Wall Rx - Global Market ExtensionBy: Nicholas Walker

Question:You have been just contacted by Mr. Robert Herjavec from the show "Shark Tank" asking for your advice on how to enter a foreign market. Mr. Herjavec recently purchased the international rights to sell Wall Rx. Wall Rx is a no mess, easy way to repair holes in your drywall. He is very excited about the purchase but isn't sure the best way to enter a foreign market. You must advise him on which of the following will be the best option for him:

1. Exporting2. Franchising3. Licensing4. Subcontracting5. Joint Ownership6. Direct Investment

What is the best option for Mr. Robert Herjavec?

● Exporting

○ Why?

■ There are plenty of conditions that favor this way of entry into the

foreign market

■ The advantages outweigh the disadvantages

■ The option that is easiest and makes the most sense to use for his

situation

What is Exporting? ● Exporting is the most traditional and well-established form of operating in foreign markets

● Exporting is the marketing and direct sale of domestically-produced goods in another country

● Exporting is when products produced in one country are marketed in another country through marketing and

distribution channels

● Exporting does not require that the goods be produced in the target country, which means no investment in foreign

production facilities is required.

● The export entry mode is either indirect or direct.

Advantages vs. Disadvantages● Limited sales potential in target country;

little product adaptation required

● Distribution channels close to plants

● High target country production costs

● Liberal import policies

● High political risk

● Minimizes risk and investment.

● Speed of entry

● Maximizes scale; uses existing facilities.

● Trade barriers & tariffs add to costs.

● Transport costs

● Limits access to local information

● Company viewed as an outsider

Why Does Exporting make the most sense for Mr. Herjavec?

● Since he is unsure of how to enter a foreign market, exporting would be the best

option because it is fairly simple and has low costs/investments and risks. This will

allow him to gain knowledge of the foreign market before making other decisions.

● It helps in diversifying markets, which would reduce his products exposure to

domestic demand instability

● He can enter an indirect export where his product will be traded through trading

companies

Why not use the other entry modes?1) Joint Ownership: The complexity of coordinating policies, decisions and execution with a different

company is the reason he shouldn’t use this method.

2) Franchising: This method is used more for food chains, and consumer service businesses and would not

be much help for his drywall repair product.

3) Licensing: He shouldn’t use licensing so he can avoid the lack of control he would have over the use of

assets and to also avoid the possible future competition of licensee

4) Subcontracting: This method is usually used to compliment strategies such as franchising, and would not

be needed in exporting.

5) Direct Investment: This method has a higher risk than other modes. This method also requires more

resources and commitment and may also be difficult to manage the local resources.

Should he follow a Straight Extension or Product Adaptation?

Straight Extension

A straight extension is when a product is presented to a global marketplace without any changes. Since some

products are known globally and need no additional product or promotion changes, these products can be

made available to consumers and can be purchased without having to create any marketing or promotion

strategies.

Why follow a straight extension?

○ In straight extension the same product is marketed to all countries except for labeling and language

used in the manuals. Since Mr. Robert Herjavec is selling Wall Rx (a no mess, easy way to repair

holes in drywall), a straight extension would make the most sense.

○ Drywall repair is something that is known worldwide, so there would be no need for product

adaptation.

○ Product adaptation is only needed for customers of less affluent countries need a product of similar

quality but needs to be downscaled to be more affordable. Technology products must also be

changed to meet the specific language of the country that the product is being sold too. In this

situation, a product adaptation is very unnecessary.

Works Cited"Entry Methods." Wweb.uta.com. N.p., n.d. Web. 19 Feb. 2017.

Foley, James. "Foreign Market Entry Modes." Www.quickmba.com. N.p., 2010. Web. 19 Feb. 2017.

"International Marketing." Encyclopedia of Business and Finance, 2nd ed.. . Encyclopedia.com. 19 Feb. 2017.