International Markets Strategies Quiz

International Markets: Assessment and Entry Modes

• Think locally, offer value, and be patient. Patience is key to successfully entering new markets.
• Om Malik emphasizes the importance of understanding local markets, offering value, and a long-term strategy.

Learning Objectives

• Review market screening steps and environmental analysis techniques.
• Discuss the value of trade missions and trade fairs.
• Describe challenges faced by market researchers in foreign markets.
• Explain international market entry methods.

Market Screening Approaches and Techniques

• Market Screening: A modified version of environmental scanning. Firms identify desirable markets by eliminating undesirable ones.
• Environmental Scanning: A process where firms analyze changes in environmental forces that might impact them.

Market Screening Approaches and Techniques (Continued)

• Country Screening: A method that uses countries as the basis for market selection.
• Segment Scanning: A method that utilizes market segments (consumer groups within a country) as the basis for market selection.

Initial Screening - Basic Needs Potential

• A funnel-shaped process to select potential foreign markets.
• The process eliminates markets that don't meet basic criteria.
  • First, basic needs are assessed
  • Then, economic/financial, political/legal, and sociocultural aspects are screened.
• A final selection is made based on the remaining market criteria.

Second Screening - Financial and Economic Forces

• Market Indicators: Economic data used to evaluate market strength of countries/regions.
• Market Factors: Economic indicators that highly correlate with market demand for a product.
• Trend Analysis: Statistical technique to predict future values by analyzing past trends.
• Cluster Analysis: A statistical technique to group objects based on similarity.

Third Screening - Political and Legal Forces

• Assess political and legal factors within target markets

Fourth Screening - Cultural Forces

• Culture Wheel: A model used to analyze national cultures.
• The Wheel categorizes elements like values, community, knowledge, language, traditions/rituals, arts, tools/objects, and techniques/skills.

Fifth Screening - Competitive Forces

• Analyze competitors' number, size, financial strength, market share, marketing strategies, promotional effectiveness, product lines, pricing policies, after-sales service levels, and distribution channels.
• Consider whether market segmentation can create currently underserved niches.

Final Selection of New Markets

• Carefully select new markets based on thorough analysis and assessment of various factors. Use the selection method (Figure from the presentation, showing an arrow hitting a "right choice" ball amidst many wrong ones) as a tool in the selection process.

Segment Screening Criteria

• Definable, Large, Accessible, Actionable, and Capturable segments are key criteria during screening

Trade Missions and Trade Fairs

• Trade Mission: Market visits by business people and/or government officials. Used to look for business opportunities.
• Trade Fair: Large exhibitions where companies promote their products.

Research in the Local Market

• Social Desirability Bias: Respondents' tendency to provide answers to please the interviewer rather than reflect their true beliefs/feelings.

Entering Foreign Markets

• Nonequity-Based Entry Modes: Entry methods not involving equity investment.

  • Exporting
  • Turnkey project
  • Licensing
  • Franchising
  • Management contract
  • Contracted Manufacturing

• Equity-Based Entry Modes: Entry methods involving equity investment.

  • Joint venture
  • Strategic alliance
  • Wholly owned subsidiary

• Turnkey Project: An export of technology and management expertise, the contractor sets up the plant. Involves initial capital equipment, and the process to produce the products, training and operation of the facility. Once the product is tested, operation, the facility is turned over to a purchaser.

• Licensing: A contractual arrangement where one firm provides access to its technology/patents/trade secrets to another for a fee.

• Franchising: An advanced licensing agreement where one party grants permission for another to operate its business. The permission includes the use of the business's name, and operating practices under predefined rules.

• Management Contract: One firm provides managerial services to another firm.

• Contracted Manufacturing: Another firm produces products according to the original firm's exact specifications.

• Joint Venture: A partnership with two or more entities with common interests in a particular business.

• Strategic Alliance: A collaboration formed between competitors, customers, and/or suppliers in the form of equity, or non-equity arrangements.

• Wholly Owned Subsidiary: The company owns the business setup overseas.

Test your knowledge on international market assessment and entry modes. This quiz covers essential topics such as market screening, environmental analysis, and entry methods for foreign markets. Gain insights into the challenges and strategies necessary for successful market entry.