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Read the information below and add additional information that…
Read the information below and add additional information that you’ve found. Cite all sources used.
Related to a product offering that would be considered a commodity, identify three key variables that would affect your choice of entry strategies. Using specific examples, how might these variables affect your analysis?
A basic good that is used as an input in the production of goods and services is called a commodity (Lioudis, 2022). This indicates that commodities are used in the manufacturing process by businesses to create common goods. The majority of products that end up in the hands of consumers contain commodities, such as tires, tea, ground beef, orange juice, and clothing.
There are a number of important factors that can have an effect on the decision-making process when considering entry strategies for a commodity product. The size of the market, the level of competition, and government regulations are three of these variables.
Size of market
The size of the objective market is a basic calculate deciding the most proper passage system. On the off chance that the market is little, entering through a joint venture or strategic alliance with a laid out nearby partner might be more successful. Conversely, assuming the market is huge, direct investment might be the best methodology. For instance, if a company wants to sell sugar in a small country like Belize, partnering with a local distributor might be a good idea. But if the company wants to sell sugar in a big market like Brazil, it might be better to start a subsidiary that is all owned by the company (n.d.).
Competition level
Another important factor to take into account when choosing an entry strategy is the level of competition in the target market. A business may need to differentiate its product or service through branding, quality, or price in a highly competitive market. To gain access to existing distribution networks and customer relationships, it may be necessary to establish a joint venture with a local business in some instances. For instance, to sell espresso in a profoundly serious market like Colombia, it could be profitable to cooperate with a nearby espresso cultivator to use their current associations with merchants and retailers (n.d.).
Government regulation
The administrative climate in the objective market can fundamentally affect the section procedure. A few nations have severe guidelines around unfamiliar speculation, item principles, and import/export out strategies. To ensure compliance, it may be necessary to collaborate with regulatory agencies and local lawyers in these instances. For instance, in order for a business to sell pharmaceuticals in Mexico, it must adhere to stringent regulations regarding the labeling, distribution, and safety of the products (Group, 2023).
Reference:
A new partnership to support Colombia’s Coffee Farmers: USAID impact. USAID Impact Photo Credit: USAID and Partners. (n.d.). Retrieved April 26, 2023, from https://blog.usaid.gov/2013/08/new-partnership-to-support-colombias-coffee-farmers/.
Belize – market overviewbelize – market overview. Belize – Market Overview. (n.d.). Retrieved April 26, 2023, from https://www.export.gov/article?series=a0pt0000000GnExAAK&type=Country_Commercial__kav.
Group, G. L. (n.d.). Pharmaceutical advertising laws and regulations report 2022-2023 Mexico. International Comparative Legal Guides International Business Reports. Retrieved April 26, 2023, from https://iclg.com/practice-areas/pharmaceutical-advertising-laws-and-regulations/mexico.
Lioudis, N. (2022, July 12). Commodity vs. product: What’s the difference? Investopedia. Retrieved April 26, 2023, from https://www.investopedia.com/ask/answers/021615/whats-difference-between-commodity-and-product.asp.
