DDBA 4990 Week 10 Market Entry Note Example

First Pallets Across the Border: A Market Entry Note for a Pennsylvania Maker of Hardwood Cutting Boards Selling Through an Ontario Kitchenware Distributor, on Currency, One Business Custom and Bilingual Labels

Student Name

Walden University

DDBA 4990: Business Essentials

Instructor Name

Month Day, Year

First Pallets Across the Border: A Market Entry Note for a Pennsylvania Maker of Hardwood Cutting Boards Selling Through an Ontario Kitchenware Distributor, on Currency, One Business Custom and Bilingual Labels

The Move

Allegheny Edge Woodworks, a composite shop of nine people near Pittsburgh, makes end-grain hardwood cutting boards and serving trays sold through 70 kitchen stores in the eastern United States. It will enter Canada by direct export through one distributor, a Toronto firm that supplies about 200 independent kitchenware and gift stores in Ontario. Direct export through a single distributor fits a first step abroad: it commits little capital, uses the distributor's knowledge of Canadian retailers and can be expanded or abandoned after a year. Johanson and Vahlne (1977) described this pattern of small, staged commitments, growing as a firm learns about a foreign market, and Allegheny's plan follows it.

Currency

Invoices will be in US dollars. That decision places the exchange risk on the distributor: if the Canadian dollar weakens between order and payment, the distributor pays more in its own currency, and Allegheny receives the same amount. For a nine-person shop with no treasury function, avoiding currency exposure is worth something.

The distributor will likely ask for something in return. In the first conversation, its buyer asked whether Allegheny would hold prices fixed in US dollars for twelve months, so that the distributor could set Canadian retail prices once a year. Allegheny should agree, since its wood costs are in US dollars and largely contracted for a year. It should also expect the distributor to raise Canadian prices when the exchange rate moves against it, which may slow sales in a weak year. That is the price of shifting the risk.

One Business Custom

The difference that most changes how Allegheny sells concerns who pays to get the goods across the border. Allegheny's US practice is to quote prices at its loading dock and let each store arrange freight. The Toronto distributor expects quotations delivered to its warehouse with duties and customs clearance paid, the term known in international trade as delivered duty paid under the International Chamber of Commerce's rules (International Chamber of Commerce, 2019). Canadian distributors commonly prefer this because it gives them one landed price per item.

For Allegheny, quoting delivered duty paid means arranging the truck to Toronto, hiring a customs broker and becoming responsible for clearance. Because the boards are made in the United States from North American hardwood, they should qualify for duty-free entry under the trade agreement between the United States, Mexico and Canada, provided Allegheny documents their origin. The broker will charge a fee per shipment, and Allegheny must build it, and the freight, into its Canadian price list.

One Regulatory Requirement

Canada requires that the information on the label of a prepackaged consumer product appear in both English and French. Canada's federal consumer packaging regulations (C.R.C., c. 417) state that all information required on such a label must be shown in both official languages, with an exception only for the name and address of the dealer (Government of Canada, 2024). Allegheny's boards are sold in shrink-wrapped retail packaging with a printed card showing the product name, dimensions and care instructions. For Canada, the required information on that card must be bilingual.

The practical step is to redesign the card with French text, translated professionally rather than by software, and to print a separate Canadian run. The cost is modest, about $1,400 for translation and design plus a minimum print run, but the step must happen before the first pallet ships, because the distributor will not accept goods it cannot legally sell.

Why Start With One Distributor

A single distributor concentrates risk: if the Toronto firm loses interest or fails, Allegheny loses its Canadian sales at once. The alternative, selling directly to Ontario stores, would spread that risk but require Allegheny to handle dozens of small shipments across the border, each with its own customs paperwork. For a first year, one partner and full pallets keep the work manageable. The agreement should run for one year with a clear exit, so the shop can widen its options once it has learned how Canadian stores buy.

Left for Later

The note deals with one currency decision, one custom and one requirement. It does not address Canadian sales tax, which the distributor collects, or product safety rules for food-contact surfaces, which the shop's finish supplier certifies. Each would deserve its own check before a second market is opened.

Next Steps

Allegheny should confirm the twelve-month price hold in writing, request a delivered duty paid quotation from a customs broker for a standard pallet and commission the bilingual card. With those three steps done, the first order can ship in about six weeks.

References

Government of Canada. (2024). C.R.C., c. 417 [Federal regulations on consumer packaging]. Justice Laws Website. https://laws-lois.justice.gc.ca/eng/regulations/C.R.C.,_c._417/

International Chamber of Commerce. (2019). Incoterms 2020: ICC rules for the use of domestic and international trade terms. ICC.

Johanson, J., & Vahlne, J.-E. (1977). The internationalization process of the firm: A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8(1), 23-32. https://doi.org/10.1057/palgrave.jibs.8490676