International Business: Export Strategies and Market Entry Analysis

This report examines the crucial steps for establishing a successful export strategy, emphasizing the importance of market potential evaluation, understanding market entry constraints, utilizing effective marketing practices, and planning an effective distribution network. It also analyzes the advantages and disadvantages of foreign direct investment and management contracts as market entry strategies, with a specific focus on the context of Marriott Hotels. The report highlights how direct investment allows for control over product and service quality, while management contracts offer reduced market risk. The analysis provides insights into strategic decision-making for international business expansion, covering market analysis, government regulations, marketing practices, and distribution networks. The report draws on academic research to support the analysis and provide a comprehensive overview of the topics discussed, making it valuable for students studying international business and related fields.

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Answer 1
There are four important steps that the management must follow in order to bring efficacy
to establish a successful export strategy. According to the research of Broocks and Van
Biesebroeck (2017) it can be stated that the first steps towards establishing a successful export
strategy is to evaluate the market potential. In other words, the market analysis is very essential
for a business organisation before facilitating the export strategy. In most of the cases the
business enterprises at first analyses the market environment and then decides the market entry
strategy because the entry strategy is always depended on the situation and risk in the new
market (Hollender, Zapkau & Schwens, 2017). For instance, if a coffee brewing company is
interested in entering into the Australian market then it will be important to understand the
market trend. The coffee market of Australia is highly customer oriented and has its own features
that is completely different from the international market. The market threat is also at high risk.
Based on this understanding, the respective company must choose the right decision of market
entry.
Apart from that it is also pertinent for a business organisation to evaluate the market entry
constraints before establishing a successful export entry strategy. It is important to note that the
role of the market entry constraints will help the organisation to figure out the risks and the
advantages of choosing the right entry mode (Crowley & Song, 2018). If it is an export strategy
then the company must adhere to the government regulations and duty charges. In fact, it will
increase the product price as well. Therefore, the company must understand the consequences of
successful exporting and also the knowledge of regulations and duty charges before going to
export products.

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Utilisation of effective marketing practice is also identified as a crucial task for the
business companies before exporting the product. According to the research of Bugamelli,
Linarello and Serafini (2019) effective marketing practice generates a strong brand value and
presence in the competitive market. It initiates a connection with the customers and get them
attracted. Therefore, implementing better marketing practice before exporting the product has a
pivotal role to play. Furthermore, Broocks & Van Biesebroeck (2017) advocated that the role of
effective marketing is also associated with providing enough information regarding the trend and
demand of the customers. As a result of that the organisation can set its target market based on
the responses over the marketing practice and shape the product in the same manner as the
customers are expected.
The final part in establishing a successful export strategy is to plan an effective
distribution network so that it can provide strategic advantage in the competitive market. From
the research of Crowley, Meng and Song (2018) it can be derived the supply and distribution are
integral part of the export strategy of an organisation. It requires proper negotiation with the
suppliers and distributors once the product will be exported. The success of exporting also
depends on its market capitalisation and the distributors are responsible to create better
environment for the organisation. Henceforth, it is crucial for the organisation to gain success in
exporting by establishing good relationship with the distributors.
Answer 2
The foreign direct investment mode of entry strategy is very advantageous and effective
for the multinational business companies. One of the main reason is the organisational
performance. In the directly owned business, the multinational companies are able to control the

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quality of products and services directly and focus on extensive brand image. Moreover, Matiza
and Perks (2017) opined that the market diversification can also be possible as it is under direct
supervision of the multinational company.
However, there are some potential disadvantages like potential risks in the new market.
By direct investment practice, the multinational company is fully responsible for the success and
failure of the new market establishment (Chhabra & Popli, 2019). Therefore, failure in
penetrating the new market can generate direct negative impact over the entire business of the
organisation.
The management contracts is associated with licensing and franchising mode of entry. It
means the organisation provides the contractors to use the product and brand of the company in
foreign market. The parent company will get profit share accordingly. This practice definitely
help the business organisations to reduce its potential market threat as the organisation is not
responsible to take any responsibilities for its overseas market (Rosado-Serrano, APaul &
Dikova, 2018). Moreover, the contractors are generally belonged to the local market so that they
have profound knowledge regarding the market. The parent organisation can leverage on the
market knowledge of the franchisee company to get more market expansion.
Nevertheless there are still threat for the parent business company as it has no direct
control over the quality of products and services. Any wrong doing by the franchisee company
can damage the name and brand value of the parent company. In fact, due to lack of control over
the franchisee business the parent organisation fails to put any change in the new market
(Cheptegei, and Yabs, 2016). Therefore, a change in organisational culture and business practice

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can create obstruction for the parent company to expand its market successfully in the new
market.
From the point of view of Marriott Hotels, the direct investment practice should be the
right choice for the organisation. The direct investment practice means the company directly
invest its money to establish hotels in new markets. The most excruciating factor is the quality of
service that Marriott provides to its customers. It is uncertain that the franchisee company is able
to continue the high quality service practice that Marriott follows for a long year. According to
Chhabra and Popli (2019) the service facility in hospitality sector are the major driving tool for
the success of the company. Therefore, Marriott cannot take chances in compromising its quality
of service by handed over the new market to some franchisee companies. In fact, the service
quality ensures the brand value of Marriott. Therefore, it is a challenge for Marriott to follow
licensing. There are some potential risks that the direct investment practice in terms of dealing
with enormous market pressure and regular intervention of the government. Henceforth, the
direct investment and ownership strategy will be the best possible solution for Marriott to
continue success in business.

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Reference
Broocks, A., & Van Biesebroeck, J. (2017). The impact of export promotion on export market
entry. Journal of International Economics, 107, 19-33.
Bugamelli, M., Linarello, A., & Serafini, R. (2019). The'Margin call'. Export experience and
firm entry into new export markets (No. 536). Bank of Italy, Economic Research and
International Relations Area.
Cheptegei, D. K., & Yabs, J. (2016). Foreign market entry strategies used by multinational
corporations in Kenya: A case of Coca Cola Kenya Ltd. European Journal of Business
and Strategic Management, 1(2), 71-85.
Chhabra, A., & Popli, M. (2019). Impact of top management team sociodemographic faultlines
on speed of foreign direct investment expansion: An emerging market
perspective. Strategic Change, 28(3), 209-215.
Crowley, M., Meng, N., & Song, H. (2018). Tariff scares: Trade policy uncertainty and foreign
market entry by Chinese firms. Journal of International Economics, 114, 96-115.
Hollender, L., Zapkau, F. B., & Schwens, C. (2017). SME foreign market entry mode choice and
foreign venture performance: The moderating effect of international experience and
product adaptation. International Business Review, 26(2), 250-263.
Matiza, T., & Perks, S. (2017). Human Capital Reputation as an Antecedent of Foreign Direct
Investment Market Entry in Zimbabwe. Journal of Economics and Behavioral
Studies, 9(5), 185-199.

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Rosado-Serrano, A., Paul, J., & Dikova, D. (2018). International franchising: A literature review
and research agenda. Journal of Business Research, 85, 238-257.