Challenge 3
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Challenge 3

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@AdventuresomeLimit

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Questions and Answers

What must management do if key resources are lacking for a foreign market venture?

  • Proceed with the venture regardless
  • Focus only on local markets
  • Ignore the resource gaps
  • Acquire or develop the necessary resources (correct)

    • Why is organizational culture important for expanding into foreign markets?

  • It guides the selection of competitors
  • It affects the motivation and commitment of key employees (correct)
  • It determines the geographic location of the firm
  • It influences product pricing strategies

    • Which aspect is NOT crucial for assessing product suitability in foreign markets?

  • Assessing local cultural beliefs
  • Analyzing why people buy the product
  • Identifying who uses the product
  • Understanding competitor pricing strategies (correct)

    • What is a recommended method for evaluating local demand for a product in a target market?

    <p>Ask intermediaries in the target market</p> Signup and view all the answers

    What is an important factor to consider when adapting offerings for foreign markets?

    <p>Local regulations and laws</p> Signup and view all the answers

    What should be assessed to identify potential market hindrances?

    <p>Local customer characteristics and preferences</p> Signup and view all the answers

    What is the primary purpose of country screening in opportunity assessment?

    <p>To identify the best countries for market entry</p> Signup and view all the answers

    What might inhibit sales in a foreign market?

    <p>Certain local consumer habits and preferences</p> Signup and view all the answers

    What is a critical indicator of market attractiveness in terms of the middle class?

    <p>The share of national income available to middle-income households</p> Signup and view all the answers

    Which of the following best describes the relationship between income distribution and market attractiveness?

    <p>Equal income distribution is necessary for a larger middle class</p> Signup and view all the answers

    What is a potential drawback of per capita income measurements in emerging markets?

    <p>They can underestimate market potential due to informal economies.</p> Signup and view all the answers

    What is a key consideration when conducting country screening for foreign direct investment?

    <p>Variables considered for foreign direct investment differ from those for exporting</p> Signup and view all the answers

    What method do researchers use to evaluate the overall market attractiveness of countries?

    <p>They assign scores based on various criteria, weighted by importance.</p> Signup and view all the answers

    What is a significant consequence of failing to select the right countries for expansion?

    <p>Opportunity costs that tie up resources</p> Signup and view all the answers

    Which criterion is NOT used when assessing potential countries for market entry?

    <p>Global population trends</p> Signup and view all the answers

    What characteristic is particularly emphasized when targeting consumer electronics markets?

    <p>Large populations and discretionary income</p> Signup and view all the answers

    What is the initial approach firms often take when selecting countries for expansion?

    <p>Choose countries similar to the home country</p> Signup and view all the answers

    What process is described as a method to gradually identify promising markets?

    <p>Gradual elimination</p> Signup and view all the answers

    What is an important factor that contributes to a country's receptivity to imports?

    <p>High levels of economic freedom</p> Signup and view all the answers

    Why might firms initially avoid more complex markets like China or Japan?

    <p>Management's discomfort with cultural differences</p> Signup and view all the answers

    Which type of market is likely to be targeted by health insurance companies?

    <p>Countries with many doctors and hospitals</p> Signup and view all the answers

    What is the first step a firm should take when deciding on foreign business partners?

    <p>Determine value-adding activities</p> Signup and view all the answers

    Which of the following types of foreign business partners typically produces products under licensing agreements?

    <p>Independent businesses</p> Signup and view all the answers

    What factor is NOT considered when assessing a company's sales potential in a target market?

    <p>Competitor strategies</p> Signup and view all the answers

    Which partner type focuses on global sourcing and contract manufacturing?

    <p>Basic suppliers</p> Signup and view all the answers

    What is meant by industry market potential?

    <p>An estimate of the likely sales for all firms in a particular industry over a specific period.</p> Signup and view all the answers

    Which factor is NOT typically considered when estimating industry market potential?

    <p>Innovation rates of companies within the industry.</p> Signup and view all the answers

    When crafting a market entry strategy, which of the following criteria is most critical for selecting partners?

    <p>Access to distribution channels</p> Signup and view all the answers

    What is a crucial determinant of company sales potential?

    <p>The intensity of the competitive environment.</p> Signup and view all the answers

    Which factor is a major determinant of a company's proficiency and success speed in foreign markets?

    <p>Human and financial resources</p> Signup and view all the answers

    Which of these methods is used for estimating industry market potential?

    <p>Simple trend analysis to examine aggregate production.</p> Signup and view all the answers

    What is the approximate time frame a firm should consider for developing a sales forecast in target markets?

    <p>3 to 5 years</p> Signup and view all the answers

    What aspect is considered important when estimating sales in a new market?

    <p>The degree of pricing and financing attractiveness.</p> Signup and view all the answers

    What major factor could impact a company's competitive intensity in a foreign market?

    <p>Existing competitors' reactions</p> Signup and view all the answers

    What role do supplier networks play in estimating sales potential?

    <p>They deliver insights on sales and competitor activity.</p> Signup and view all the answers

    How often are industry market potential and company sales potential forecasted?

    <p>For at least three years.</p> Signup and view all the answers

    Which indicator is NOT typically related to estimating industry market potential?

    <p>The environmental impact of industry practices.</p> Signup and view all the answers

    Study Notes

    Opportunity Assessment:

    • Similar to a SWOT analysis but focuses on international expansion

    Key Resource Assessment:

    • Management must acquire or develop key resources before venturing into foreign markets.
    • Organizational culture is critical for motivating and committing employees to international expansion.
    • The external business environment should be examined for opportunities and threats in the target market.

    Assessing Product/Service Suitability:

    • Identify the buyers, users, and reasons for purchase for the product/service.
    • Evaluate the fit between the company offerings and foreign customer needs.
    • Identify factors that might hinder market potential in each target market.
    • Determine necessary adaptations of the offering for each specific market.
    • Consider foreign customer characteristics, legal regulations, channel intermediaries, and competitors.
    • Consult with intermediaries in the target market, and attend industry trade fairs to gauge demand.

    Country Screening:

    • Essential, but time-consuming, process for identifying the most promising markets.
    • Focus on criteria like market size, growth rate, intensity, consumption capacity, receptivity to imports, infrastructure, economic freedom, and country risk.
    • Initially, prioritize countries that are geographically and culturally similar to the home country.

    Screening Methodology:

    • Gradual Elimination: Start with a long list and eliminate countries based on research.
    • Macro Level: Analyze population, income, and economic growth for each country.
    • Micro Level: Evaluate market size, competition, import statistics, and export levels.
    • Indexing and Ranking: Assign scores based on criteria and weighting each indicator for relative importance.

    Engines of Economic Growth: Middle Class:

    • The size and growth rate of the middle class are critical indicators.
    • The middle class is measured by the share of national income available to middle-income households.
    • A large, growing middle class indicates a more attractive market.
    • Unequal income distribution can limit the middle class size and reduce market attractiveness.

    Country Screening for Foreign Direct Investment (FDI):

    • FDI involves longer-term investments, so choosing the right market is crucial.
    • Different variables are considered for FDI compared to exporting.

    Estimating Industry Market Potential:

    • Forecasts industry sales for all firms in a specific sector over a given period.
    • Managers analyze variables specific to each country:
      • Market size and growth
      • Trade barriers
      • Industry standards and regulations
      • Distribution channels
      • Customer requirements and preferences

    Data Sources for Industry Market Potential:

    • Obtain information about industry sales, production, export intensity, and import levels.

    Estimating Company Sales Potential:

    • Forecasts the firm's share of industry sales in each target market.
    • Factors that influence company sales potential include:
      • Competitive intensity
      • Pricing and financing attractiveness
      • Human and financial resources
      • Partner capabilities

    Methods for Estimating Industry Market Potential:

    • Simple Trend Analysis: Examines aggregate production in the industry.
    • Key Industry-Specific Indicators: Monitors industry drivers of market demand.
    • Key Competitor Analysis: Estimates competitor sales levels.
    • Key Customer Monitoring: Tracks customer activity globally for potential sales information.
    • Supplier Network Insights: Taps into suppliers for information on sales and competitor activity.
    • International Trade Fairs: Offers insight into market characteristics and sales potential.

    Choosing Foreign Business Partners:

    • Determine the type of partner needed and establish ideal partner qualifications.
    • Identify value-adding activities to be performed by the partners.
    • Assess partners based on criteria like expertise, commitment, distribution channels, financial strength, staff quality, and facilities.

    Types of Foreign Business Partners:

    • Exporters: Collaborate with foreign market intermediaries (e.g., distributors, agents).
    • Licensing Partners: Produce products using the focal firm's intellectual property.
    • Franchising Partners: Franchisees acquire rights and skills from the focal firm for local operations.
    • International Collaborative Ventures: Include joint ventures and strategic alliance partners.
    • Other Partners: Basic suppliers, global sourcing partners, and contract manufacturers.

    Estimating Company Sales Potential:

    • The firm estimates its most likely share of industry sales in each target market over a specified period.
    • Develop a 3-5 year sales forecast based on partner capabilities, distribution access, competitive intensity, pricing and financing, market penetration timeline, and risk tolerance.
    • Factors that influence company sales potential include:
      • Competitive intensity
      • Pricing and financing attractiveness
      • Human and financial resources
      • Partner capabilities

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    Related Documents

    Ch. 3.pdf - International Market Opportunities PDF

    Description

    This quiz explores critical aspects of international expansion, focusing on opportunity assessment and the key resources required for successful market entry. Participants will analyze product/service suitability and evaluate the organizational culture necessary to motivate employees in foreign markets. Prepare to delve into buyer characteristics and market potential.

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