Global MarketGlobal MarketOpportunity AssessmentOpportunity Assessment

International BusinessDr. Attila Yaprak

Dr. Attila Yaprak 2

A Three-stage Approach to Global Marketing A Three-stage Approach to Global Marketing Opportunity AssessmentOpportunity Assessment

1. Choice of country or region (including assessment of country market potential, and industry market potential)

2. Choice of partner (including assessment of company sales potential)

3. Structuring the business partnership

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Key Points in Global Market Opportunity AnalysisKey Points in Global Market Opportunity Analysis

• Typically, managers attempt these tasks simultaneously, not sequentially.

• The three choices are independent; e.g., depending upon the country, the profile of ideal partners may be different.

• Choice of poor country market can be offset by an excellent partner, but not vice versa.

• Managers need to resolve these choices in a dynamic manner—i.e., make adjustments over time. Today’s prescription in terms of mot attractive countries, most competent and compatible partners, and a smooth relationship may no be good enough tomorrow.

• Effectively fulfilling each management task has positive implications in terms of reducing each of the four types of risks: commercial, political, cross-cultural, and currency risk.

• Best practices exist with respect to each of the three management tasks.

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Three-State ApproachThree-State Approach

Country/Region Choice

Structuring the Relationship

Partner Choice

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IMPLICATIONS FOR:IMPLICATIONS FOR:

Significance Commercial Political Cross-Cultural CurrencyRisk Risk Risk Risk

Choice of Country/ A macro decision,Region with very long-term

consequences. Muchlearning aboutcountry. Abandonmentcan be costly.

Choice of Partner A macro decision, withlong-term consequences.Cultivating a strategicpartnership is time andresources intensive.Divorce can be costly.

Structuring the A gradual, evolvingAgreement relationship is possible.

Flexibility can be builtinto the relationship.Can adjust over time.

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• Scrutinize news media and trade publications• Network within trade/industry groups• Examine country trends and reports• Participate in trade fairs/shows• Country rankings and cluster analysis• Direct mail promotion

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Country ChoiceCountry Choice

Industry Specific Indicators of Market Potential

• Surrogate indicators• Industry trends/timing• Stage in product life cycle• Market entry barriers• Standards and regulations• Competitive intensity

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• Trend analysis: domestic production, plus imports, minus exports

• Monitor key indicators of industry demand• Monitor key competitors’ activities• Follow your customers around the world• Tap into special customer/supplier networks• Do regression/econometric forecasting

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Deliberations over:• What value-adding activities are expected to be

completed in the foreign market;• Complementarities sought;• What organizational and financial resources (e.g.,

equity) we wish to commit to the venture;• How much control we wish to retain over our

strategic resources;• What risks we wish to tolerate and out time horizon;• Strategic importance of the market;• Availability and capabilities of intermediaries…

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Determine the Entry Mode:

Company-owned operation vs.

Partnering with Independent Entities (Contracted)• Distributor• Agent/Representative/Affiliate• Licensee/Franchisee• Contract manufacturer/Supplier• JV partner