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    Foreign Market Selection Process

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    Saurabh Gupta
    This document summarizes various foreign market entry strategies and the foreign market selection process. It discusses indirect and direct exporting options and their advantages and disadvantages. It also provides examples of how to screen foreign markets using minimum criteria thresholds or clustering techniques. The document concludes by describing how the International Business Resource Center (IBRC) can help businesses research international markets and develop export strategies by matching them with student interns for research and reporting.

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    Foreign Market Selection Process

    Uploaded by

    Saurabh Gupta
    162 views26 pages
    This document summarizes various foreign market entry strategies and the foreign market selection process. It discusses indirect and direct exporting options and their advantages and disadvantages. It also provides examples of how to screen foreign markets using minimum criteria thresholds or clustering techniques. The document concludes by describing how the International Business Resource Center (IBRC) can help businesses research international markets and develop export strategies by matching them with student interns for research and reporting.

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    This document summarizes various foreign market entry strategies and the foreign market selection process. It discusses indirect and direct exporting options and their advantages and disadvantages. It also provides examples of how to screen foreign markets using minimum criteria thresholds or clustering techniques. The document concludes by describing how the International Business Resource Center (IBRC) can help businesses research international markets and develop export strategies by matching them with student interns for research and reporting.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    162 views26 pages

    Foreign Market Selection Process

    Uploaded by

    Saurabh Gupta
    This document summarizes various foreign market entry strategies and the foreign market selection process. It discusses indirect and direct exporting options and their advantages and disadvantages. It also provides examples of how to screen foreign markets using minimum criteria thresholds or clustering techniques. The document concludes by describing how the International Business Resource Center (IBRC) can help businesses research international markets and develop export strategies by matching them with student interns for research and reporting.

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    Foreign Market Selection Process

    Kelly E. Fish, Ph.D. International Business Workshop

    Overview

    Market Entry Strategies


    Exporting

    Foreign Market Selection How IBRC can help with the process

    High risk/reward

    Foreign Market Entry Strategies

    Wholly owned subsidiary

    Local production
    Joint venture

    Local assembly

    Contract manufacturing

    Franchising/Licensing

    Low risk/reward

    Sales subsidiary

    Direct exporting
    Indirect exporting

    Strategy Trade-offs
    Entry Strategy Control Asset Variable Fixed Market Overall Level Costs Costs Share Cost

    Indirect Exporting Direct Exporting Sales Subsidiary Franchising/Licensing Contract Manufacturing Local Assembly Joint Venture Local Production Wholly owned subsidiary

    Indirect Export Trading Companies (TCs) Advantages


    Open new markets without expertise or investment TCs cover market well and service products they sell

    Indirect Export Trading Companies (TCs) Disadvantages


    TCs control market selection and marketing More of a foreign concept (Japan, South Korea, Brazil, Western Europe) Product may not get attention it deserves

    Indirect Export Export Management Companies Advantages

    Instant foreign market knowledge and contacts Sales are on commission basis (variable cost) Potentially better feedback than TC

    Indirect Export Export Management Companies Disadvantages

    EMCs may spread themselves too thin with too many customers Product may not get attention it deserves Market expertise/contacts can be limited to one or two countries

    Indirect Export Piggyback Exporting Advantages


    Rider benefits from carriers established export and distribution facilities Shared expenses Rider benefits from carriers reputation

    Indirect Export Piggyback Exporting Disadvantages


    Carrier seldom assumes any risk on riders product Rider subject to carriers strategy/reputation

    Direct Exporting Advantages


    Usually yields higher sales than indirect exporting Company has greater control, better market information Company develops in-house expertise Company has greater freedom to choose entering markets

    Direct Exporting Disadvantages


    Costs are higher than with indirect exporting It may take longer to establish market entry, distribution network, etc.

    Foreign Market Selection


    The two most widespread mistakes of market selection are: 1) ignoring or missing markets that offer good potential for a firms products and

    2) spending too much time researching markets that are poor prospects for the firm

    Foreign Market Screening

    Target

    Foreign Market Screening

    1. Macro-level research
    2. General market factors relating to the product 3. Micro-level factors specific to the product 4. Final screening

    Target

    Foreign Market Screening

    Screening techniques range from simple minimum criteria thresholds (Example A) to clustering techniques using artificial intelligence (Example B).
    Target

    Example A Targeting Countries for Kidney Dialysis Equipment


    1. Macro-level research

    GDP over $15 billion GDP per capita over $1,500 Political stability

    Example A Targeting Countries for Kidney Dialysis Equipment


    2. General market factors relating to the product

    Less than 200 people/hospital bed Less than 1,000 people/doctor Govt. expenditures over $100 million for healthcare Govt. expenditures over $20 per capita for healthcare

    Example A Targeting Countries for Kidney Dialysis Equipment


    3. General market factors relating to the product

    Kidney-related deaths over 1,000 Patient use of dialysis equipment over 40% annual growth

    Example A Targeting Countries for Kidney Dialysis Equipment


    4. Final screening

    Number of competitors Distributor reputation

    Example B Targeting Countries for Kidney Dialysis Equipment

    Self-Organizing Map

    GDP GDP per capita Total health expenditure per capita Total Health expenditure as a % of GDP Political Risk Index Cultural score

    Example B Targeting Countries for Kidney Dialysis Equipment


    India Malaysia Philippines Hong Kong Jamaica Singapore Australia Austria Canada Ireland New Zealand Switzerland United Kingdom France Italy United States Japan

    Ecuador Guatemala Indonesia Pakistan Turkey Venezuela Yugoslavia Chile Panama Peru South Korea Thailand

    Iran Mexico South Africa

    Denmark Finland Netherlands Norway Sweden

    Brazil Colombia

    Argentina Costa Rica Greece Portugal El Salvador Spain Uruguay

    Israel

    How the IBRC can help your business

    Provide export assistance to NEA businesses

    1. NEA Business Contacts the IBRC 2. IBRC matches ASU Intern with NEA Business 3. Intern Researches International Markets and Develops Export Strategy for the NEA firm under direction of IBRC 4. Intern makes Final report and end of semester

    Provide export assistance to NEA businesses

    We have the expertise for oversight (Drs. Fish & Guha) We have the manpower (Students are cheap free!) We have the country data We are committed to working with the U.S. Export Assistance Center

    Visit the ASU International Business Resource Center on the Web at: ibrc.astate.edu

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