International Market Penetration: Cost & Risk Share Model

As business continues on its path to being totally global, more & more companies seek entry into new & unknown markets for growth. These markets have great potential to create new revenue streams. This potential does not come without cost or risk. Most require a capital investment, in addition to ongoing expenses to develop the business.

Larger companies usually will go at it alone. Most have the resources to do their own market research, competitive analysis, margin & pricing analysis etc. These larger firms will utilize their own employees & have the budget to invest in these markets.

It is the small & medium size firms that typically are faced with more difficult decisions. Most SME’s today need to develop new revenue streams outside of their current “comfort zone”. New markets & sectors are not just about expansion but long term survival.

Yet these SME’s that so desperately seek new business are often the same firms without the budget or capital necessary to penetrate new markets. Over the years most will attempt in one of two ways: hire a non employee (commission only salesperson) or on their own (usually through an overseas trade fair). Both have high failure rate.

The time is right for a more collaborative approach to new markets. Assembling a group of firms seeking entry overseas into a cooperative can spread the risks & costs substantially. Research suggests savings of upward to 40% over traditional marketing. Companies that may have passed on a market opportunity due to entry cost can now possibly join the cooperative & gain the desired exposure.

Hopefully organizations & associations that represent (Chambers of Commerce, Industry Associations etc.) member firms will take some time to analyze & research the viability of this model. Many firms continue to bypass opportunities that they so desperately need. A collaborative may be the answer for future growth.