Entering the Australian market: Market entry strategies for DebtorInfo New Zealand Ltd

Abstract

DebtorInfo New Zealand Ltd is a small credit management business who provides credit management solutions to small and medium sized businesses. The company has recently developed an internet based system that will enable small businesses to take control of their debt management through checking potential customers' credit history through a secure database. The system has recently been protected through a patent. DebtorInfo New Zealand Ltd has adopted an aggressive growth strategy, and wishes to enter the Australian credit management market within the next 18 months. The purpose of this report is to examine the options available to the company for entering into the Australian market. The specific aim of this report is to evaluate each option and recommend the most appropriate. Academic and practitioner literature was used to gain a working knowledge of each option. Further, personal communication and company documentation was used to test the applicability of each option to DebtorInfo. Four modes of entry were analysed; the use of agency agreement, the use of franchise agreements, entering into a joint venture, and setting up a wholly owned subsidiary. The advantages and disadvantages of each were examined and then applied to the situation of DebtorInfo. Factors such as the organisations international experience, size, and desire for control all influenced the final decision. It is recommended that DebtorInfo use agency agreements to enter the Australian market. This method was chosen as it fits best with the organisations goals and strategy. It also provides the organisation with increased control and will make the most efficient use of the company's resources. Caution must be exercised regarding the legal aspects of the agreements, as well as the selection and training of the agents