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Times have certainly changed, and the world has gotten smaller. We no longer have to wait for months for ships to return with products from far away lands to use with our domestic goods or to sell indecently. We have solved the question of how to overcome the issue of paying in local currency. So much so, we now measure the strength of a country's economy by measuring how much it imports versus how much it exports. We've come a long way from all markets being local (some of which still remain), to markets that are global. Many of the hurdles of doing business outside your country have been resolved.

The module shared five ways to enter the global marketplace. Pretend for a moment that you are the owner of a successful domestic business that you would like to grow out to international locations. Which of the five options would you choose to use and why? Also, pick another option and explain why you believe it would be more challenging for you and why?

For this discussion, I would consider expanding my existing successful domestic bakery business into international markets through direct exporting. My bakery, which specializes in organic, locally sourced baked goods, has gained popularity due to its quality and unique recipes. Exporting directly to international markets would allow me to maintain control over the product quality and branding while leveraging established distribution networks. This approach minimizes the risks associated with sharing ownership or establishing physical facilities abroad. I believe this method would enable gradual market entry, manageable logistics, and direct communication with international customers, which is crucial for maintaining the brand's integrity.

On the other hand, I find franchising to be a more challenging option. While franchising provides the benefit of rapid expansion and local expertise from franchisees, it also requires sharing control over brand standards, recipes, and customer experience. Ensuring that franchisees adhere to the company's quality standards can be difficult, especially across different cultural and regulatory landscapes. Moreover, differences in legal systems and intellectual property protection could pose significant barriers. The risk of losing brand reputation if franchisees do not uphold the company's standards makes this approach more complex for a small but growing business like mine, with limited resources to enforce consistent quality globally.

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Expanding a domestic business into the international marketplace involves a strategic assessment of various entry modes. Based on the module's five options—including exporting, licensing, franchising, joint ventures, and wholly owned subsidiaries—I would choose direct exporting as my primary mode of international expansion. This approach aligns well with my company's current stage and resources, offering a balance of risk, control, and profit potential. My bakery has built a strong local brand centered around organic and locally sourced ingredients. Moving into international markets via direct exporting would allow me to maintain control over product quality and brand image, while gradually testing new markets without significant financial commitment or exposure.

Direct exporting involves selling goods directly to foreign customers or through distributors, and it offers several advantages. It enables the company to build relationships with international distributors or customers directly, which can lead to valuable market insights and tailored marketing strategies. Additionally, this mode limits investments in foreign operations, reducing financial risks and operational complexities associated with establishing a physical presence abroad. It also allows the business to adapt its offerings based on regional preferences and demands, which is essential for niche products such as organic baked goods. Furthermore, the relative simplicity of this approach makes it attractive for small to medium-sized enterprises (SMEs) seeking international growth without overstretching their resources (Cavusgil, Knight, Riesenberger, 2017).

However, not all modes of market entry are equally suitable. For instance, franchising, although effective for rapid expansion, presents significant challenges for small businesses. Franchising requires extensive support systems and stringent quality control measures to ensure consistency across locations. Implementing these requires robust legal, operational, and training frameworks, often demanding substantial resources and expertise that a small bakery might lack. Moreover, cultural differences can complicate franchise agreements, and protecting intellectual property rights abroad remains a concern. This mode also entails less direct control over franchisees, increasing the risk of brand dilution or inconsistent customer experiences, which could harm the company's reputation (Ekeledo & Sivakumar, 2004).

In conclusion, selecting the appropriate market entry method depends on a company's resources, risk appetite, and strategic goals. For my bakery business, direct exporting offers a manageable and flexible pathway into international markets, allowing controlled growth and learning opportunities. On the contrary, franchising, while potentially lucrative, would be more challenging due to its high resource demands and complexity in maintaining consistent quality and brand standards globally. Understanding these modes and their respective challenges enables small businesses to make informed decisions that align with their capabilities and growth ambitions.

References

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