To Russia with Love: The Complexity of Penetrating New Markets

Abstract

Clarwen is a small privately owned company based in southern California, USA. It designs, manufactures, and markets custom-made luxury accessories for men and women. The company is considering pursuing international expansion—primarily into Russia but also into the European and/or Chinese markets—in order to directly increase its revenues by adding potential new customers for its current products. Preliminary market analyses indicate that non-domestic customers are willing and able to buy Clarwen's products. Cultural factors, as well as the need for innovation, are key to Clarwen's expansion strategy. Additionally, an internal environmental scan reveals that the firm's current capabilities are limited, both in terms of production and distribution. Taking into consideration intellectual property and financial risks inherent in going international, especially for a small company, devising an appropriate entry strategy and executing it flawlessly becomes a matter of vital importance. This case examines the socio-economic factors involved in determining what entry mode Clarwen should choose: agents/distributors, franchising, direct marketing, or joint ventures in its attempts to penetrate these markets. Distribution and sales channels, selling factors and techniques, pricing, promotion and advertising, and customer support issues are considered as well.