3. Market
selection
Market selection is the
process of deciding which
markets to invest in and
pursuing.
One of the major criteria to be
kept in mind while doing market
selection is the growth of the
market. i.e what is the potential
for a company’s revenue to grow
by investing in a particular
market.
3
4. Foreignmarket
selection
International market
selection plays a crucial role
at the international level.
Market selection is based
on a thorough evaluation of
the different markets with
reference to certain well-
defined criteria, given the
company resources and
objectives.
4
5. Youmustanswerfollowing3questionsbeforeyouoperateinforeignmarket.
1) Should you enter top
market prospect or should
you employ a more
regional focus?
2) Should you choose the
largest market possible or
one that is easier to
understand and navigate?
3) Is the foreign market that is
more preferable to one that is
developing?
5
6. Five steps of foreign market selection.
Step 1
Development of
appropriate
indicator.
Step 2
Collection of
data for each
indicators &
making data
comparable.
Step 3
Establish
appropriate
weights for
indicators.
Step 4
Analyzing
the results
Step 5
Market
selection
6
7. • Appropriate indicators need to be developed based on past
sales, competitive research, experience, and discussions with
other entrepreneurs doing global business.
• Specific indicators for the company need to be developed in
three general areas:
7
Development of
appropriate
indicator.
1
Overall market size
indicators.
Market growth
indicators.
Product indicators.
1. Population
2. Per capita
income
3. Market for the
specific product
4. Types of
companies &
their sales &
profit of
particular
products.
1. Overall country
growth(GDP)
2. Growth rate for
the particular
market of the
venture.
1. Size of the export of
the specific product
category to the
market
2. No. of sales lead
3. Level of interest
should be estd.
8. Collection of data for
each indicators &
making data
comparable.
•This step involves collection of
data for each of these
indicator and making the data
comparable.
•Both primary & secondary
data needed to be collected.
Typically secondary data are
collected first to establish what
information (if any) still needs
to be collected.
8
9. •Some of problem may arises
while collecting international
data due to the different
economic stages of countries,
some of the problem are:-
•Some source of international
data are:
•National trade data bank(NTDB)
•Country reports, country analysis
briefs(CABs).
•Country commercial guides (CCG).
9
Problems
1.
compara
bility
2.
Availability
3.
Accuracy
4. cost
10. Establish
appropriate
weightsfor
indicators.
• Third step involves establishment of
appropriate weights for the indicators
toreflect the importance of a particular
indicator in predecting foreign market
poptential.
• For eg: one co. manifacturing hospital
beds, the no. & types of hospitals, age
of the hospitals & their beds, and the
government’s expenditure on health
care and its socialized system were the
best country indicators in selecting a
foreign market.
• The indicator which receives more
weights reflects more importance.
• The assignment of points & weights as
well as the selection of the indicators
vary greatly from one entrepreneur to
another.
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11. Analyzing the
results
•Entrepreneur should carefully
examine and question the
result when looking at the
data.
•He/she should also look for
errors.
•Also a what if analysis should
be conducted by changing
some of the weights and
seeing how the result vary.
11
12. INVOLVES SELECTING A MARKET TO ENTER
AS WELL AS FOLLOW UP MARKETS SO THAT
AN APPROPRIATE ENTRY STRATEGY CAN BE
SELECTED AND A MARKET PLAN DEVELOPED.
12
14. Strategies are as
follow:-
1. Exporting
2. Indirect exporting
3. Directing exporting
4. Non-equity
Arrangements
5. Mergers
14
15. 1. Exporting
• Exporting refers to
the sales and
shipping of products
manufactured in one
country to a
customer located in
another country.
2. Indirect exporting
• It refers to in
international
business, involves
having a foreign
purchaser in the local
market or using an
export management
firm.
3. Direct exporting
• Direct exporting
involves the use of
independent
distributors or the
company’s own
overseas sales office
in conducting
international
business.
15
16. 4. Non equity
arrangements
• Non equity
arrangement is a
method by which an
entrepreneur can
enter a market and
obtain sales and
profits without direct
equity investment in
the foreign market.
5. Mergers
• A combination of two
things, especially
companies, into one.
Types of merger:-
1. Horizontal merger
2. Vertical merger
3. Product extension
merger
4. Market extension
merger
5. Diversified activity
merger.
16
18. • A legal form of business
operation between two or more
individuals who share
management and profits. The
federal government recognizes
several types of partnerships. ...
In a general partnership, the
partners manage the company
and assume responsibility for
the partnership's debts and other
obligations. 18
Entrepreneurial
partnering
19. Advantage&disadvantagesofentrepreneurialpartnering
Advantages
1. Easy to get started
2. Less formal with fewer legal obligations
3. Sharing the burden
4. Access to knowledge, skills, experience and
contacts
5. Better decision-making
6. Privacy
7. Ownership and control are combined
8. More partners, more capital
9. Prospective partners
10.Easy access to profits
Dis-advantages
1. The business has no independent legal
status
2. Unlimited liability
3. Perceived lack of prestige
4. Limited access to capital
5. Potential for differences and conflict
6. Slower, more difficult decision making
7. Profits must be shared
8. Personally demanding
9. Taxation
10.Limits on business development
19
21. 21
Barriersto
international
trade.
Trade barriers are government-
induced restrictions on
international
trade. Barriers take the form of
tariffs (which impose a
financial burden on imports)
and non-
tariff barriers to trade (which
uses other overt and
covert means to restrict
imports and occasionally
exports).
1. General Agreement on
Tariffs & Trade (GATT).
2. Trade blocks & Free Areas.
3. Entrepreneurial Strategy &
Trade Barriers.
24. 24
Implicationforthe
global
entrepreneur
Cont…
•Generally, the costs & political risks are lower in
those market oriented countries that are more
advanced economically and politically.
•However, the long run benefits to an entrepreneur
are the country’s future growth & expansion.
•This opportunity may indeed occur in less
developed & less stable countries.
•The entrepreneur must carefully analyze the
countries to determine the best one(s) (if any) to
enter & then develop an appropriate entry
strategy.