Proposal for Business Venture Part 2
International trade can increase sales and profit, enhance a company's prestige, and create jobs. Companies that intend to be successful in a global market will however need to examine the many aspects associated with conducting business internationally. The decision to enter foreign markets raises questions about which markets to enter, when to enter the market, on what scale to enter the market, and most important how to enter the market. According to Hill (2009), the choice of entry in a foreign market is one major issue that companies must wrestle with. The various modes for entering international markets are by exporting, franchising, licensing, entering joint ventures, setting up wholly owned subsidiaries, or acquiring established enterprises in the other country. The magnitude of success with each entry mode depends on the type of business, associated costs, and trade barriers, and other business risks or benefits. Companies, therefore need to weigh the benefits and risks associated with the entry modes and select the appropriate mode of entry into a foreign market.
It takes time and patience to build a great, enduring global enterprise, so be patient and plan for the long haul
Management at New Hope has decided to begin global expansion as exporters with the intention of later switching to another suitable mode for serving the Guatemalan market. Using export as an initial mode of entry will avoid the cost of manufacturing operations in Guatemala and give New Hope time to observe the actual sales against projected sales. The cautious approach to entering the Guatemalan market stems from the fact that various agents from social services and advocacy groups have indicated interest in buying the Hope reader from New Hope and selling at discounted rates to people. The concern is whether the various groups will be able to obtain continuous funding to sell the EHope at discounted rates making it affordable to the...