International Marketing Operations

Once the company has carried out all the necessary research and made a decision on the market for foreign expansion, the next decision that the management faces is that of the entry mode choice. The entry modes that can be used during foreign expansion are usually evaluated in two dimensions: risk that the company takes on in case the venture turns out to be unsuccessful and control of the foreign operations that it provides the company with.
Having analyzed the market of Saint-Petersburg, it has been decided that it is the optimal first step of the company’s expansion to Russia. The following passages enumerate decision-making criteria and describe the entry mode that has been chosen taking in account all the considerations.

Decision-making Criteria
Club-Mate is a new product for the market of Saint-Petersburg, with un-established consumer image but large potential. On the other hand, it is a rather simple commodity product, which generally require fewer involvement of exporter than the more complex ones. However, the nature of the drink being rather unusual and the core target audience somewhat narrow, it has been decided that the company must take responsibility over the initial promotion of the prod- uct and establishment of the distribution network. That way the company could ensure that all the factors of the marketing mix were handled according to its requirements.
However, a venture into the market so different from the company’s home environment in the EU does carry a certain amount of risk. Therefore, the company must also take into account the level of uncertainty, selecting the entry mode with minimum involvement that however satisfies all its needs in terms of control. 

Sales Subsidiary in Saint-Petersburg
It has been decided that direct exporting fits the company’s purposes the best. However, choosing among the different ways of establishing direct exporting activities, it appears that the company must incorporate a sales subsidiary in order to facilitate all its needs.
Its functions must be the following:

1. Negotiating sales contracts with retailers, bars, etc.;
   
2. Organizing local logistical processes;
   
3. Raising public awareness about the product by means of advertising and promotion
   campaigns;
   
4. Monitoring the performance and carrying out research of the market.
   

Thus, the subsidiary in Saint-Petersburg would enable the company to seize better control of expansion to the city. Taking in account Saint-Petersburg’s strategic location, it could later serve as a stepping-stone for its further expansion to Russia, if the company’s first experience in the market turns out to be successful. Moreover, being in close contact with the distributors, the firm would be able to obtain valuable data relating to the Russian sales patterns for the drink. The results could later be used to adjust the expansion strategy for maximum fit with the mar- ket.
Setting up the subsidiary would demand a certain amount of investment from the company, increasing the risk of the venture. However, the former are justified by the benefits that the ability to fine-tune its expansion strategy on its initial stage would yield.