Rei in Tokyo, Japan and Bogota, Columbia, Marketing Plan Example

REI is a popular company that markets, distributes, and sells outdoor equipment for a variety of activities, including camping, water sports, and snow sports (REI, 2010). The primary mission of the organization is as follows: “At REI, “We inspire, educate and outfit for a lifetime of outdoor adventure and stewardship” (REI, 2010). The company has been largely successful in its efforts to develop and to sustain a vast customer base, and continues to increase its sales growth, despite a difficult economy (REI, 2010). Therefore, the company must explore new opportunities for growth that will be effective in sustaining this level of growth for the foreseeable future (REI, 2010). It is evident that exploring international growth is one of the key requirements of the company to improve its marketability and popularity, and therefore, must determine how its market entry methods will be successful in other nations. The countries and cities of choice are Tokyo, Japan, and Bogota, Columbia, both with significantly diverse customer bases, and therefore, REI must evaluate their own capabilities and how these might be modified to adapt to both cities. The following discussion will address various market entry methods and how these might apply to REI’s entry into Japan and Columbia, including the strengths and weaknesses of each strategy and how it might be useful in supporting long-term growth objectives.

Franchise Development

For REI to experience international growth, franchising the business in other countries is a viable option. This process involves establishing a strategy for distribution in other countries, using the REI name (Learnmarketing.net). Therefore, the company would serve as the leader in providing support and ongoing guidance to the franchiser(s) in achieving their desired objectives (Learnmarketing.net). This is a viable approach for REI to consider in Japan and Columbia, because both countries have successfully responded to other American brands that have franchised in their markets, such as McDonalds, but this requires an effective understanding of the needs and expectations of customers in these countries before market entry is complete (Learnmarketing.net). There are significant cultural factors that must also be addressed in order to determine how to best move forward in supporting these objectives, such as the popularity of outdoor sports and activities in these countries.

Manufacturing in Overseas Markets

It is possible that REI could expand upon its existing manufacturing processes and transfer these capabilities to other markets, but it is very likely that the cost of doing business, as well as legal restrictions, may not be conducive to positive results (Learnmarketing.net). In addition, the workplace culture might not be adaptable to managing the business in the most successful manner possible (Learnmarketing.net).

Joint Venture

With a joint venture, there is a possibility that collaborating with another business in order to achieve the desired goals and objectives might be an option. This process requires an effective understanding of the roles and expectations of both parties, and how these might influence the overall direction of the organization in international markets (Allen, 2010). In this context, both parties would retain ownership of their respective businesses, but they would collaborate regarding a wide variety of objectives that could lead to successful outcomes over the long term (Allen, 2010). To be specific, “In some cases, a large company can decide to form a joint venture with a smaller business in order to quickly acquire critical intellectual property, technology, or resources otherwise hard to obtain, even with plenty of cash at their disposal” (Allen, 2010). This strategy would require REI to join forces with another company in its international market of choice, which may prove to be more difficult than the effort is actually worth, due to economic and cultural differences, amongst others.

Summary and Recommendations

Based upon the three market entry methods, it is strongly recommended that the company should consider a franchising opportunity above all others in order to create opportunities for sustained growth and development in both Japan and Columbia. The company has already been successful in opening a new store in Tokyo in the early 2000s (All Business, 2000), but additional stores must be considered, that would be best established with a franchising alternative. In this context, it is necessary to consider that franchising would enable REI to explore its options in Tokyo and Bogota by first examining the markets as they stand today, so that there are sufficient alternatives in place in order for the company to be successful over the long term. In addition, REI could capture its key strengths, core values, and mission in such a way that it could attract possible franchising agreements in a successful manner. The company has already established itself in the domestic market, so franchising would require effort in the areas of cultural alignment and legal responsibilities, but the possibilities are strong in both Tokyo and Bogota. This type of effort requires a unique collaboration with effective communication and ongoing dialogue in order to achieve the desired level of success.

References

All Business (2000). Outdoor retailer REI opens first international store in Tokyo. Retrieved September 18, 2010, from http://www.allbusiness.com/retail/retailers-book-music-hobby-stores-sporting-goods/6425218-1.html

Allen, S. (2010). Joint venturing 101. Retrieved September 18, 2010, from http://entrepreneurs.about.com/od/beyondstartup/a/jointventures.htms

Learnmarketing.net. Market entry methods. Retrieved September 18, 2010, from http://www.learnmarketing.net/international%20marketing%20entry.htm

REI (2010). Newsroom. Retrieved September 18, 2010, from http://www.rei.com/aboutrei/releases/10revenues_dividend.html