CHAPTER XII
ANALYZING INTERNATIONAL OPPORTUNITIES
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Learning Objectives
Explain each of the four steps in the market- and
site-screening process.
Describe the three primary difficulties of
conducting international market research.
Identify the main sources of secondary
international data, and explain their usefulness.
Describe the main methods used to conduct
primary international research.
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I. SCREENING POTENTIAL MARKETS
AND SITES
1. Step 1: Identify Basic Appeal.
2. Step 2: Assess the National Business Environment
3. Step 3: Measure Market or Site Potential
4. Step 4: Select the Market or Site
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SLECT THE MARKET OR SITE
Step 4
Step 3
Step 2
Step 1
+ Field Trips
+Competitor Analysis
MEASURE MARKET OR SITE POTENTIAL
+ Current sales, Income Elasticity,
Market Potential Indicator.
+ Quality of Workforce, Material, Infrastructure c
ASSESS THE NATIONAL BUSINESS ENVIRONMENT
+ Language, attitudes, religious beliefs, traditions, work ethic
+ Government regulation, government bureaucracy, political stability.
+ Fiscal and monetary policies, currency issues
+ Cost of transporting goods, country image
IDENTIFY BASIC APPEAL
+ Suitability of climate, absolute bans
+ Access to materials, labor, financing
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I.1 Step 1: Identify Basic Appeal
Determining Basic Demand
Determining Available of Resources
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I.1.1 Determining Basic Demand
Climate
Regulations (Foods, Smuggling…)
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I.1.2 Determining Available of Resources
 Carry out local activities
 National market or imported
 Relocate to countries
 Available and cost of local capital (Secure financing in a
market abroad)
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I.2 Step 2: Assess the National Business
Environment
Cultural Forces
Political and Legal Forces
Economic and Financial Forces
Other Forces
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I.2.1 Step 2: Cultural Forces
Some countries display cultural similarities.
Most differ in many ways:
Languages/ Attitudes toward business/ Religious belief/
traditions/ customs.
What kinds (and How) of products are sold?
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I.2.2 Political and Legal Forces
Government Regulation
Government Bureaucracy
Political Stability
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I.2.2 Political and Legal Forces
Government Regulation

Create investment barriers to ensure domestic control of a company or
industry.

Restrict international companies from freely removing profits earned in
the nation.

Impose very strict environmental regulations.

Require companies divulge certain information.
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I.2.2 Political and Legal Forces
Government Bureaucracy
 A lean and smoothly operating government bureaucracy can
make a market or site more attractive.
 A bloated and cumbersome system of obtaining approvals and
licenses from government agencies can make it less appealing.
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I.2.2 Political and Legal Forces
Political Stability

Every nation’s business environment is affected to some degree by political risk.

The key element of political risk that concerns companies is unforeseen political
change

The perception of a market’s political risk is often affected by managers’
memories of past political unrest in a nation.

Managers may assign company personnel to gather information on the level of
political risk in a country.
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I.2.3 Economic and Financial Forces
Managers must carefully analyze a nation’s economic policies before
selecting it as a new market or site for operations.
The poor fiscal and monetary policies of a nation’s central bank can
cause high rates of inflation, increasing budget deficits, a depreciating
currency, falling productivity levels, and flagging innovation.
Currency and liquidity problems pose special challenges for
international companies.
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I.2.4 Other Forces
Costs of Transporting Materials and Goods.
The cost of transporting materials and finished goods
affects any decisions about where to locate manufacturing
facilities.
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I.2.4 Other Forces
Logistics
Management of the physical flow of products from the
point of origin as raw materials to end users as finished
products.
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I.2.4 Other Forces
Country Image
Country image embodies every facet of a nation’s business
environment
Highly relevant to the selection of sites for production,
R&D, or any other activity.
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I.3 Step 3: Measure Market or Site Potential
Measuring Market Potential
Measuring Site Potential
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I.3.1 Measuring Market Potential
Industrialized Markets
The most developed markets: sole purpose of supplying market data to
companies.

Names, production volumes, and market shares of the largest
competitors

Volume of exports and imports of the product
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I.3.1 Measuring Market Potential
Industrialized Markets…

Structure of the wholesale and retail distribution networks

Background on the market (population, social trend…)

Total expenditure on the product in the market

Retail sales volume and market prices of the product

Future outlook for the market and potential opportunities.
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I.3.1 Measuring Market Potential
Industrialized Markets…
Income Elasticity
Sensitivity of demand for a product relative to changes in income.
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I.3.1 Measuring Market Potential
Emerging Markets (China, India)

Market Size

Market Growth Rate

Market Intensity

Market Consumption Capacity

Commercial Infrastructure

Economic freedom

Market Receptivity.

Country Risk.
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I.3.2 Measuring Site Potential
Managers must carefully assess the quality of the resources
(Human resources-both labor and management)

Training local managers requires a substantial investment of time
and money.

Examine the local infrastructure: roads, bridges, air-ports,
seaports, telecommunications systems.
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I.4 Select the Market or Site
Field Trips
Competitors Analysis
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I.4.1 Field Trips
Making a personal visit to each remaining potential
market or site cannot be overstated.
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I.4.2 Competitors Analysis
Competitors Analysis
 Number of competitors in each market
 Market share of each competitors
 Whether each competitor’s product appeals to a small market segment or has
mass appeal.
 Whether each competitor focuses on high quality or low price
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I.4.2 Competitors Analysis
Competitors Analysis…
 Whether competitors tightly control channels of distribution.
 Customers loyalty commanded by competitors
 Potential threat from substitute products
 Potential entry of new competitors into the market
 Competitors control of key production inputs.
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II. CONDUCTING INTERNATIONAL
RESEARCH
1. Difficulties of conducting International
research
2. Sources of Secondary International data
3. Methods of conducting Primary
International Research
4. A Final word
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II.1 Difficulties of Conducting
International Research
Availability of Data
Comparability of Data
Cultural Problems
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II.1.1 Availability of Data
Highly industrialized countries: Both agencies and
private research firms supply information.
Emerging and Developing countries:
To deliberate misrepresentation
specialize in gathering data (Research
agencies)
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II.1.2 Comparability of Data
Data obtained from other countries must be interpreted with great
caution. (Poverty, consumption, literacy)
Data must be accompanied by precise definitions.
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II.1.3 Cultural Problems
In unfamiliar markets must pay attention to the ways in which
cultural variables influence information.
Need to survey potential buyers (questionnaires written in the local
language)
Companies that have little experience in an unfamiliar market often
hire local agencies to perform some or all of their market research.
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II.2 Sources of Secondary International
Data
International Organizations
Government Agencies
Industry and Trade Associations
Service Organizations
Internet and World Wide Web
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II.2 Sources of Secondary International
Data
Secondary Market Research
Process of obtaining information that already
exists within the company or that can be
obtained from outside sources.
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II.2.1 International Organizations
A variety of international organizations are excellent sources of
much free and inexpensive information about product demand in
particular countries.
International development agencies: WB, IMF… provide valuable
secondary data.
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II.2.2 Government Agencies
The commerce department and international trades agencies of most
countries typically supply information about import and export
regulations, quality standards, and the sizes of various markets.
The Trade Information Center (TIC) operated by the U.S Department of
commerce
The TIC details product standards in other countries and offers advice
on opportunities and best prospects for US companies in individual
markets.
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II.2.2 Government Agencies…
Other TIC information includes:

Information on federal export-assistance programs that can be essential
for first-time exporters

National trade laws and other regulations

Trade shows, trade missions, and special events

Export counseling for specific countries

Import tariffs and customs procedures

The value of exports to other countries.
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II.2.3 Industry and Trade Associations
Companies often join associations composed of firms within their
own industry or trade.
The publications of these organizations keep members informed
about current events and help managers to keep abreast of
important issues and opportunities.
Sometimes industry and trade associations will commission
specialized studies of their industries.
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II.2.4 Services Organizations
Many international service organizations in fields such
as: banking, insurance, management consulting, and
accounting offer information to their clients on cultural,
regulatory, and financial conditions in a market.
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II.2.5 Internet and World Wide Web
Companies engaged in international business are
quickly realizing the wealth of secondary research
information available on the internet and the World
Wide Web.
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II.3 Methods of Conducting Primary
International Research
Primary Market Research
Process of collecting and analyzing original data
and applying the results to current research needs.
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II.3.1 Trade Shows and Trade Missions
Trade Show
Exhibition at which members of an industry or
group of industries showcase their latest products,
see what rivals are doing, and learn about recent
trends and opportunities.
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II.3.1 Trade Shows and Trade Missions…
Trade Mission
International trip by government officials and businesspeople that
is organized by agencies of national or provincial governments for
the purpose of exploring international business opportunities.
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II.3.2 Interviews and Focus Groups
Focus Group
Unstructured but in- depth interview of a small group of
individual (8-12 people) by a moderator to learn the group’s
attitudes about a company or its product.
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II.3.2 Interviews and Focus Groups…
Consumer Panel
Research in which people record in personal diaries,
information on their attitudes, behaviors, or purchasing
habits.
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II.3.3 Surveys
Survey
Research in which an interviewer asks current or
potential buyers to answer written or verbal questions
to obtain fact, opinions, or attitudes.
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II.3.4 Environmental Scanning
Environmental scanning
Ongoing process of gathering, analyzing, and
dispensing information for tactical or strategic
purpose.
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III A Final word
In order to keep pace with an increasingly
hectic and competitive global business
environment, companies should follow a
systematic screening process that incorporates
high quality research methods.
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THE END
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