INTERNATIONAL BUSINESS 1
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Strategies for entering the foreign market opportunity assessment
Tosucceed in the plan to enter new markets, especially foreign markets,one of the strategies employed by the firms is the technicalinnovation strategy. The technical innovation strategy involves theintroduction of goods and services that are clearly superior to theexisting products on the market (Romanowski & Schueller,2009).Therationale is to enable the products to penetrate the market due toquality. Consumers would like to be associated with superior qualitygoods. The technical innovation strategy is quite favorable in theapplication to foreign markets as the customers are always lookingforward to products that could offer something unique to what theyare used to (Elliott, 2008). Firms that employ that strategy have theobjectives to maximize on the sales volumes before competitorsintroduce similar products or services into the market (Ribeiro,2011)Productadaptation strategy is also a preferred strategy by many firms. Thestrategy focuses on modifying the existing goods and services so thatit improves the quality and the cost. K7L, for example, would taketime to understand the nature of products in the UK market and makedeliberate efforts to modify its beauty range of products(Global cosmetic industry,1999).The rationale of adopting this strategy is to give the consumers achance to embrace a product or service that they are more or lessfamiliar with but at the same time, the products have unique featuresmeant to influence their perceptions positively. K7L could createlipsticks that are closely related to what the consumers are used toin the UK market but ones that have unique features to identify withthe new company (Ribeiro,2011). However minor, the differences maybe, the consumers are more likely to embrace the new products forexperimental purposes. Any modification of the product could make theconsumers switch their allegiance and stick to the new product. Thestrategy capitalizes on the attention that new products receive, topenetrate the new markets (Ribeiro,2011). Some modificationsregarding quality and packaging could go a long way to capturing andpenetrating the market by the firm. Availabilityand security strategy could also turn out to be a crucial strategyfor KL7 in its bid to penetrate the beauty industry market in the UK.The strategy involves, overcoming the logistical challenges so thatthe firm penetrates areas that have not been served by other playersin the industry. This could be informed by any elements of perceivedrisks or even transport risks that could lead to losses. If the firmcan strategize and serve this segment of the market, it will havemanaged to reach a customer base that has not been focused on byplayers offering similar products (Elliott, 2008). It would be anopportunity for KL7 as a firm to introduce the range of products andmake efforts to retain the market. The customers who may have feltneglected would, in turn, embrace the products and services(Ribeiro,2011). Serving segments of the population that have beenneglected for long is always a good penetration strategy for newfirms such as K7L.It would get the chance to demonstrate itscapabilities without distractions from any form of competition.K7Lcould also employ Low price strategy whereby the firm adopts lowpenetration rate to capture the attention of the consumers in thebeauty industry. The approach will be useful if the firm aims toprovide products and services that are similar or slightly differentwith those offered by the competitors. Pricing strategy is veryhelpful in the entry of new markets as consumers in most markets haveobjectives to make any gains that are informed by reductions inprices of goods and services(Ribeiro,2011)..Totaladaptation and conformity strategy would also be an option K7L.Thisis a strategy where foreign producer gives a straight copy of theproducts in the market. The strategy is to provide the consumers withthe kind of products they been used to, albeit some slightdifferences in packaging and advertising campaigns (Elliott, 2008).The policy would aim at penetrating the market through a brandidentification strategy where the consumers would identify with thenew name and not necessarily the differences in prices or quality.The firm also capitalizes on the euphoria and the attention that newproducts get at the initial stages of their introduction.
Inits effort to create its market niche, K7L would be required toidentify new market opportunities in the UK beauty industry. This isinformed by the fact that there exist firms offering similar goodsand services and hence the existence of fierce competition in theintroduction of the products (Seidel, 2010). The company shouldidentify population segments that it feels would best be captured bythe availability of the product in the market. The firm should bespecific in its assessment so that it establishes real opportunitiesin the market for its range of productsThefirm should also provide market size estimates based on thepopulation figures in the UK. The estimates would make the firm beable to make the necessary projections as it prepares to penetratethe market. Good estimations of the market size would enable the firmto make the correct financial projections regarding revenues(Chalmers & Edinburgh Napier University, 2011). By focusing onthe population figures of the areas that the company deemsappropriate for its operations, it will have made a significantstride in the market assessment.K7Lshould identify the requirements of the market and the likelybarriers that could hamper entry. It would be significant for thefirm to establish the specific market requirements of the beautyindustry in the UK so that it creates products and services that arerelevant to that market. Failure to adhere to that requirement maymake the company incur losses informed by the introduction of goodsand services that are not unique to the market.K7L should also assessand establish the barriers to entry in the market with the aim tofeel the gaps. Identification of the obstacles would enable the firmto come up with the necessary strategies to overcome the barriers(Obadia & Vida, 2006).K7Lshould incorporate a marketing research that explores the challengesof the existing market and the gaps that require being filled. Thiswould enable the firm to brace for the challenges and make efforts tofeel the current gaps (Nordås, Geloso & Pinali, 2008). Thecompany should also explore and prioritize ways of addressing theexisting challenges and the unmet needs (Elliott, 2008). The firmshould as a matter of priority establish the urgency of dealing withthe current challenges. That would significantly affect the goals andobjectives of the firm in its endeavor to penetrate the UK beautyindustry market (Obadia & Vida, 2006). The firm should alsoexplore the number of competitors together with their strengths andweaknesses. It would not be easy to encounter an opponent whosestrengths or weaknesses one is not aware. The successful explorationof this would enable the firm to identify the existing opportunitiesin the market adequately.
Strategies Used By Companies to Enter Foreign Markets
Byoperating a UK beauty industry market through export K7L would beattractive to the consumers because it would offer less financialrisk and at the same time gather a lot of local knowledge to operatein the UK. Such knowledge is vital to the penetration of the marketand should not be taken lightly. It would be appropriate for K7Lbecause it does not have a lot of international experience havingbeen operating in Kuwait (Elliott, 2008). It would also be suitablefor the firm as most of the international activities, and functionswould be performed by an agent (Obadia & Vida,2006). It would beconvenient for the company as the agent would shoulder most of thecost including the entire logistical costs which at times could bequite substantial. The firm would, however, have little control overmost of the operation. The agents also serve several firms and hencemay not be available to provide the unique attention that the firmmay deem appropriate. This is informed by the fact that such agentsoffer more attention to the firms that offer better margins. There isa problem caused by the fact that agents survive on commissions, andso they don`t buy the products from the firm which could lead to acash-flow risk as the operation involves a form of credit (Elliott,2008).
Foreign Direct Investment (FDI) and collaborative ventures
Thefirm could opt to set up the entire cosmetic plant in the UK throughcapital and technology investment so that it can truly be able topenetrate the cosmetic and beauty industry in the UK. However, FDIrequires substantial resources and hence it`s upon the management ofthe firm to determine if the they are ready for such a venture.Alternatively, the firm could enter into collaborative ventures withother firms in the UK to set up the cosmetic business or just enterinto a joint venture in putting up a plant for production of therange of beauty products based on the marketing perception of thefirm.
Licensing, franchising, and other contractual Strategies
K7Lcould be compelled to give, licenses, franchise, and enter into theircontractual agreements with UK firms and entities. Such as anapproach would provide an opportunity for the UK companies who have agood understanding of the market to introduce the K7L brand into theUK markets. The licensed and contracted firms just pay for thelicenses, and they agree on the contract as they popularize the brandin the UK market.
Globalsourcing is another strategy that the company could employ. Itinvolves sourcing of products from other countries informed by theeconomics of scale regarding labor, raw materials and power costs.K7Lcould, therefore, be compelled to move its manufacturing to the UK ora nearby country so that the firm benefits from lower productioncosts that may result from such a step(Obadia & Vida,2006). Thatwould, however, be determined by the research that the company hascarried out in anticipation of the business venture. The firm couldmove its entire operations to the UK so that it benefits from thesavings that would be realized.
Recommendations and Conclusions
TheUK market is suitable for the cosmetic business. The existence of adiverse population primarily influences the decision. The market sizeis quite substantial and open for exploitation for the cosmeticbusiness. With the employment of the discussed entry strategies, thecosmetic company would perform quite well in the UK market.Franchising and licensing should be employed by the firm to give thelocal entrepreneurs in the UK market an opportunity to popularize thecosmetic range of products of the firm. That is based on the factthat minimal resources are required to achieve the goals andobjectives of the firm.Thedemographic mapping reflects high levels of urban settlement in theUK which is a perfect condition for the establishment of cosmeticbusiness. Urban dwellers are more conscious about their appearanceand hence the proper positioning that the firm will achieve(Fournier, 2015). The country has well-distributed incomes whichwould assert the purchasing power of the population. With most of theworking groups involved in the service industry in the UK, the imageis paramount and that would inform a positive reception of thebusiness. The literacy levels also have a significant role to play indetermining the penetration rates of a product. With the highliteracy levels in the UK the flow of information about the productwould be effective.
Young, I., & Great Britain. (2000). Competitiveness study onthe UK cosmetic, toiletry and perfumery industry. London: Dept.of Trade and Industry.
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Nordås, H., Geloso, G. M., & Pinali, E. (January 01, 2008).Market Structure in the Distribution Sector and Merchandise Trade.
Obadia, C., & Vida, I. (January 01, 2006). International marketentry failures: Classification of subsidiary opportunism. MarketingInsights, Innovations and Ingenuity, 34-39..
Fournier, J.-M. (January 01, 2015). The negative effect of regulatorydivergence on foreign direct investment.