Question

Give opinion: Global marketing can appear to be a risky move when a company is considering crossing the international border. The strategies for entering the global market are indirect and direct exporting, licensing and franchising, joint ventures, and direct investment and each of these strategies have advantages and limitations (Finch, 2012, Section 14.3, para 1). Indirect and direct exporting gives those the ability to learn about how the global market responds to them with minimal risk to their business as a whole. Licensing and franchising gives the business the ability to expand with some profitability but can create problems with various promotions. Joint ventures means that one would have to trust the person they are going into business with and be prepared to take a loss if the deal falls through. Direct investment can improve sales and create new ideas in a new market, but also can be rather expensive and ruin the brand name depending on the country in which the business has expanded. McDonald’s is now a brand name everywhere you go. The lesson from McDonald’s success in the global marketplace can be utilized across various industries are brand growth and stability in the market.

Scentsy has have agreements in the U.K., Canada, Ireland, Germany, Mexico, and Australia and the company has flourished with consumers and consultants. Recently, we had our first Global convention with consultants from all over the world in Anaheim, CA. It was great to hear about how other consultants are building their home based businesses and working to not only better themselves but also the communities in which they live. The Scentsy brand name is becoming more a household name and the company is building stability in the countries in which they do business. Therefore, even though Scentsy is not the same as McDonald's, it is growing rapidly.

Answer 1

The business model that Scentsy has adopted in order to expand abroad is similar to a pyramid structure that is often seen with the likes of Amway or Herbalife. However, it also appears that Scentsy are also recruiting directly through their websites.

Now, while the overall business structure may be of a pyramid, the business entity that is established abroad will likely be a direct investment. This is because while the consultants can operate flexibly, their remuneration (commissions) and events need to be handled by the country specific organization. This is likely a locally registered business that is a direct subsidy of the parent company abroad.

The challenge with such business model is that, while theoretically it is a profitable business, it requires a lot of hard work from these freelance consultants. Many of them may not prioritize this business and as a result the growth is never at its full potential. Also many consumers are more comfortable purchasing products directly from store rather than from the likes of a consultant. Due to this, establishing a strong brand becomes difficult. This is why Amway does not have a strong brand presence as Unilever or P&G. Given this situation, Scenty may face similar issue.

The benefit of adopting such business model is that the capital expenses are comparatively lesser such businesses when it comes to supply chain management. However, the vision and mission of the organization is critical to choose the model of business and expansion plan internationally.