In this article, you will find out major problems of entering into new markets abroad. You will also learn possible solutions to those problems with some additional commentary.
Once we know why companies want to sell products to other countries, now it is time to look at possible difficulties of entering into foreign markets.
Let’s take a look at some of the typical obstacles that a business can face when selling to other countries.
Problem 1: Strong local competition
Possible solutions include investing in appropriate marketing and targeting the right audience. Another solution is to form partnerships or Joint Ventures (JV) and Strategic Alliances (SA) with local companies. Finally, building a factory in the country to provide jobs, being a loyal customer to local suppliers, providing quality services, etc.
However, it can be expensive to market products like this which could result in low returns. Also, risk of failure in the new market is high.
Problem 2: Lack of local knowledge – culture, economy, wants and needs of foreign customers, local laws, etc.
Possible solutions include doing extensive market research first to learn about the country and its way of doing business there. Market research can be done using surveys. Another solution is to connect with the local governments to meet all of the legal requirements of running a business.
The market research will most likely to be secondary research as conducting primary market research in a foreign country can be very difficult and expensive.
Problem 3: Language barriers
Possible solutions include getting translators to assist in business activities or even learning the foreign language.
However, learning a new language is a long and hard process. Also, can local translators be fully trusted?
Problem 4: Costs of factors of productions – land, labor, capital and enterprise
Possible solutions include purchasing an existing firm or looking for inexpensive countries to enter where factors of production are affordable for the business to acquire or lease.
However, knowledge of local laws, culture, etc. is required.
Problem 5: No brand established so unknown to the market
Possible solutions include marketing directly to a foreign country.
However, you will need to contact agents or distributors as intermediaries to enable access to the overseas market.
It is not easy to enter into a new market, and if that market is abroad, it can be even more difficult. Entering new markets abroad is a hard thing to do for any business.
