Singapore Companies with a mission to expand their operations in terms of growth and gaining an increased percentage market share, must implement a proper strategy to execute this. The strategy chosen must take all factors into consideration and adhere very closely to the planned methodology to ensure success. It is only logical that minor adjustments will be required for tweaking of strategy but a game plan is pertinent.
The 5 main actions any company can take to venture overseas or acquire foreignmarket share and clients are as follows:
- Joint Venture
- Direct Investment
- Online Marketing
Each of these factors will be discussed separately but in formulating a strategy it should always be remembered that the type of market or product a company has must be analyzed in the most stringent manner and studying all environmental issues of the foreign state.
This part of the strategy deals exclusively with the marketing functions and direct sales of the product into the foreign market. The function of exporting covers all aspects of marketing, advertising and sales to enable the product to become available in markets others than their original home base. The task is made easier due to the fact that goods need not be manufactured in the country selected for export and this means no direct investment for companies to invest in infrastructure or manufacturing facilities.
The role players involved with exporting a product into other countries and markets are mainly the following:
- Exporting company
- Company tasked with importing the product
- Transport and logistics
- Governments and existing laws applicable on exports and imports.
Although exporting has traditionally been seen as a fix when local markets became sluggish and where sales are in a state of decline. This seemed to be a traditional cure to increase sales and keep the company in a profitable position. New entrants are normally advised to do extensive research beforehand and enter into discussions with their local partners to stay abreast of all laws and potential obstacles in this field.One must have a law adherent company as well as an entity which is familiar with the business environment.
New entrants into the popular area of exporting must research customs, cultural differences and the current economic conditions prevailing in the identified markets. A strategy, similar to a business plan, must be designed to focus on what strengths exist in the company, what weaknesses could hamper the plan, the extent of the opportunities and threats pre-existing in the country or market identified. A SWOT analysis can be useful. The export plan must be able to pinpoint and identify the company ‘s objectives to establish the right tactics required. A lack of knowledge can be overcome with a great overseas partner with a great track record or at least a fair share of enthusiasm and contacts to distribute your products or services.
Some say this is an easy way to make money.. while some may not want to go into it as it may have some negative reactions to the Brand. This method is normally a very low cost factor in comparison with the other factors involved.The licensing factor is normally the best option for small and medium size companies to break into foreign markets. The risk factors are limited for the manufacturer and involves very little in the form of capital investment. It is cost effective indeed.
This method is considered one of the best ways to penetrate a new foreign market and limit expenses as much as possible. The licensee selected for this form of expansion and market penetration pays royalty fees on the products sold.It means in essence that a company appoints a company in the foreign market to manufacture or distribute your product in return for receiving royalties per product sold. So basically you sit back and enjoy the moolah rolling in while they do the hardwork. It can be done if your product is good and the licensee feel that it can distribute it easily leveraging the Brand name. Very similar to Franchising but not exactly.
Licensing offers the company some lucrative benefits as opposed to exporting your product or manufacturing it in the market selected. The following are the main advantages of licensing:
- Not dependant on the company resources to produce results
- There is a low internal expansion commitment
- Avoidance of export related taxes
- More acceptable from a government point of view
- Offers protection against intellectual property
- Cost effective solution
- Minimal Risk
In short this is less risky and can be achieved a lot faster that other options available to enter a foreign market for your product.
Joint venture considerations
This method has been tried and tested in many countries with quite wonderful results. It is basically a business agreement entered into between two or more companies outlining the framework on which they will work together to create a new market for the product or services. It normally involves the below points :
- Shared resource allocation
- Shared risks in marketing the product
- The sharing of financial rewards
- How responsibilities are divided without affecting the autonomy of the company
- The term of the relationship
- Structure of the relationship
- Fail Contingencies
This type of agreement holds some extremely beneficial advantages for the company wishing to establish themselves in a foreign market. The partner may have intimate knowledge or experience in the target market and the legal rules and laws prevailing in that country. Or the partner organization may have someone they know who has some insights into that particular destination which may hold the trump card for success.
The joint venture works well when the objectives of both parties are similar. These include strategic goals, size of target market and sharing of skills and knowledge. Of course profitability is very much part of the equation without a doubt.
Potential problems are part of any business agreement and this is no exception to the rule. The partners may find some conflict in the following areas:
- Conflict over new investments
- There could be mistrust regarding proprietary processes , methods etc.
- Problems about performance issues
- Support received or demanded from the company entering a foreign market
- Issues and conflicts resulting from some cultural concerns
- The length of the joint venture agreement and what happens at the end
- Failure to implement and response to failure
Potential problems experienced could include the following:
- Conflict over asymmetric new investments
- Mistrust over proprietary knowledge
- Performance ambiguity – how to split the pie
- Lack of parent firm support
- Cultural clashes
- What happens if the relationship breaks down
- How to develop shared resources
- What controls are in place ensuring some form of control to each party
This method has seen many companies succeed and many a companies fail. One must be very cautious and have everything laid out in black and white because this strategy calls for a much larger investment than most of the other as it involves a lot of time and planning and time as they say is money.
Direct investment options into a foreign market
This method implies that the company expanding into a foreign market retains all ownership of their facilities and assets. It many cases they may either erect or transfer resources to get the operation on track. The company may also pursue acquisition options to speed up the process. It can be a faster way to penetrate the local market or even expanding the market share and control. It may translate to better economies of scale at times.
Having full control over the facility means high capital investments and resource usage but delivers more functional and effective control over the company. It may translate to savings in the long run.
This strategy is mainly the domain of large multinational companies that is strategically geared to have a international production and marketing network for their product or brand. This is in many cases done after initial exporting, licensing and joint venture options have proved beyond any doubt that a profitable market does exist for their offerings.
Online marketing is one way of promoting products and services through the internet. When we talk about online marketing it involves a broad range of marketing strategies. Internet nowadays has been used for business marketing and it is known to be one of the easiest ways to promote your business. Business owners use it via search engines, blogs, email, social media sites (Facebook, twitter, Instagram etc). This can help you to have easy and better communication with your customers and also improve your customer service. It is also proved itself as a cost effective powerful tool to get customers and boost the Brand and business in today’s’ online world!
In our world today, there are a lot of businesses online. Entrepreneurs use e-commerce to promote and sell goods over the internet. Online marketing is also called Web marketing internet marketing or even cutely E- marketing. Other ways to boost your presence online include Search Engine optimization ( SEO ) and Search Engine Marketing ( SEM ). A popular channel of communication is SMO ( Social Media Optimization) and this is very potent as it helps Brands stay connected with consumers and clients.
Below are the benefits of online marketing:
- Improved sales
- Growth in potential
- Decreased Expenses
- Easy communication
- Competitive advantage
- Improved Control
- Low cost of entry
- Low barriers to entry
- High Visibility
You can also hire an online marketing strategist. He or she will be the one to take care of your online business’ objectives, with proper planning, great content development and media tactics; these are the things needed to be able to achieve a good return of investments. Online marketing has continued to grow in the industry and has helped a lot of businesses grow their market share in today’s competitive industry.
Singapore companies using the MRA grant funded by IE Singapore can penetrate overseas using these methods and based on the capacity , nature and intent of the businesses, these methods can be adopted to grow their businesses. These methods are extremely powerful and proven. Small enterprises have become huge due to these strategies. Anyone can implement these 5 and grow HUGE!