Scanning and Selecting International Markets

Utkarsh Agarwal Viraj Jagwani Yuvraj Gaur

 Do we have products that can be marketed abroad?
How/Why Companies go Yes
No
International Should we investigate foreign markets?
Yes
Does preliminary screening indicate potential target No
country markets?
Yes
Does secondary data analysis indicate a country with No Continue to
high sales potential? exploit home
Yes market
Do primary (field) data support secondary data? No
No Yes
Redesign entry Is our entry mode the most appropriate mode, given
mode external factors and our objectives?
Yes
No Is our marketing plan the most appropriate one, given
Redesign marketing our resources and objectives?
plan Yes
No
Should we enter the foreign market now?
Delay entry
Yes
Operations
No No
Redesign strategy Is our performance satisfactory? Withdraw
Yes
Yes No Stay with
Should we investigate other markets? single market
BERI INDEX
The BERI is a private
source for risk rating,
analysis and forecasting for
over 140 countries26. Haner
F. Theodore developed this
risk model in 1966.
R Factor
country’s ability and disposition
Operations Risk Index (ORI)
Political Risk Index (PRI) socio- to allow foreign investors to
political conditions “convert profits and capital in
the local currency to foreign
exchange and transfer the funds

Internal Causes of Political Risk

• Fractionalisation of the political spectrum and the power of these factions
• Fractionalisation by language, ethnic and or religious groups and the power of these factions
• Restrictive (coercive) measures required to retain power
• Mentality, including xenophobia, nationalism, corruption, nepotism, willingness to compromise, etc.
• Social conditions, including population density and wealth distribution
• Organisation and strength of forces for a radical government.
External Causes of political risk
• Dependency on and/or importance to a major hostile power
• Negative influences of regional political forces
Symptoms of Political Risk
• Social conflict involving demonstrations, violence, strikes, and street violence.
• Instability as perceived by unconditional changes, assassinations, and guerrilla wars
Economic Intelligence Unit (EIU)
Founded in 1946 as a subsidiary of The Economist

EIU evaluates risks

• political risk 22%
• economic policy risk 28%
• economic structure risk 27%
• liquidity risk 23%
Market Potential
Production (of a product in a country)
Import- export= theoretical market
size

Theoretical market size +/- changes in

stock size = effective market size

A countries : Strategic long-term

Investment opportunity & invest in further
research

B countries Either high political or

economic risk. Should be handle delicately

C countries ‘catch what you can’ markets.

High Risk countries
Once the prime markets have been identified
firms then use standard techniques to segment
markets within countries, using variables such
as:
• demographic/economic factors
• lifestyles
• consumer motivations
• geography
• buyer behaviour
• psychographics

Once the firm has chosen a certain country as a target market the next stage in the micro-segmentation
process is to decide with which products or services the company wishes to
become active in the individual countries