The outline below guides you through a market assessment and market-entry plan for a particular business and country such as Dick’s Sporting Goods to Japan, IKEA to Brazil, or Sea World to Dubai. Source suggestions are presented and include Internet sources and sources commonly available through online university library sites. Your instructor may suggest alternative or additional options based on sources available at your particular university.
Executive Summary
• Briefly describe your product/service and the state of your business.
• Briefly state the international experience of your business. Check out your
firm’s corporate website to see when and where the firm internationalized.
o PLEASE NOTE: This experience might provide very useful insights for your own project such as product adaptations abroad or pricing policies. If your firm has already entered a country with a similar culture as your target country, investigate its experience in that earlier market. See if there have been any cultural or strategic missteps that should be avoided in the future. Do an Internet search and look for appropriate business news articles via the Business Source Complete or Factiva found on most university online library sites.
Provide a very short summary of your report
oHow attractive or unattractive is the proposed market and why? o What mode of entry do you propose?
o What key product or service and product-line adaptations do you
propose?
o What distribution, pricing and promotion strategies do you suggest?
Economic Environment
• What is the general economic outlook for your market? What implications could this have for your business model? A good and timely source for this is Business Monitor found on most university online library sites. Business Monitor may even provide a specific report pertaining to your industry. And their Retail Reports can be useful overviews for any consumer-product market.
• Review issues in Chapter 2 in your textbook to identify pertinent issues for assessing the economic environment. Address:
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o trade restrictions
omembership in economic integration organizations o foreign exchange issues
For your section on implications of exchange regime and rates, specifically address the following:
o What is the nature of the local currency regime—freely floating, pegged to dollar, pegged to the euro, etc.? For a description of different currency regimes see the IMF site http://www.imf.org/external/np/mfd/er/2006/eng/0706.htm
o What has been the recent history of the local currency versus the home currency? Examine the past three years (at least) for developed countries and ten for developing countries. If you have a major global competitor from a third country, also look at the recent history of the local currency versus the currency of their home country.
• Wikipedia often provides a good summary of national currencies. For example look under Russian ruble or Mexican peso.
• A good source for current and historical exchange rates is Oanda at http://www.oanda.com/
o Do experts propose that the local currency will devalue/revalue against the local currency/third-country currency? What are the pressures to do so? Please note: If you have a pegged currency, recent stability is no indicator of future trends. The currency could be stable or it could be heading for a steep devaluation.
• Business Monitor is one possible source for expert insight.
• An Internet search using the name of your currency (e.g., Egyptian
pound), the current year, and “prediction” often results in several authoritative articles.
What are the implications of your analysis above to your business plan? For example how might a relative change in currency values affect the following:
o The value of profits when translated to the home currency?
o The value of licensing or franchising fees when translated to the
home currency?
o Choice of target markets?
o Pricing strategies?
o The decision to import products or not—and from where? o Competitive positioning against local and international
competitors?
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Political Environment
• Review Chapter 4.
• What are the short-term and longer-term macro political risks associated with your country? What are the micro political risks associated with your particular industry or home country? Business Monitor is a good source for this as well.
• Go to the IFC/World Bank site www.doingbusiness.org. What is the general regulatory environment like in your country? Which specific regulatory areas are salient to your proposed business venture? How does your country rank on those particular areas of regulations? For example, if you plan to export through independent distributors you will not be interested in how difficult it is to get electricity. You will be more interested in trading across borders and enforcing contracts.
• Research more about specific regulations concerning your industry in your country. This can be done on the Internet and Factiva.
• Also address government corruption in this section (see Chapter 5) and, if appropriate, explain how corruption could affect your business operations in the targeted country. Be sure to look at Transparency International’s website at http://www.transparency.org/ , but go beyond just listing a number or ranking for your country. Particularly address the types of corruption that apply to your proposed business model.
Cultural Environment
• Address the different cultural issues discussed in Chapter 3 that could apply to buyers of your product or service.
• In addition to the topics raised in the textbook, think how other more specific aspects of culture might affect your specific business model and research accordingly. Food culture? Furniture aesthetics? Dating and marriage habits? These specific aspects of culture will vary by business. An Internet search can be useful not only for articles but for visuals as well.
• Look for articles or websites that discuss the cultural aspects of doing business in your particular target country. Use search terms such as “business culture” and “business etiquette.” How might these insights affect how you market in the country and how you relate to local stakeholders such as employees, partners, and regulators? Specifically note how any of these cultural insights relate to concepts covered in the Chapter 3, such as attitudes towards time, context of language, or expression of emotions.
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Do any of these cultural insights appear to support the Hofstede scores for your target country? Can you find any cultural paradoxes related to the Hofstede scores or other generalizations concerning national culture?
Competition
• Review Chapter 6.
• Identify local competitors and discuss their strengths and weaknesses vis-à-vis your
own.
• Identify global competitors operating in the market (or considering entering it) and discuss their strengths and weaknesses vis-à-vis your own.
• Can your business expect a country-of-origin advantage? Disadvantage? Explain.
• Check your university online library site. Business Monitor, Business Source Complete, Euromonitorand Marketline Advantage may have industry reports that can be helpful in identifying and evaluating competitors.
• Also Wikipedia may list competitors under your industry in your targeted country. Once you have names you can do further research on these competitors. Remember to look at corporate websites and check business news via library sites such as Factiva.
• A general Internet search can be useful too, and even take you to competitors’ corporate websites. It can also be useful for identifying smaller local competitors.
Mode of Entry
o Review Chapter 9.
o What are the realistic entry options given your product/service and the target country? For example, if your business model consists of establishing restaurants or retail outlets, you will not choose exporting as a mode of entry. You could however be interested in franchising, joint-venturing, establishing a new wholly-owned subsidiary or acquiring an existing company.
o Does your firm have a history of using a particular mode of entry? Is there any reason that the firm must keep to this historical mode of entry—or can you suggest a change?
o Briefly identify the pros and cons of each realistic entry option.
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• What is your choice and why?
• How will you attempt to mitigate the cons of your choice?
• If your plan includes partners such as distributors, franchisees, or joint venture partners, identify the qualities you want from these partners. How might you locate such partners? Try to identify an actual target firm or individual. Why might they be interested in partnering with you? If you can’t identify a potential partner, do you need to reconsider your mode of entry?
• Similarly, if you plan to enter via acquisition, you should identify an actual acquisition target and present a reasonable argument why the target would be interested in being acquired by you. You should also check the business news and determine if your firm is likely to be able to afford the acquisition. Is it in good financial shape?
Target Market(s)
• Review the section on target markets in Chapter 5.
• Identify your target market or markets. On which specific segments of the population will you focus your marketing efforts? This is an important question to answer. Think about demographics, lifestyles, and even geography. When you later design a marketing strategy, you must meet the needs of these segments. You will need to communicate with these segments through media that will reach them and with a message that resonates with them.
• After identifying the target market(s), determine the various steps you would take to put a number (customers and sales) on your target market. Try to find numbers as you work through these steps. Don’t worry if you can’t find all necessary numbers. This is to be expected. This missing information can later be added to your ‘Unanswered Questions’ section of the report. However, attempt to establish that your target market is large enough to be viable and specific enough to address with the marketing strategy you will later propose.
• For many projects, it is reasonable to think of more than one target market— each of which will need a distinct marketing strategy. For example, dating services seek male clients and female clients. In some countries the needs and availability of single males and single females will be more similar than in others where they would need to be treated as distinct segments. For other businesses (such as fast-food franchises or theme parks) locals and foreign tourists could be distinct segments. This might sound like a lot of extra work. However, dealing with this issue is actually much easier than it sounds.
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Alternatively, ignoring multiple segments when they in fact exist can result in confusion, frustration and wasted time.
Marketing Strategy
For the marketing strategy section, see if your library has any country-industry reports appropriate for your project. Again, these reports may be found via Business Monitor, Business Source Complete, Euromonitoror Marketline Advantage on your university online library site. The U.S. Export Portal at www.export.gov provides Country Commercial Guides that often have good information and can be accessed for free. It also has some specific country-industry reports. These special reports are free but require registration.
Product/Service Adaptations
o Review Chapters 10 and 11.
o What will your product line consist of and how will it differ from that in the home market? Why?
o How and why might the proportions of different lines vary from your home country?
o What product/service adaptations do you propose? Why?
o Do warranties or after-sales service apply to your business? If so, does
either need adaptation?
o What will be your branding policy? Why?
Pricing Strategy
oReview Chapter 12.
o How might cost factors affect your pricing strategy?
o How might market factors affect your pricing strategy?
o How might competitive factors affect your pricing strategy?
o Do government policies or laws restrict your pricing in any way?
o In general, how do buyers respond to pricing strategies? Your Country Commercial Guide can be useful in answering this question.
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o Revisit the Economic Environment section of your report: How could exchange-rate issues between the currency of the home country of your business and the currency of your potential host country possibly affect your pricing strategy—now or in the near future?
o Based on the discussion above, what is your proposed pricing strategy? For example, will you price the same as in the home market, a bit lower, a lot higher, etc.? Explain.
Distribution Strategy
oReview Chapter 13.
o What do you suggest as your distribution strategy? Why?
o If appropriate to your product, describe the wholesale/retail environment of your target country. How would you identify potential channel partners in your country?
o If you plan to utilize channel partners, how will you motivate these partners?
o If your service or product/service does not market (ever!) via wholesalers or retailers (e.g., Joe’s Crab Shack or Disney theme park) then you should focus on the number and location of your own stores, and it might be useful to look at Case 7.2 in the textbook. On the other hand, if you are investigating Ben & Jerry’s, your ice cream could sell through these channels, and you should consider them—even if you later decide only to sell via Ben & Jerry stores.
o Will you consider selling via the Internet? If so, discuss the e- commerce environment in your country.
o What impact does your country’s infrastructure (e.g., ports, railroads, roads) have on your distribution strategy? How might this affect your logistics?
o If appropriate to your product, discuss any problems with parallel markets (Chapter 12) or smuggling (Chapter 13) that you have uncovered.
Promotion Strategy
oReview Chapters 14 and 15.
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o What is the message you wish to convey to your target market(s). Remember to tie your promotion strategy clearly to your target market.
o Which promotion options—personal selling, sales promotions, telemarketing, advertising, buzz, etc.—are best suited for your business model in your target country? Why?
o What insights can you find concerning your proposed promotion choices in your target country?
o Are there any regulations pertaining to promotion that might affect your strategy?
o If you will pursue advertising, address issues concerning media strategy and agency choice. The Country Commercial Guides of the U.S. Export Portal at www.export.gov can be useful for this.
o Do you think your product/service is better served by a local or a global campaign? Explain your choice.
o Does your business participate in any corporate social responsibility projects? If so, will they be extended to your country—or do you suggest other projects? Why?
Unanswered Questions
• Did you identify important questions that proved difficult to research? If so, how did you attempt to address these questions? Why were your attempts unsuccessful?
• If you were given a research budget, what are some sources of for-pay information that could enrich your report?
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