International Marketing - Essay Example

International Marketing Globalization is one of the greatest events that have occurred in the recent past. However, its greatest impact has perhaps been felt in the business environment, where it has opened up new market opportunities for companies. Globalization has opened up new market opportunities for companies by making it easy for large companies to explore lucrative overseas markets (Lymbersky 2008, p. 56). Accordingly, many large domestic companies are currently searching for a lucrative market, where they can expand their businesses to gain a competitive advantage. Most U.K. companies, in particular, are increasingly going global to ease competition pressure in the domestic market and to explore new market opportunities for growth. Product Pig meat is one of the agricultural products that are produced in large quantities in the U.K. Statistics show that the production of pig meat has been increasing every year in the country. Unfortunately, the production appears to outweigh the demand available considering that a section of the U.K. citizens does not eat pork because of cultural issues. Accordingly, the low demand for pig meat has been affecting most farmers negatively because it results in losses for farmers as they are forced to lower their prices because of the low demand. In March 2015, the U.K pig meat production totaled 69,300 tons, accounting for about 5% increase compared to the same March 2014 (Pig World 2015). The high production of pig meat experienced in recent months has resulted in a huge drop in prices. Therefore, the best way to save the U.K. pig farmers is perhaps to look for new market opportunities in the global market where the demand for pig meat is high. Target Market China will be the right target market for the U.K. surplus pig meat. This is because of the high demand for pork in China. Studies show that China is the worlds leading consumer of pork, which accounts for more than three-quarter of the meat consumed in the country. Currently, each Chinese consume an average of 84 pounds of pork every year (Hoffman 2014). The high consumption of pork is attributed to the fact that pork is the meat of choice among Chinese people. In fact, pork consumption in China is projected to reach more than 70 million tons by 2017(Larsen 2012). Accordingly, this makes China a lucrative market for expansion for U.K. pig farmers. Considering that China is also the most populous county in the world with more than 1.3 billion people, who eat pork, this is certainly a lucrative pork market that must be exploited by the U.K. pig meat producers who are currently experiencing huge losses because of lack of a good market promoted by low demand. Market Entry Strategies Although China is a lucrative market for the U.K. pig meat, choosing, an appropriate market entry strategy will be key to the success of the business in the country. The market entry strategy chosen must consider the risk factors that might be involved in expanding the pig meat business into the Chinese (Lymbersky 2008, p. 62). Fortunately, there is a variety of market entry strategies that the U.K. pig meat producers can adopt when expanding their businesses into the Chinese pork market. Three of the possible market entry modes that the U.K. pork producers should consider for entering the Chinese market include direct exporting, joint venture partnerships or licensing. The first appropriate market entry that a U.K. pig meat producer can use to expand business in the U.K. is through direct exporting. Direct marketing is an entry mode that involves the exporting the processed pork from the U.K. to China (Tielmann 2010, p. 12). This implies that the U.K. Company will not have to manufacture the products in China, but rather processing is done in the home country and exported ready for consumption. However, through direct exporting, the U.K. Company will have to invest heavily in marketing and promotion to create awareness in the Chinese market. Direct exporting will be appropriate because of the several advantages associated with this mode of entry. Firstly, U.K. firms will benefit from direct exporting of pork to China because they will not have to invest in manufacturing facilities in China as the entire production will be home-based. Accordingly, this immunizes the risk associated with having to put up a pork manufacturing facility in China, which will also require additional investment. Secondly, direct exporting of pig products will be appropriate for the U.K firms because it will give the U.K. exporters the opportunity to learn and understand the Chinese market before committing to invest in bricks and mortar if a U.K. business finds it suitable. Additionally, direct exporting will be appropriate because it reduces the risk of doing business in China. This is because the U.K. exporters of pork to China can hold back of cease exporting at any time where potential threats emerge. Despite the benefits that a U.K. pig meat producer will gain from exporting to China, there is the risk that the U.K. exporters will be at the mercy of the Chinese agents, which results in lack of control. The U.K. pork producers should also consider entering the Chinese market through joint ventures. The joint venture is an entry mode that involves partnering with a Chinese company that already involves the port production and sale in the country (Lymbersky 2008, p. 65). After partnering with a Chinese company, the U.K. and the Chinese company will share resources, ownership, control, and operations. Joint ventures will be appropriate entry mode because it will minimize the risk associated with a market. For instance, because China is a culturally rich country, joint venture partnerships will be appropriate as it will enable the U.K. company be seen as one of their won, resulting in warm reception and success. Additionally, the entry mode will benefit a U.K business since it will involve the sharing of financial and management strengths. Despite the benefits associated with using this entry mode, the U.K. businesses will have to take into consideration the shortcoming associated with this method, including lack of full control, difficulty in recovery of capital invested and possibility of disagreements over the management. The other appropriate entry mode would be licensing, which would involve giving a foreign permission to use the process, manufacturing, skills and trademark owned by the licensor (Tielmann 2010, p. 14). In this respect, the U.K. business can consider entering the Chinese pork market by seeking a license from an established Chinese pork producer to enable it use its manufacturing facilities, skills, trademarked and personnel to use in the country. This method is appropriate because it minimizes the risk of operating in China, have no capital tied in Chinese operation and will give the U.K. business opportunity to start operating in China and open more branches in the country. However, the shortcoming that must be noted with this mode is that the silence granted may be short, require significant fact finding, investigation and planning and the fact that there is a potential for loss of manufacturing and marketing. Conclusion In conclusion, based on the advantages and disadvantages associated with the three possible entry modes, direct exporting will be the most appropriate because the U.K. exporters will not have to invest in manufacturing facilities, which immunizes the risk associated with having to put up a pork manufacturing facility in China; will give the U.K. exporters the opportunity to learn and understand the Chinese market before committing to invest in bricks and mortar and the fact that it reduces the risk of doing business in China. References Hoffman, H 2014, How increased meat consumption in China changes landscapes across the globe. Forbes, 26 March, viewed 19 April 2015 http://www.forbes.com/sites/bethhoffman/2014/03/26/how-increased-meat-consumption-in-china-changes-landscapes-across-the-globe/ Larsen, J 2012, Meat consumption in China now double that in the United States, viewed 19 April 2015 http://www.earth-policy.org/plan_b_updates/2012/update102 Lymbersky, C 2008, Market entry strategies: text, cases and readings in market entry management. Christoph Lymbersky, London. Pig World 2015, Last months pigmeat production was the highest March total for 15 years, viewed 19 April 2015 http://www.pig-world.co.uk/news/fullstory.php/aid/7924/Last_month_s_pigmeat_production_was_the_highest_March_total_for_15_years.html Tielmann, V 2010, Market entry strategies: international marketing management. Berlin: GRIN Verlag. Read More