1. DECIDING WHETHER TO GO ABROAD
Objectives:
1.Know factors a company should review before it goes abroad
2.Know how companies can evaluate and select specific foreign markets to enter
Companies need to enter and compete in foreign markets, though the risks are high:
- Political and legal uncertainties (unstable governments)
- Foreign-exchange problems (volatile currencies)
- Corruption
- Technological pirating
- Different customer needs and expectations
- Foreign languages
- Tariffs and other trade barriers
- High cost of product and communication-adaption
The main characteristics of global firms are that they plan, operate and coordinate their activities on a worldwide basis. Acting globally is not a matter of size. Even a small or medium-size firm can serve global niches.
There are various reasons for going abroad:
- Higher profit opportunities than in the domestic market
- Larger customer base to achieve economies of scale
- Reduce the dependence on one market
The main decisions in International market to be made are based on these questions:
1.Whether to go abroad?
2.Which market to enter?
3.How to enter the market?
4.Which marketing program to chose?
5.Deciding on the marketing organization
But going global will cause risks that would not affect a company acting only domestically. Here are some examples:
- Not understand foreign customer preferences
- Failing to offer a competitively attractive product
- Not understand the foreign business culture or know how to deal effectively with foreign nationals
- Underestimate foreign regulations that mean unexpected costs.
- Lack of managers with international experience
2. DECIDING WHICH MARKETS TO ENTER
When going abroad a company has to define its international marketing objectives and policies, whether to market in a few countries or many and determine the pace. Firstly it may seem wise to enter fewer countries.
The attractiveness of countries is influenced by factors like
Product
Geography
Income
Population
Political climate
Though it’s less risky to sell in the the European Union, the United States and Far East, the developing world represents a huge potential market for a wide range of goods. Furthermore regional economic integration has intensified, e.g the European Union.
Review Questions:
1.What factors should a company review before it goes abroad?
2.How can companies evaluate and select specific foreign markets to enter?