INTRODUCTION

In today's globalizing world, firms are increasing, looking towards other regions of the world to trade in. What are the steps taken by the executives of these firms before deciding on which market to enter? How do they make sure they make their journey a successful one?

Introduction contd.
The decision requires an analysis of the aspects of the foreign market. - Whether to go abroad - Which markets to enter - How to enter those markets - Choice of marketing program

Introduction Contd.
Criteria for Country selection :
1.Country/market Attractiveness in terms of the following: o Market size o Market growth potential in terms of demand 2.Company strength in terms of brand and accessibility 3.When the risk e.g. political is marginal compared to opportunities 4.Customer response 5.Competitive situation

Introduction contd.
A firm becomesproactivei.e. pulled by the potentials and advantages in the foreign market due to the following reasons:
1.The advantage of having a unique brand 2.When a firm possesses technological advantages 3.The availability of resources in the foreign countries 4.Economic and political factors

Introduction Contd.
A firm becomesreactivei.e. pushed by bad domestic markets when the following is evident:
1.The pressure of domestic competition 2.Poor domestic market due to stagnant or declining sales figures 3.Saturated domestic markets

INTERNATIONAL MARKET ANALYSIS

Your company has to develop a unique design based upon its specific goals and more importantly, its budget and existing capacity. you cannot do an analysis, if you have nothing to analyze The bulk of the analysis task is in gathering the information first and then understanding how this information is relevant to your company's specific

International Market Analysis Contd.

Choosing market to analyze - can consumers and/or end users afford your product or service? or - does the proposed business venture have any real potential for success?

International Market Analysis Contd.

Gathering Information Relevant topics and sources of information:
- Domestic Government Agencies - The largest compiler of data about foreign markets in our country is Ministry of Trade and Commerce and FICCI.

International Market Analysis Contd.

Private Agencies and Other Private Sources

- collects and disseminates market analysis and other important data about foreign markets - groups as industry & trade organizations, local chambers of commerce and other business development groups provide a wealth of information about foreign

International Market Analysis Contd.

Assessing Political Risk - it may be possible to cover your financial risk in terms of money, political risk has far reaching affects that go beyond any financial consequences. - will have a demoralizing effect on the mind of all employees in a company

International Market Analysis Contd.

The Process of Analysis - OK. You've spent time, money and resources gathering up every bit of information that you could find about several foreign markets. Essential Factors to Consider: Size of the market Product/service localization issues Business infrastructure

CASE STUDY : McDONALDS GOES GLOBAL

By the mid 1980s, McDonalds found it next to impossible to continue its growth within the U.S. domestic market Because : - the U.S. market had become saturated with competition - the U.S. domestic market was simply too small, in itself, to sustain consistent growth for the growing fast-food industry

Case Study (1): McDonalds Goes Global, Contd.

The new McDonalds strategy included an overseas component which began cautiously, at first, but then accelerated significantly McDonalds found that its operations had to be adjusted to meet the variances of different markets In the U.S., employees treat their McDonalds job as temporary, whereas employees in Russia wish to work for McDonalds for the rest of their lives

Case Study (1) : McDonalds Goes Global

Pricing is also a problem, as the purchasing price of a Big Mac depends on the exchange rate between the local currency and the U.S. dollar The lesson learned by McDonalds is that dependence on a single domestic market can be overcome by overseas ventures, but not without a considerable amount of research into the changes that must be made in each culture to make the foreign operation a

FOREIGN MARKET ENTRY MODES

Amode of entryinto an international market is the channel which your organization employs to gain entry to a new international market Expansion into foreign markets can be achieved via the following four mechanisms: - The Internet Exporting - Licensing - Joint Venture - Direct Investment - International Agents & International Distributors

Foreign Market Entry Modes Contd.

The Internet
The Internet is a new channel for some organizations and the sole channel for a large number of innovative new organizations The eMarketing space consists of new Internet companies that have emerged as the Internet has developed, as well as those pre-existing companies that now employ eMarketing approaches as part of their overall marketing plan

Foreign Market Entry Modes Contd.

New Internet Companies: - New online retail brand e.g. Amazon, Lastminute.com - Online Auction e.g. eBay - New online manufacturer brand e.g. Dell.com

Foreign Market Entry Modes Contd.

Pre-existing companies that have adopted eMarketing - Banking and financial Services e.g. HSBC Bank - Agents e.g. Avon Representatives, Oriflame - Franchises e.g. KFC

Foreign Market Entry Modes Contd.

Exporting - Exporting is the marketing and direct sale of domesticallyproduced goods in another country - There are direct and indirect approaches to exporting to other nations - Direct exporting is straightforward. Essentially the organization makes a commitment to market overseas on its own behalf

Foreign Market Entry Modes Contd.

- if you were to employ a home country agency (i.e. an exporting company from your country - which handles exporting on your behalf) to get your product into an overseas market then you would be exporting indirectly

Foreign Market Entry Modes Contd.

Licensing
Licensing essentially permits a company in the target country to use the property of the licensor Such property usually is intangible The licensee pays a fee in exchange for the rights to use the intangible property and possibly for technical assistance. Because little investment on the part of the licensor is required, licensing has the potential to provide a very large ROI

Foreign Market Entry Modes Contd.

Joint Venture
There are five common objectives in a joint venture: - market entry - risk/reward sharing - technology sharing - joint product development - conforming to government regulations

Foreign Market Entry Modes Contd.

Foreign Direct Investment/
Overseas Manufacture / International Sales Subsidiary A business may decide that none of the other options are as viable as actually owning an overseas manufacturing planti.e. the organization invests in plant, machinery and labor in the overseas market

Foreign Market Entry Modes Contd.

involves the transfer of resources including capital, technology, and personnel through the acquisition of an existing entity or the establishment of a new enterprise The key benefit is that your business becomes localized - you manufacture for customers in the market in which you are trading downside is that you take on the risk associated with the local domestic market

Foreign Market Entry Modes Contd.

International Agents and
International Distributors agents are individuals or organizations that are contracted to your business, and market on your behalf in a particular country They rarely take ownership of products, and more commonly take a commission on goods sold. Agents usually represent more than one organization

Foreign Market Entry Modes Contd.

Agents are a low-cost, but lowcontrol option Distributorsare similar to agents, with the main difference that distributors take ownership of the goods

Foreign Market Entry Modes Contd.

Strategic Alliance A strategic allianceis a term that describes a whole series of different relationships between companies that market internationally Essentially, Strategic Alliances are non-equity based agreements i.e. companies remain independent and separate.

Foreign Market Entry Modes Contd.

There are many examples including: - Shared manufacturing e.g. Toyota Ayago is also marketed as a Citroen and a Peugeot - Research and Development (R&D) arrangements - Distribution alliances e.g. iPhone was initially marketed by O2 in the United Kingdom