Quick questions on Market entry strategies for global diversification (QCE Business Unit 3)

Market entry strategies vary along a spectrum from low-commitment (low risk, low control, low return) to high-commitment (high risk, high control, high return).

Selling goods or services produced in Australia to overseas customers.

The Australian business (licensor) grants an overseas business (licensee) the right to use its IP (technology, brand, patent, design) in exchange for licence fees and royalties.

The Australian franchisor grants an overseas franchisee the right to operate a business under the franchisor's brand and system, with initial fee plus royalties.

The Australian business partners with an overseas business to form a new jointly-owned entity that serves the overseas market. Each partner typically contributes capital, capability, or market access.

The Australian business establishes or acquires a wholly-owned subsidiary in the overseas market.

The right strategy depends on:

Atlassian. Built initial international revenue through online direct export (no physical presence, customers self-served online). Followed with FDI greenfield - offices in San Francisco, Amsterdam, Bengaluru, Manila for sales, engineering and customer-success teams. The phased approach matched investment to revenue growth.

Sell through an Australian-based export trading company that handles overseas marketing and distribution. Lowest cost and risk; lowest control and learning.

Sell directly to overseas customers, often through an overseas-based distributor or agent. Higher cost than indirect; more market knowledge and brand control.

Building a new operation from scratch. Highest control, slowest, requires deep capital. Used when the business has unique capabilities or IP and needs full control.

Buying an existing overseas business. Faster than greenfield, brings existing operations and staff, integration risk.

Built initial international revenue through online direct export (no physical presence, customers self-served online). Followed with FDI greenfield - offices in San Francisco, Amsterdam, Bengaluru, Manila for sales, engineering and customer-success teams. The phased approach matched investment to revenue growth.

Combination strategy. Direct export through regional sales offices; FDI greenfield (manufacturing in the US) for the world's largest cochlear-implant market; partnerships with surgeons and hospitals globally.

Attempted FDI by acquisition with the Homebase UK acquisition (2016) which failed and was sold at a substantial loss in 2018. The failed entry illustrates the FDI-acquisition risk - acquired businesses may not respond to the home-market playbook.