Which foreign market?Some irhportant issues concerned managers during the market- and-site-screening process:o (1) The attractiveness of a potential market for aninternational business depends on the balancing of thebenefits, costs, and the risks; (the conclusion in chpt 2)o (2) Value create in foreign markets: check the adaptationof the product and the competition in this market . (theconclusion in chpt 11)o (3) following the steps:a)Identifybasic appealb)Assessthenationalbusinessenvironmentc) Measuremarketorsite potentiald) Select the marketor site
Which foreign market? Some important issues concerned managers during the market- andsite-screening process: (1) The attractiveness of a potential market for an international business depends on the balancing of the benefits, costs, and the risks; (the conclusion in chpt 2) (2) Value create in foreign markets: check the adaptation of the product and the competition in this market . (the conclusion in chpt 11) (3) following the steps: a) Identify basic appeal b) Assess the national business environment c) Measure market or site potential d) Select the market or site
CostsBenefitsCorruptionSizeof EconomyLackofinfrastructureLikelyeconomicGrowthLegal costsOverallAttractivenessRisksPolitical risks: social unrest/anti-business trendsEconomicrisks:economicmismanagementLegal risks:failure to safeguard property right
Benefits Size of Economy Likely economic Growth Costs Corruption Lack of infrastructure Legal costs Overall Attractiveness Risks Political risks: social unrest/anti-business trends Economic risks: economic mismanagement Legal risks: failure to safeguard property right
Step 4:Select the Market or Site-Field trips·CompetitoranalysisStep 3:Measure Market or Site Potential·Current sales, income elasticity,market potentialindicatorQuality ofworkforce,materials,infrastructureStep 2:Assess the National Business Environment.Language,attitudes,religious beliefs,traditions,work ethicGovernment regulation, government bureaucracy,political stability.Fiscal and monetary policies,currencyissuesCost of transporting goods,country imageStep 1:Identify Basic Appeal.Suitability of climate,absolutebansAccess to materials,labor, financing
When to enter ?Entry is early : when a firm enters a foreignmarket before othersfirst-mover advantage :1.By brand name;2.Experience curve & cost advantage;3.Creatingswitching cost.- first-mover disadvantage : pioneering cost1.Learning costs;2.Failure costs;3.Promotion and establishing a product offeringRegulations change in a way4
Entry is early : when a firm enters a foreign market before others. - first-mover advantage : 1. By brand name; 2. Experience curve & cost advantage; 3. Creating switching cost. - first-mover disadvantage : pioneering cost 1. Learning costs; 2. Failure costs; 3. Promotion and establishing a product offering 4. Regulations change in a way When to enter ?
On What Scale ?On a large scale0Strategic Commitment: A decision that hasda long-term impact and is difficult to reverseThe effects:First mover advantage: Easier to attract1.customs and distributors;+Give other competitors' entry pause; +2.Limit the company's flexibility3./-Onasmall scaleO- gather information;- lower the risks, lower the benefits
On a large scale Strategic Commitment: A decision that has a long-term impact and is difficult to reverse. The effects: 1. First mover advantage: Easier to attract customs and distributors;+ 2. Give other competitors’ entry pause; + 3. Limit the company’s flexibility － On a small scale - gather information; - lower the risks, lower the benefits On What Scale ?