Option1: Manufacture the product at home and let foreign sales agents handle marketing (Exporting) Exporting is a part of international trade & an entry mode to foreign markets.
Exporting is sale or trade goods manufactured in one country which are shipped to a completely new country (Export Definition| Investopedia, 2012). Currently, the Canadian company has good opportunity to export their medicine to because both the countries have good economic relations. Both countries view each other as complementary economies.It could enhance their own competitiveness by integrating themselves in the global supply chain by taking advantage of India’s low-cost skilled labour. The existence of English as the common language of business should enable the Canadian company to find a suitable sales agent who would handle the marketing of its product in the foreign market (India) (Canada Service Coalition, 2007). If the Canadian company chooses exporting as their entry mode the advantages it may obtain is increased profits, reduce the risk & balance growth, Lower the unit cost and economies of scale.
Another advantage The Canadian pharmaceutical company may face some trade barriers which could affect their entry mode strategy. Few of the trade barriers include extensive custom procedures, re-inspections, discriminatory packaging and labeling regulations that stipulate the color used for packaging. Furthermore, the pharmaceutical company will face a 30% duty since it is the policy of the Indian government to restrict import and encourage domestic companies. Moreover, these barriers will also result in delays and higher costs and most of all consume energy and patience.Option 2: Manufacture the product at home and set up a wholly owned marketing subsidiary in the chosen country to handle marketing.
This option to manufacture the product at home & set up wholly owned market subsidiary will help the company in the long run as it will learn a enormous deal regarding the market and will likely earn greater profits if sets up its own wholly owned subsidiary.It will also expose the firm to fewer peril of technological loss, and would allow the firm to maintain a much tighter control over the quality and costs of the drug . However, the Canadian pharmaceutical company should take into consideration that when it enters into a foreign market it will have no knowledge about the market & the latest trends and also it will take time for them to increase market share. Whereas, in option 1 the agent will be more familiar with the market and thus, it will be more effective for him to handle the marketing for the Canadian firm (Canada Service Coalition, 2007).
