Transcript Document

chapter fifteen
Assessing and Analyzing
International Business, 11/e
Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
Discuss environmental analysis and market screening
Explain market indicators and market factors
Describe some statistical techniques for estimating market
demand and grouping similar markets
Appreciate the value to businesspeople of trade missions
and trade fairs
Learning Objectives
Discuss some of the problems market researchers encounter
in foreign markets
Understand the differences between country screening and
segment screening
Identify sources of information for the screening process
Appreciate the utility of the Internet as a source of market
research data
Assessing and Analyzing Markets
• Market Screening
– A version of environmental scanning in
which the firm identifies desirable markets
by using the environmental forces to
eliminate the less desirable markets
• Environmental Scanning
– A procedure in which a firm scans the world
for changes in the environmental forces that
might affect it
Market Screening
• Permits management to identify a small
number of desirable by eliminating those
judged to be less attractive
Market Screening
• Two Types of Screening
• Country Screening
• Using countries as the basis for
market selection
• Segment Screening
• Using market segments as the basis
for market selection
Initial Screening
• Basic Need Potential
– If the need is lacking, then no reasonable
expenditure of effort and money will enable
the firm to market its goods and services
– Easier for producers of specialized industrial
materials or equipment than for widely
consumed products
Initial Screening
• Imports Don’t fully measure market potential
• Resources to establish need potential
– International Trade Administration site on the
Internet (
– U.S. Exports of Merchandise on the National
Trade Data Bank
– U.S. International Trade in Goods and Services
(FT900) by the Department of Commerce
– Annual Worldwide Industry Reviews and
International Market Research Reports prepared
by various U.S. embassies
Second Screening: Financial and
Economic Forces
• Measures of market demand based on
economic and financial data
– Market indicators
– Market factors
– Trend analysis
– Cluster analysis
Market Indicators
• Market Indicators
– Economic data used to measure relative market
strengths of countries or geographic areas
– Possibilities:
• Market size
• Market growth rate
• E-commerce readiness
Market Factors
• Market Factors
– Economic data that correlate highly with market demand for a
– Estimation by analogy
Trend Analysis
• Trend Analysis
– Statistical technique by which successive observations
of a variable at regular time intervals are analyzed to
establish regular patterns that are used for establishing
future values
Cluster Analysis
• Cluster analysis
– Statistical technique that divides objects into
groups so that the objects within each group are
Third Screening:
Political and Legal Forces
• Entry Barriers
– Import restrictions, local participation
requirements, local content restrictions,
government-owned competition
• Profit Remittance Barriers
– Undue restrictions on repatriation of
earnings, limits to FDI, inability to provide
foreign exchange
• Policy Stability
– Political climate, government stability, public
Fourth Screening:
Sociocultural Forces
 Screening on the basis of sociocultural factors
is challenging
 Sociocultural factors are fairly subjective
 Data are difficult to assemble, particularly from a
Fifth Screening: Competitive Forces
• The number, size, and financial strength
of the competitors
• Their market shares
• Their marketing strategies
• The apparent effectiveness of their
promotional programs
• The quality levels of their product lines
Fifth Screening: Competitive Forces, cont’d.
• The source of their products--imported or
locally produced
• Their pricing policies
• The levels of their after-sales service
• Their distribution channels
• Their coverage of the market
Final Selection of New Markets
• Personal visit to potential markets is essential
– Field Trip, unhurried
– Government-Sponsored Trade Missions
– Trade Fairs
Final Selection of New Markets,
• Research in Local Market
– Face-to-face interviews reveal information that
would never be written
– Hire local research group
• Person in charge of the project must have
experience in that country or culturally similar
one in same geographic area
Local Research Problems
• Cultural
– Language
– Literacy
– Social desirability bias
• Technical
No up-to-date maps
Streets have different names
Houses not numbered
Only wealthy have telephones
Mail delivery issues
Research in Developing Nations
• Less research performed
• Often a seller’s market
• Competition is frequently less intense in
developing nations because
• fewer competitors
• management struggling with problems
other than marketing
Return to Segment Screening
• Segment Screening
– Definable: identify and measure
– Large: to be worth the effort needed
– Accessible: for promotion and distribution
– Actionable: have control of marketing programs
– Capturable: potential exists