Expanding Business Into Turkey

International Business There are several reasons why my company would want to market overseas. Selling overseas is a great way to expand one's market potential. In a country like Turkey, we would be adding another 80 million or so potential customers. This can help us to fill existing capacity, to generate new revenue and it can also serve to provide us with some geographic diversification (Gordin, 2011). If we are already producing in Turkey, selling there would give us an opportunity to create an operating hedge on the Turkish lira.

There are a number of different methods for expanding abroad. These are exporting, licensing, joint ventures and direct investment. Exporting implies using the current production capacity but shipping the products overseas. Licensing would be hiring a local Turkish firm to produce for the Turkish market, with us providing the specs and licensing the brand. A joint venture would be to enter into an equity partnership with a local company where each company would bring something to the joint venture company.

Direct investment involves setting up our own subsidiary in order to handle the Turkish market, presumably manufacturing there as well as selling (QuickMBA, 2010). Pink Manufacturing already has the manufacturing capacity domestically, and therefore does not need to create additional capacity. Further, there are risks involved in building a new company in an untested market. We have never done business overseas, so in a sense this is an experiment for us.

Given that we lack international expertise, it is perhaps unwise to make a massive investment in a country in which we have never earned a penny. Thus, the most sensible option is to enter the Turkish market via exporting. There are certainly drawbacks to this approach. Exporting means that you work with an importer and they handle a lot of the work on your product. Many critical business elements are essentially out of your control.

Further, our lack of knowledge with respect to the Turkish legal system puts us at a disadvantage in disputes. But there are also advantages to working with an importer. The importer has much greater knowledge of marketing and distributing in Turkey and thus may be able to make better decisions than we would be able to. Moreover, the importer takes on some of the risk. Exporting is the lowest-risk option, and the one with the lowest up front capital requirements.

Thus, exporting is a good way to test the viability of our products in the Turkish market before we consider making a bigger move in that market. In addition to the mode of market entry, there are other ways to minimize risks. It will be necessary to hire a Turkish legal team, and advertising agency. Doing this will allow locals to handle the aspects of the business that require local expertise. These steps will minimize risk. Written contracts are common in Turkey, and we will use those as well.

Moreover, the business will require some form of operational control. To do this, we will need to set up a small office and have a person on the ground in Turkey ensuring that the importers and distributors are fulfilling their obligations -- just because you are exporting does not mean that your responsibilities end at the loading dock. There are also other factors to consider. Market size matters, and Turkey was chosen because it was a large market.

Cultural factors can affect the success of a product as well, and in this case we believe that Turks will love.