Bechtel Corporation

Bedusl projitJes premier tetlinieal, management. and dltecty related slices to develop, manage. engineer, build. and operate installations lor customers in nca-ly 6D countries worldwide. Before Bethlel ventures ;nlo new markels, the company starts with a detailed strategic market analysis, it looks at its markets and iries to determine vjTiSTe il sfiuulil be in lout or live years' time. A management team tines a oosl-bensf it analysis that lac-!ors in the position ot competitors, infrastructure, regulatory and Me barriers, and the tax situation (boltt corporals and individuals. Ideally, trie new market should be a country wilh an untapped need for its products or services: a quality, skilled laijqtf pool capable of manufacturing the product; and a welcoming environment Igov-emmental and physical.!.

Arc there countries that meet ilechtel.'s requirements? Although Singapore has an educated, English-speaking labor force, basks in political stability, and encourages foreign investment, it has a small population. Although many countries in central Europe possess an eager, hungry-lo-leam labor pool, their infrastructures.creatc difficulties. The team evaluating a new market must determine whether the company could cnjXi enough on iis Investment to cover the risk factors or other negatives,2'

lit Deciding How to Enter the Market

Once a company decides to target a particular county it has to determine the best mode of entry: Its broad choices ate indirect exporting, direct exerting. licensing, joint ventures, and difvel investment. These five matter-entry strategies are shown in f igure 21.2. Laeh succeeding Strategy involves more commitment, risk, control, and profit potential.

indirect and Direct Export

The normal way to get involved in an i n tenia (i una I market is through export. Occasional exporting is « passive level of Involvement In whltti the company exports from time to time, eiilier on its own initiative or in response to unsolicited orders fro m abroad. Active exporting takes place when the Company makes a commitment tu expand in to a particular market, in either case, the company produces iis goods in the home counlry a ¡id might or might not adapt them to the international market.

Companies typically Start with Intiireit exporting—rbat is, they work through independent intermediaries. Domestic-based export merchants buy the manufacturer's products and then sell Client abroad. Domestlc+based export /j^ws'scek and negotiate foreign purchases and are paid a com mission, Included in this group are trading companies. Cnoperatirr organizations carry oil exporting activities on behalf of several producers and are partly under their administrative control. They are often used by producers of primacy products sueh as fruits or nuti Export-management conipani&agtce to nuniigc a company's export activities for <1 fee.

Indirect export lias two advantages. First, it involves less investment: The firm does not have io develop an export department, an overseas sales force, or a set of International contacts. Second, It involves less risk: Hecause International-marketing intermediaries bring know-how and services to the relationship, the seller will normally make fewer mistakes,

Companies eventually may decide to handle their own exports?6 The investment and risk are somewhat greater, hut so is the potential return, A company can carry on direct exporting in several ways:

Dontestst-based export department of division. Might evolve into a self-contained export department operating as a profit center.

; Overseas sales branch or subsidiary, The sales branch handles sales and distribution and might handle warehousing and promotion as well. It often serves an a display and customer service ccnier.

n Travelingexport sales representatives- J Ionic-based sales representatives are sent abroad lo find business.

i Foreign-based distributors or agents. These distributors and agents might be given exclusive rights lo represent the company in that country, or only limited rights.

Whether.Companies decide (0 export indirectly or directly, many companies use exporting us itway invest the waters" before building a plant and manufacturing ¡1 product overseas. University tiamts of nurluigame. California, maker of education games dial encourage social interaction and imagination, lias blossomed Into 3 $50 million-per-yenr international company through careful entry into overseas ventures,

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