Term Paper: Proposal for Physical Expansion of a US Company in a Foreign Market

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¶ … Business

International Market Expansion Proposal

Vision Statement

Modest Middles has thrived to make breastfeeding more fashionable and enjoyable for moms through our innovative and creative nursing shirts. Now that the Western United States market has so readily accepted our product, it is time to focus on expansion into the international market where we can bring our product and the beauty of breastfeeding to the world.

Company Summary

Modest Middles began as an Arizona-based company and has grown drastically over the past five years. The owner, Amy Maschue, founded the business on the principle of making a nursing product that is both fashionable and modest for moms who breastfeed. Currently the Arizona-based company has spread throughout the Western United States. The current American business filing is an LLC and all patent are exclusively owned by Amy Maschue within the United States only. With a steady increase in sales each year, Modest Middles is ready to expand to the market. The following paper will detail the steps necessary to take this American company into the foreign market.

Company Financial Outlook

Modest Middles was founded with investments solely owned by the founder Amy Maschue. Currently, all profits are re-invested into the company for growth and new opportunities. It is not feasible to seek out loans for the international expansion; however, seeking out local investments may be an option. During this entire expansion, the goal will be to minimize costs and maximize expansion, keeping the small nature of the business in mind at all times.

Market Research

The first step is determining the optimal market for expansion. The Market Research team reviewed all markets within the current United Nation's International Business treaty. The reason these businesses were selected for the initial expansion was because all countries have signed and uphold valid intellectual and patent property rights, ensuring that Modest Middles product will not be exploited in the foreign market.

After market research into various countries within the treaty including African, Asian and European, the best market for this business to choose would be Japan. Japan has a high number of breastfeeding moms and it is socially acceptable for mothers to breastfeed in public, which is the primary purpose of the product. Additionally, breastfeeding fashion is a newer market in the country, so the competition would be very limited for Modest Middles given how innovative the product is, it should have an excellent niche within the country.

Japan's economy is steadily growing. According to yesterday's reports, the Japanese market jumped .92%. This steady increase in the market reflects in increase in consumer spending and a healthy economy. These factors are critical for a starting business. In fact, according to market reports, last year Japan was the second largest retail consumer market with a total turnover of 1.124 billion dollars last year. Japan is an open, deregulated market, making it ideal for retail sales.

International Intellectual Filings

The current patent and trademark for Modest Middles are for the United States exclusively. With this in mind, it is apparent that there will be a need for much foreign legal work to be completed before we can effectively expand. Modest Middles cannot enter the foreign market without proper intellectual property protection. All current filings were filed by Amy Maschue, the owner, so it is apparent that an International Business Attorney with Japanese experience will be essential for this expansion. According to Japanese law, the following legal-related documents must be obtained, filed, and accepted before the transition into the market can begin.

The first step when expanding into the Japanese market is to create a business seal. This seal is a signatory held exclusively by the owner of a business and is used on all business contracts. Seals must be made by a seal carver. The best seal for Modest Middles would most likely simply be the company's trademark. This ensures that the mark is unique and can be used on all documents for clear identification. Once the seal is complete, it must be filed with the local ward's office in Japan. This may require travel, but often can be handled internationally. Once the seal and certificate of seal are filed and in hand, other documents can be filed within Japan.

The second necessary step is to search and apply for a patent in Japan. All patent law and patent applications are in Japanese, so it is imperative to locate a foreign intellectual property attorney in the United States that can assist with the filing and process. The organization that the patent must go through is the World Intellectual Property Organization. This organization is part of the United Nations and its purpose is to grow and encourage international business relations. Japan is a member of this group and has signed the intellectual property treaty, making it a crime to steal anyone's patented idea. This protection is vital for any business entering the foreign market, but especially a small business such as Modest Middles.

So, under Article 36 of Japanese law "A person desiring a patent shall submit a request, specification, claims, any drawings necessary, and the abstract to the commissioner of the Japan Patent Office." According to Japanese law, the form can be in English, but a Japanese translation must be filed within 14 months. Otherwise the patent will be rejected. The average waiting period for patent approval in Japan is 18 months with 3 years being the longest time period the Japanese have for rejection of a patent application. So this application should be submitted first, as it will take some time for approval.

The next necessary step is filing the Modest Middles trademark. Japanese law recognizes unique trademarks and protects those trademarks in the same way the United States does. This filing can be completed and filed at the same time as the patent application and has the same grace period for translation.

Business Filings

Before the business can even ship a single article of clothing into the country, it must on file with the Ministry of Justice's Legal Affairs Bureau. This filing is nearly identical to that used for a corporation within the United States and requires such information as the articles of incorporation. This information is again best if filled out by a corporate attorney who specializes in establishing businesses in Japan.

Next, the business owner must file a notification of business in the region where the expansion will take place. This establishes a connection with the tax office so that all sales and revenues can be properly taxed. This filing must be done in person within the first 15 days of business. It takes roughly one business day to file, so it is a fast form.

Once all of these forms are filled out, it is time to decide how the business will be handled. Given that Modest Middles already has a reliable manufacturer in California, the most efficient means of bringing product into the Japanese market would be through import. Importation has some advantages, as it allows for less employees within the country and requires no space rental.

Business Model

With Japan's unregulated business frontier, the possibilities are endless for entry into the market. Modest Middles is a small company with a specialty product, so the best market it can utilize is a partnership with existing baby and pregnancy fashion retailers. The basic premise would be that trained sales associates present the product to applicable retailers and establish accounts with those retailers. The retailers are then given a credit account to order a desired supply of Modest Middles. Upon reordering, the old account must be paid in full. Sales representatives would be paid on commission based upon the number of businesses they register within the country.

In order to make this business model a success, Modest Middles must file with the… [END OF PREVIEW]

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Proposal for Physical Expansion of a US Company in a Foreign Market.  (2012, February 29).  Retrieved December 11, 2019, from https://www.essaytown.com/subjects/paper/proposal-physical-expansion-company/929469

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"Proposal for Physical Expansion of a US Company in a Foreign Market."  Essaytown.com.  February 29, 2012.  Accessed December 11, 2019.