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International Business: The Challenges of Globalization Tenth Edition Chapter 13 Analyzing International Opportunities Copyright © 2...

International Business: The Challenges of Globalization Tenth Edition Chapter 13 Analyzing International Opportunities Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Learning Objectives 13.1 Explain the basic appeal of a market or site and the role of national factors. 13.2 Describe how to measure market and site potential and perform a final selection. 13.3 Identify the main sources of secondary market research data. 13.4 Describe common methods used to conduct primary market research. Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Starbucks’ Global Expansion Starbucks – 33,000 retail stores in 83 countries – Success rooted in market research ▪ Learned how to take on Europe’s traditional cafés ▪ Introduced coffee culture to China, a nation of tea drinkers Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Market Research Companies typically get involved in international business by entering familiar, nearby countries first – Companies in Canada, Mexico, and the United States often go international by entering one another’s markets Market research Collection and analysis of information used to assist managers in making informed decisions – Helps managers to understand buyer preferences and attitudes and to design the marketing strategy Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Basic Appeal and National Factors: Identify Basic Appeal Determining basic demand – Important in determining this basic appeal is a country’s climate ▪ Walmart’s missteps Determining availability of resources – Markets and sites that fail to meet a company’s requirements for basic demand or resource availability are removed from further consideration Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Figure 13.1: Screening Process for Potential Markets and Sites Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Basic Appeal and National Factors: National Business Environment (1 of 2) Cultural forces – Affect the kinds of products that are sold abroad and how they are marketed – Site-selection decisions – Workforce availability Political and legal forces – Regulations and bureaucracy ▪ Can create investment barriers ▪ Can limit profit repatriation ▪ Can influence the ease of doing business – Political stability ▪ Political risk and uncertainty Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Basic Appeal and National Factors: National Business Environment (2 of 2) Economic and financial forces – Fiscal and monetary policies – Currency and liquidity issues – Transportation costs ▪ Logistics – Management of the physical flow of products from the point of origin as raw materials to end users as finished products Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Global Manager: Expanding Globally Online Questions to ask when entering new markets online: Infrastructure: Do your potential customers have easy and adequate access to the internet? Content: Does your company know the licenses and permits required by the country it plans to enter? Privacy: How do consumer groups in the country view the collection of customer data? Security: Is your company’s data communications division safe from unauthorized access by hackers and those seeking ransom? Intellectual Property: Do any international agreements govern and protect copyrights, databases, patents, and trademarks in the nation? Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Photo and Discussion Question (1 of 5) Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Quick Study 13.1 1. What is involved in conducting the first step of the screening process for potential markets and sites? 2. What are some cultural forces that a company should research when assessing a nation’s business environment? 3. What are the political and legal forces for a company to research when assessing a nation’s business environment? 4. What are the economic and financial forces to consider when assessing a nation’s business environment? Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Measure and Select the Market or Site: Market Measure or Site Potential (1 of 2) Measuring market potential Data more readily available for industrialized nations – Market research agencies can supply market data Forecast market demand using a product’s income elasticity – Sensitivity of demand for a product relative to changes in income Estimate potential using a market-potential index that incorporates a market’s size, intensity, growth rate, consumption capacity, commercial infrastructure, receptivity, economic freedom, and country risk Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Map 13.1: Mobile Phone Subscriptions Per 100 People (1 of 2) Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Map 13.1: Mobile Phone Subscriptions Per 100 People (2 of 2) Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Photo and Discussion Question (2 of 5) Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Measure and Select the Market or Site: Market Measure or Site Potential (2 of 2) Measuring site potential – Assess the quality of resources available locally ▪ Labor and management ▪ Wage rates ▪ Management training requirements ▪ Productivity of labor and managers – Local infrastructure Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Measure and Select the Market or Site: Select the Market or Site (1 of 2) Visit each remaining location in order to confirm earlier expectations and to perform a competitor analysis – Field trips are an important part of site selection ▪ Experience the culture ▪ Observe the workforce that the company might soon employ ▪ Make personal contact with potential new customers and distributors Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Measure and Select the Market or Site: Select the Market or Site (2 of 2) Competitor analysis should address the following issues: – Number of competitors in each market – Market share of each competitor – Whether each competitor’s product appeals to a small market segment or has mass appeal – Whether each competitor focuses on high quality or low price – Whether competitors tightly control channels of distribution – Customer loyalty commanded by competitors – Potential threat from substitute products – Potential entry of new competitors into the market – Competitors’ control of key production inputs Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Quick Study 13.2 1. What term describes the sensitivity of demand for a product relative to changes in income? 2. Which factors are commonly included in a market- potential index? 3. How important is it for top managers to pay a visit to a market or site before making a final decision? Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Secondary Market Research Secondary market research Process of obtaining information that already exists within the company or that can be obtained from outside sources – Relatively inexpensive Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Photo and Discussion Question (3 of 5) Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Secondary Market Research: Public Information Sources International organizations – WTO: World Trade Report and World Trade Statistical Review – UN: International Trade Statistics Yearbook ▪ UNCTAD: World Investment Report Government agencies – CIA: World Factbook – ProChile – Japanese External Trade Organization – US Department of Commerce ▪ International Trade Administration Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Secondary Market Research: Private Information Sources Industry and trade associations – Examples: ▪ National Pasta Association ▪ National Onion Association Service organizations – Banking, insurance, management consulting, and accounting offer information to their clients on cultural, regulatory, and financial conditions in a market ▪ “Doing business in” Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Secondary Market Research: Issues Availability of data may be limited in emerging and developing countries Reliability of data is questionable Comparability of data – Terms differ greatly from one country to another – Different ways in which countries measure data Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Table 13.1: Top Market Research Firms Rank Company Name Country 1 Nielsen Holdings N.V. United States/Netherlands 2 I QV I A United States 3 Kantar United Kingdom/United States 4 Gartner United States 5 Ipsos France/United Kingdom 6 GfK Group Germany 7 I RI United States 8 Dynata United States 9 Westat United States 10 Intage Japan Source: Based on the article, “Top 10 Market Research Companies”, ( www.softwaretestinghelp.com ), September 27, 2021. Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Quick Study 13.3 1. What do we call the process of obtaining information that already exists within a company or can be obtained from outside sources? 2. What are several public sources of existing market information for companies? 3. From what private sources might companies obtain existing market information? 4. What are three potential issues that can arise with the use of secondary research data? Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Primary Market Research Primary market research Process of collecting and analyzing original data and applying results to current research needs – Helpful in filling in the blanks left by secondary research – Often more expensive to obtain than secondary research data Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Primary Market Research: Trade Shows and Trade Missions Trade show Exhibition at which members of an industry or group of industries showcase their latest products, study activities of rivals, and examine recent trends and opportunities – Held by regional, national, and global industry trade associations and government agencies Trade mission Government-sponsored international trip designed to explore international business opportunities – Gain introductions to important business contacts and well-placed government officials Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Photo and Discussion Question (4 of 5) Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Primary Market Research: Interviews and Focus Groups Focus group Unstructured but in-depth interview of a small group of individuals (8 to 12 people) by a moderator – Useful in learning a group’s attitudes about a company and its product Consumer panel Research in which people record in personal diaries information on their attitudes, behaviors, or purchasing habits Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Photo and Discussion Question (5 of 5) Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Primary Market Research: Surveys and Environmental Scanning Survey Research in which current or potential buyers answer a series of written or verbal questions – Useful for obtaining facts, opinions, or attitudes Environmental scanning Ongoing process of gathering, analyzing, and dispensing information – Keeps managers aware of potential business opportunities and threats Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Primary Market Research: Issues Marketers in unfamiliar markets must pay attention to how cultural variables can potentially pose issues while collecting primary data – Language – Illiteracy rates among the local population Companies that have little experience in an unfamiliar market often hire local agencies to perform some or all of their market research Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Quick Study 13.4 1. What is the term for the act of collecting and analyzing original data and applying results to current research needs? 2. What is the appeal of trade shows and trade missions for small and medium-sized companies? 3. What type of information are interviews, focus groups, and surveys good at providing? 4. What potential issues can arise when collecting and analyzing original data? Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Copyright This work is protected by United States copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permitted. The work and materials from it should never be made available to students except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials. Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved