continuing management service fees.

• The franchise has restrictions on how you run the business so you won’t have as much freedom or control.

• The franchisor may go out of business.

• If you ever wanted to sell your franchise it would be difficult because you can only sell to someone approved by the franchisor.

• All profits are shared with the franchisor.

Advantages and disadvantages of licensing

Advantages • Good way to start low risk

operations in a foreign market. • Capital is not tied up in foreign

operation.• Low cost. • It helps with barriers of tariffs

and quotas.• It helps with profitability with

very little investment.

Disadvantages• Limited participation. • Returns may be lost.• Lack of control. • Licensee may become

the competitor. • Licensee may exploit

the company's idea and resources.

Advantages and disadvantages of joint ownership

Advantages• Allows partners to share

their strengths and ideas.• You share the risk. • Taxes.• You share the workload.• Access to new markets and

distribution networks.

Disadvantages• Share rewards and profits. • Potential conflict if you see

things differently. • Partner could break off and

become a competitor.• Having to deal with different

working styles. • Success relies on thorough

research and analysis of the objectives.

Advantages and disadvantages of direct investment

Advantages• Easy international trade.• Employment and

economic boost. • Tax incentives. • Access to markets.• Reduces cost of

production.

Disadvantages• Economic non-

viability.• Risk of political

challenges. • Expropriation.• Countries may be

against foreign ownership in industries.

So what is the best approach?In my opinion I think the best approach for Robert to take would be exporting. Exporting is the most traditional and low risk path to choose. There is a low investment start up and also your products would be made domestically. This helps U.S jobs and also avoids the risks of starting a business in another country. There could be cultural barriers, or some countries don’t favor foreign ownership. Which is hard for direct investors. You would be avoiding this by exporting. The risk to exporting is there could be trade barriers or tariffs. Due to the U.S being one of the most significant economic markets while being the top three importers and exporters this shouldn’t be too big of a problem. Any approach there is going to be risk. Exporting is the less risky market entry for the wall Rx.

The product will be adaptable to many markets it wont a hard start up. Since the product can contribute to many cultures, assuming most people in the countries you are selling to are living in houses with walls the demand is high. Because of the demand and great product it will be easy to sell. You wont need the help or ideas of another like a joint venture or a franchise to help reorganize the product or get it off the ground. Because of the benefits of the common product you should approach the market by yourself and maximize your profits which adds to the reasons why exporting is the best choice.

Straight Extension or Product Adaptation?Straight extension is the practice of releasing an existing product without making any changes to it while releasing it to a foreign market.

Product adaption is the process of modifying an existing product so it is suitable for different customers or market.

What’s best approach?

I think the best approach for wall doctor would be to keep the product as it is, Straight extension. The product is quite simple and cant really adapt or change to a culture. If people don’t live in a house or have walls then the simply do not have demand for the product.