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International Market Selection Process

The document discusses the importance of identifying the right foreign markets to enter and outlines the factors and process a firm should consider when selecting international markets, including firm-related determinants, environmental factors, preliminary and in-depth screening criteria, and categories of markets based on risk and opportunity. It also covers basic entry decisions around how, when, and at what scale a firm should enter foreign markets, as well as common entry modes ranging from exporting to wholly owned subsidiaries.

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Yash Mittal
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77 views16 pages

International Market Selection Process

The document discusses the importance of identifying the right foreign markets to enter and outlines the factors and process a firm should consider when selecting international markets, including firm-related determinants, environmental factors, preliminary and in-depth screening criteria, and categories of markets based on risk and opportunity. It also covers basic entry decisions around how, when, and at what scale a firm should enter foreign markets, as well as common entry modes ranging from exporting to wholly owned subsidiaries.

Uploaded by

Yash Mittal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

Identification of International Markets

Module I

INTERNATIONAL STRATEGIC MARKETING

1
Why is it important to identify
the ‘right market’ to enter?

• Influences likelihood of success


• Influences nature of marketing
programmes
• Affects firm’s ability to coordinate foreign
operations

8-2
Determinants of the firm’s choice of
foreign markets

The firm related factors The environment

International
market segmentation

INTERNATIONAL MARKET SELECTION


Process of Market Selection
Country Identification

Preliminary Screening

In-depth Screening

Final Selection
4
Related Country Selection

Cost /
Sociopolitical
Factors
Factors

Fit with
Company
Regulatory Demand
Factors Factors

Strategic
Factors
Environment Factors
• International industry
structure
• Home market conditions
• Degree of
internationalization of the
market
• Host country:
– Market potential
– Competition
– Distance
– Market similarity

6
Determinants of the Firm

• Degree of
internationalization

• Size/amount of resources

• Type of industry/nature of
business

• Internationalization goals

• Existing networks of
relationships

8-7
Environment Factors
• International industry
structure
• Home market conditions
• Degree of
internationalization of the
market
• Host country:
– Market potential
– Competition
– Distance
– Market similarity

8
Market Related Factors/country attractiveness
• Market size • Market prohibitive
• Market growth conditions
• Buying power of • Government
customers regulations
• Market seasons • Infrastructure
• Average industry • Economic and
margin political stability
• Competitive
conditions

8-9
Preliminary Screening Criteria

General characteristics High degree of measurability,


Geographic accessibility, and actionability
Language
Political factors
Demography
Economy
Industrial structure
Technology
Social organization
Religion
Education
Specific characteristics
Culture
Lifestyle Low degree of measurability,
Personality accessibility, and actionability,
Attitudes and tastes but high degree of relevance

8-10
Criteria of In-depth Screening
• Political stability • Nationalization
• Economic growth • Monetary inflation
• Currency convertibility • Balance of payments
• Labour cost/ • Enforceability of
productivity contracts
• Short-term credit • Bureaucratic delays
• Long-term • Communications
loans/venture capital • Local management
• Professional services
Categories of Markets
• A countries: primary markets offering the
best opportunities for long-term strategic
development
• B countries: secondary markets where
opportunities are there but risk is high
• C countries: tertiary markets with high
risk

8-12
Basic Entry Decisions

• How to enter in foreign markets?


• When to enter the markets?
• What scale of entry?

14-2
Entry Modes for International Expansion

Wholly
WhollyOwned
Owned
Extent of Investment and Risk
High Subsidiary
Subsidiary
Joint
Joint
Venture
Venture
Strategic
StrategicAlliance
Alliance

Franchising
Franchising

Licensing
Licensing

Exporting
Exporting
Low
Low High

Degree of Ownership and Control


Market Expansion Strategies : Waterfall
Approach
High
Advanced
countries
Gross national product

Developing
per capita

countries

Less developed
countries
Low

Time
Market expansion strategies: Shower
Approach

Advanced Developing Less developed


countries countries countries

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