Analyzing Foreign Markets

                                                    Analyzing Foreign Markets
      
       There are some very basic factors that must be considered in making your decision                about going global: 
1. Size of the market. This is simple enough. Is the demand in a specific market for your product large enough to act as an incentive to enter? 2. Are there significant barriers to entry? Are there regulatory issues that make the cost of entry prohibitive? Is the market easily accessible for transport? Do the channels of distribution add too many layers and make the price non-competitive? 3. What is the competition? How many other companies sell similar products and with what amount of success? How skilled are local distributors in penetrating the market? 4. Can you sell to other markets nearby? Some markets are going to present thin profit margins, but compensate for this fact by being gateways to other local markets. This is also true of transport issues as well for landlocked markets. 5. Product/service localization issues. Is your product or service OK to sell as is or do you need to invest in localizing it for local tastes? 6. Business infrastructure. Is there a sufficient business infrastructure to support sale and distribution of your product and/or services? Are there good port facilities? How are the highways? Is there easy access by air? What kind of telephone service is available and how good is it? Is there local Internet access available? If you are buying or selling perishables, how good are port area refrigeration facilities? 7. Local business customs. In spite of our continued head-in-the-sand attitude in the United States, petty bribery is a fact of life in many parts of the world. How does this fact affect your ability to do business and compete with foreign companies who are not hampered by anti-bribery laws? Are there any local customs that could be perceived as a particular competitive advantage for your company? 8. Political risk. Is the government stable? Is there unrest there because of income distribution inequities or other similar factors? Is the government friendly to our country? 9. Banking and financial institutions. Is the central bank stable? Does it have a history of measured behavior or does it intervene often? Are currency rates stable or fluctuating within a reasonably small range? Are local banks trustworthy enough and capable enough to handle letter of credit transactions or documentary drafts?
Analyzing a foreign market is only one aspect of making the final decision about going global. It will balance all of the above-mentioned factors with your company's international business capability and its budget. How much weight is given to any one factor is very subjective and will vary from one company to another. However, it is important to realize that if you answer the questions regarding these factors and there are more negatives than positives, you might want to look at other opportunities. As a rule, you want to investigate market opportunities in the largest, strongest and best-developed economies first. You then want to consider emerging economies and finally less develope

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