Module II
Steps for Selection of
Foreign Markets
First
Step
First Step of the foreign market
selection process is to use macro variables to discriminate between countries
having basic opportunities and countries with no or little opportunities. Macro
variables of the country describe the total market in terms of social,
economic, geographic and political information. For example economic statistics
of the country will disclose gross national product, population size, per
capita income, personal disposable income etc. Political stability, political
relations with the exporting country, geographical distance, climatic
conditions etc., also influence the selection of a country.
Second
Step
Second Step of the process focuses on the
factors that indicate the potential market size and acceptance of the product.
Generally proxy variables are used in this screening process. A proxy variable
is a similar or related product that indicates a demand for firm’s product.
Other factors such as stage of economic development of the country, taxes,
duties etc., are also considered while selecting a country.
Third
Step
Third Step of the selection process
focuses on micro level considerations such as competition, cost of entry and
profit potential. In other words, in this process main focus is given on
profitability.
The
Fourth Step
The fourth and last step of the screening
process is an evaluation of potential target markets based on firm’s resources,
objectives and strategies.
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