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Business in a Changing World

Essay by   •  April 28, 2014  •  Essay  •  447 Words (2 Pages)  •  988 Views

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When deciding on an entry mode, companies are normally faced with a trade off between the benefits of increased control and the costs associated with resource commitment and risk. We believe that the most appropriate method of entry is by directly exporting our product into the Canadian Market. Direct exporting occurs when a manufacturer (Aran Jumpers) sells directly to an importer or located in the foreign country. Exporting is the most traditional and also the most well established form of operating in a foreign market offering a high degree of flexibility within the foreign market.

According to Dario Gomez, companies that export are more resilient and are more likely to stay in business.

We believe that the best option available is to sell to an agent, an independent company that will sell onto customers on our behalf. The agent will represent us and sell to wholesalers and retailers in Canada. There are many advantages of using an agent such as; they are familiar with the local market, customs and have existing business contacts. Asides from these benefits, there are some principles that apply to the law of agency:

1. In dealing with an agency, they cannot take delivery of the product at an agreed price and then resell for a higher amount without the knowledge and permission of our company.

2. Agents must adhere to the strict confidentiality regarding our affairs and must pass on all relevant information

These principles offer us some reassurance that our product will not be sold at a higher price than agreed and that any information that is deemed valuable to our competitors will not be disclosed.

Agents provide the most common form of low cost direct involvement in foreign markets. It is best for us to test the waters of the Canadian market and learn from the trends that follow rather than set up a complete establishment which can be costly and involves a lot more risk. Once more confidence has been built within the market, we can then decide to undertake our own exporting tasks and deal directly with the retailers and wholesalers, offering us increased profit potential and increased control. This high degree of flexibility and low risk will work in our favour when entering into the Canadian market and will allow us to develop future plans for improvements and further expansion into the market.

Although direct exporting reduces the risk and

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