International Market Entry Strategies Module — Planning for International Market Entry

International Business Plan

Background
You have just begun a new job as President of Unlimited Combines (UC), a Canadian farm
equipment manufacturer whose flagship product utilizes new technology to increase the
productivity of grain harvesting. UC’s equipment allows farmers and commercial grain-growing
operations to harvest wheat, barley and similar cereal crops faster and with less waste than any
other equipment manufacturer.
You are surprised to find that while UC’s products sell very well in the domestic market, they
appear to be a well-kept secret around the world. Recognizing that the world market offers an
excellent growth opportunity, you hire Patricia Paget, a new business school graduate, as your
export manager, and assign her the responsibility to create and implement an international
business plan and begin developing new global business opportunities for Unlimited Combines.
The International Business Plan
Patricia’s first task is to generate an international business plan. She develops a table of contents
making sure to mention issues of the new era in global business, the global supply chain,
technology, culture and ethics. Also addressed are international market research, entry and
maintenance, trade finance, global logistics and distribution, and legal issues and compliance.
When her plan is complete, Patricia emails a form letter to more than 130 Canadian trade offices
around the world in order to confirm which markets are the most suitable. Within two weeks, she
receives responses from more than sixty of the offices, with contact information for a total of more
than four hundred potential business partners. However, she is puzzled as to why some of the
companies appear to have no relationship with farm equipment. She receives no reply from the
other seventy or so offices.
In order to qualify the potential distribution channels, she sends an English form letter out to the
four hundred potential business partners, with a questionnaire for them to fill out. After three
weeks, she had received replies from only 12 of them. Patricia is becoming frustrated that she
has now spent over a month on trying to find potential distributors for the products, with few
results.

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International Market Entry Strategies Module — Planning for International Market Entry

One of the positive results Patricia has received is from a Japanese manufacturer of farm
equipment. She arranges for a business trip to Japan to meet with them. Upon arrival, she
encounters several problems. The company is located several hundred kilometers from the
nearest large city, and by sheer luck she finds an English-speaking person to help her with a train
connection. When she arrives, she is given several attractive gifts, but has brought none with
her—just brochures. She quickly finds that nobody at the company speaks English, although the
written communications had been in English, and she only brought English language brochures.
The company eventually brings someone in to help with translations. However, this only highlights
a major problem: the company thought the UC combine would work on rice, which was incorrect.
Rice turns out to be the main crop grown in Japan, but few cereal crops are grown because they
are easily imported at low cost. Only a small percentage of Japan’s land is suitable for farming,
so farmers focus on higher-value produce.
Because Patricia has arranged for no other meetings during her trip to Japan, she is determined
to make this one a success. They discuss many topics as she tries to forge a relationship with the
company, and it turns out that the Japanese company exports its equipment around the world
and might consider a strategic alliance with UC, whereby it would leverage its distribution network
to sell UC’s products.
One troublesome issue is financing. She is surprised to find the Japanese company prefers to
arrange for long-term payment terms through trade financing, but she insists that they work on a
cash in advance basis. She knows from what she has heard that international trade is risky, and
that payment in advance would eliminate the risk of non-payment.
Another issue is technical support. The Japanese suggest that they would like to have technical
training as part of a legal contract they would sign, if they decide to work together. Patricia knows
that they might reverse engineer UC’s product, and does not want to be constrained by a
contractual or legal obligation, so is not enthusiastic about this.
Marketing support also presents a problem. The Japanese want to translate her brochure into
other languages at their own expense, and ask if she would email the document to them so they
could do the translation. However, she says she cannot, for copyright reasons, but that they can
use the brochure she is going to leave them if they don’t tell anyone.
Another feature of “marketing support”, it turns out, is that it is occasionally necessary for them to
pay bribes to government officials in some of their non-Japanese markets. They matter-of-factly
say this is just a cost of doing business in some countries, and ask if UC will be able to contribute
to paying these “commissions”.
Finally, the Japanese want Cost, Insurance and Freight (CIF) pricing, but Patricia insists on Ex
Works (EXW) terms. This will also help her to minimize risk and keep costs down, and let the
Japanese pay the cost of freight. She has enough to do, after all, and does not want to get involved
with the complexities of global logistics.
As Patricia leaves the meeting, pleasantries are exchanged. When she asks if they think there is
a chance to do business together, she receives a smile from the general manager, who says, “We
will try.”

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International Market Entry Strategies Module — Planning for International Market Entry

When Patricia returns, you ask her how the trip went. She provides the details outlined above,
and replies that although it went reasonably well, the Japanese were fairly demanding and difficult
to do business with. During the next month, after repeated and increasingly demanding attempts
to extract an agreement to purchase from the Japanese company, she finally receives a simple
reply saying, “We are sorry, but we prefer to do business with Unlimited Combines at some time
in the future.”

Learning Outcomes
This case study relates to the following learning outcomes from the module Planning for
International Market Entry in the course International Market Entry Strategies:

• Explain the types of market entry strategies and considerations for both products and
services in terms of their application, advantages and disadvantages.
• Select the most advantageous market entry strategy for an international venture based on
the results of feasibility research, risk analysis, and competitive analysis.
• Identify, research and analyze potential business partners to determine compatibility for
an international venture.
• Develop a strong international business plan including key business strategies with
identified metrics upon which the organization can monitor progress, success and
weaknesses.
• Develop a strategic plan for market entry, based on the international business plan.

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International Market Entry Strategies Module — Planning for International Market Entry

Case Study Questions

1. What could Patricia have done differently in her overall approach to developing international
sales for Unlimited Combines?

2. What could Patricia have done differently when planning her business trip to Japan—and, had
she still decided to go, how could she have made it more successful?

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International Market Entry Strategies Module — Planning for International Market Entry

Photo Attributions

Photo #1 (Harvest)

Attribution: No attribution required Licence: Public Domain, free for commercial use

pixabay.com/en/harvest-wheat-cereal-threshing-1907821

Photo #2 (Success)

Attribution: No attribution required Licence: Public Domain, free for commercial use

pixabay.com/en/success-strategy-business-solution-2081168

Photo #3 (Pagoda)

Attribution: No attribution required Licence: Public Domain, free for commercial use

pixabay.com/en/clouds-japan-japanese-nature-1841296

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