Discussion:
The exercise will deal with a company that has successfully marketed in the U.S. and now wants to expand internationally. Even though Canada and Mexico are considered international markets (anything that crossed a country border is considered international business), many U.S. companies include Canada and Mexico in their initial plans. Therefore, we will deal here with possible expansion into Europe, Asia, Africa, South America, Australia, etc. The company(s) we will look at may not choose to enter all at once, but again this depends on the product and target market.
There are two companies that want to expand their sales and profits by marketing their products outside of the U.S.A. SP Inc. has developed application software for use on PCs. VM Corp. manufactures electromechanical ventilators used in hospital Operating Rooms, Intensive Care Units and frequently in patient rooms. The SP software product is priced at $400US while the VM ventilators start at $15,000US. We can immediately see how different these products are, one basically a soft good and the other a bulking manufactured item. In the U.S., the SP software products are marketed in retail outlets and on the Internet. VM uses a professional sales force to sell their products to hospitals where demonstrations are usually required before a purchase decision is made. You will analyze these two situations and develop preliminary plans to launch these products internationally. First you will need to establish your target market and offer opinions on the following questions:
o Will the company continue to manufacture in the United States and ship abroad, or should they add a production facility closer to the intended international markets?
o Appendix B has a list of methods and strategies (see below) that can be used when a company decides to go international. What strategy would be chosen by SP and VM? Will it be the same for both? If not, why not?
Strategies are:
• Export the product or service
• License others to act on your behalf (as sales agents franchisees, or users of your processes and patents)
• Enter into joint ventures (Partnerships) for mutual benefit to produce, to market or to do both.
• Build or purchase facilities outside your home country to conduct your business
o In which continents/countries should SP and VM begin their international activities? Or, considering their product line, should they offer their products to all countries?
o Considering cultural, religious, sociocultural, technological, economic, legal and political differences, are there areas or countries that are better suited than others for their respective product lines? Are there areas or countries where their product line would meet resistance or be rejected? Why?