A Model For Selecting Foreign Markets

Preliminary Opportunities

Country Priority Listings

Probable Opportunities

1. Macro Level Research (General Market Potential)

Economic statisticsThe political environmentSocial structureGeographic features

2. General Market Relating to the Product

Growth trends for similar productsCultural acceptance of such productsAvailability of market dataMarket sizeState of developmentTaxes and duties

Possible Opportunities

3. Micro Level Research(Specific Factors Affecting the Product)

Existing and potential competitionEase of entryReliability of informationSales ProjectionsCost of EntryProbably product acceptanceProfit potential“Feel”

4. Target Markets

Corporate factors affecting implementation

Rejected Countries

Opportunity Matrix

L

M

H

H M L

Business & Political Risk

Measured Over Time

Mark

et

Op

port

un

ity

Market Stage

Infancy Developing Mature

(Types of after markets.)

1. Customers

2. Product Introduction

3. Distribution

4. Price

5. Competitive Strategies

Criteria Used in Choosing Entry Strategies

External Criteria Internal Criteria

Market risk factor

Competition in the market

Political conditions

Market conditions

Future market potential

Availability of desired distribution outlets

Availability of venture capital

Availability of know-how

Time orientation

Need for control

Degree of internationalization

Urgency of going international

Ability to handle international risk

Entry Decisions: Strategic Parameters

Input Process Output

A strategic plan including:

* Motivation(s) for entry Decision rules for * Mode of entry site(s) selection (risks control, legal issues)

* Inventory of own * Operational and resources implementation programs

* Inventory of competitors resources

* Market intelligence

* IP protection

International Market Entry – Funnel Approach

Regional Focus Mode of Entry Regional Focus

• The “Triad” Japan North America Europe

Trading companies

Exporting

Licensing

Manufacturing

Joint Ventures

Strategic Alliances

Management Contracts

Using an entry into oneNational marketing asa stepping stone for launching market Penetration into othermarkets

Identification ofA Lead Country(Function of the Firm Size)

• Emerging Markets Latin America Venezuela Argentina Brazil Columbia Chile

Pacific Basin China India Middle East Or various clustering schemes e.g. “seekers” vs. Climbers*•Less Developing Regions

*A popular clustering approach consists of criteria such as development level (urbanization, life expectancy, infant mortality, literacy rte, per capita GDP), Economic Performance (GPD, inflation, investment foreign trade and debt, etc., and Political and Economic Liberalization.

The Spectrum of International Business Involvement

InactiveExporting

ProactiveExporting

Licensing Franchising

Turnkey Contract

JointVenture

ManagementContract

StrategicAlliance

DirectInvestment

Lessinvolved

Moreinvolved

ContractualRelations/Arrangements