Loading...

Messages

Proposals

Stuck in your homework and missing deadline? Get urgent help in $10/Page with 24 hours deadline

Get Urgent Writing Help In Your Essays, Assignments, Homeworks, Dissertation, Thesis Or Coursework & Achieve A+ Grades.

Privacy Guaranteed - 100% Plagiarism Free Writing - Free Turnitin Report - Professional And Experienced Writers - 24/7 Online Support

The final step in the screening process will generally include

29/12/2020 Client: saad24vbs Deadline: 10 Days

Read the following chapters from : Wild, John J., Kenneth L. Wild & Jerry C.Y. Han. International Business: The Challenges of Globalization, 5th Edition. Pearson Learning Solutions


12 Analyzing International Opportunities


Learning Objectives


After studying this chapter, you should be able to


1 Explain each of the four steps in the market- and site-screening process.


2 Describe the three primary difficulties of conducting international market research.


3 Identify the main sources of secondary international data and explain their usefulness.


4 Describe the main methods used to conduct primary international research.


 A LOOK BACK


Chapter 11 showed us how companies plan and organize themselves for international operations. We explored the different types of strategies and organizational structures that international companies use to accomplish their strategic goals.


 A LOOK AT THIS CHAPTER


This chapter begins with an explanation of how managers screen potential new markets and new sites for operations. We then describe the main difficulties of conducting international market research. We also identify the information required in the screening process and where managers can go to obtain such information.


 A LOOK AHEAD


Chapter 13 describes the selection and management issues surrounding the different entry modes available to companies going international. We examine the importance of an export strategy for exporters and the pros and cons of each entry mode.


Global Buzz Over Starbucks


Osaka, Japan — Starbucks (www.starbucks.com) began its global journey in 1996 with its first coffeehouse in Tokyo, Japan. Pictured below is a Starbucks located in the Japanese city of Osaka. Today Starbucks has around 1,500 coffeehouses in 43 markets outside North America. Although it has closed some underperforming stores, Starbucks still creates a buzz worldwide.


Starbucks brought European-style coffee to the United States and then took its American-style coffeehouses to Europe. The coffee giant was right that paper-cupped lattes and nonsmoking venues could take on Europe’s traditional cafés. Although in Britain since the late 1990s, Starbucks waited patiently before steaming into Zurich, Switzerland, in 2001 and into Paris, France, in 2004. Starbucks carefully researched Europe’s markets before opening its first European café in Zurich, and then branching out to other nations. With its multicultural and multilingual population, the Swiss market gave Starbucks a “tremendous opportunity to learn how to operate elsewhere in Europe,” revealed Mark McKeon, president of Starbucks Europe, Middle East, and Africa.




Source: © Andy Rain/CORBIS. All Rights Reserved.


At the same time, Starbucks introduced a coffee culture to tea lovers in China. Starbucks is encouraged by the fact that one-third of all Chinese households keep a jar of instant coffee on hand. Starbucks is trying to make coffee the drink of choice for the average 18- to 45-year-old Chinese consumer. “Per capita consumption of coffee in China is very small,” admitted Howard Behar, president of Starbucks Coffee International. “But what you have is a tremendous amount of people, so the market will grow.”


Starbucks founder and CEO, Howard Schultz, says that an integral component of Starbucks’ strategy is its image as a fair-trading multinational, which it acquired by promoting its “fair trade” coffee. As you read this chapter, consider how companies research, analyze, and select the international markets they will enter.1


Companies traditionally become involved in international business by choosing to enter familiar, nearby countries first. Managers feel comfortable entering nearby markets because they likely have already interacted with the people of those cultures and have at least some understanding of them. Companies in Canada, Mexico, and the United States often gain their initial international experiences in one another’s markets. Likewise, businesses in Asia often seek out opportunities in one another’s markets before pursuing investment opportunities outside the region.


Yet companies today find themselves bridging the gaps presented by space and culture far more often than in the past. For one thing, technological advances in communication and transportation continue to open markets around the globe. Some companies can realistically consider nearly every location on earth as either a potential market or as a site for business operations. The expansion of regional markets (such as the European Union) also causes companies to analyze opportunities farther from home. Businesses locate production facilities within regional markets because producing in one of a region’s countries provides duty-free access to every consumer in the trade bloc.


The rapidly changing global marketplace forces companies to view business strategies from a global perspective. Businesses today formulate production, marketing, and other strategies as components of integrated plans. For example, to provide a continuous flow of timely information into the production process, more and more firms locate research and development (R&D) facilities near their production sites abroad. Managers also find themselves screening and analyzing locations as potential markets and as potential sites for operations simultaneously. When Mercedes (www.mercedes.com) introduced the M-class sport utility vehicle to the U.S. market, executives also decided to build the vehicle there. The company did not merely estimate the size of the potential market for the vehicle, but simultaneously selected a suitable production site.


This chapter presents a systematic screening process for both markets and sites. After describing important cultural, political, legal, and economic forces affecting the screening process, we explain the difficulties of conducting international research. We then explore the central sources of existing market data and the prime methods for conducting international research firsthand.


Screening Potential Markets and Sites


Two important issues concern managers during the market- and site-screening process. First, they want to keep search costs as low as possible. Second, they want to examine every potential market and every possible location. To accomplish these two goals, managers can segment the screening of markets and sites into the following four-step process (see Figure 12.1):


1. Identify basic appeal


2. Assess the national business environment


3. Measure market or site potential


4. Select the market or site


This screening process involves spending more time, money, and effort on the markets and sites that remain in the later stages of screening. Expensive feasibility studies (conducted later in the process) are performed on a few markets and sites that hold the greatest promise. This approach creates a screening process that is cost effective yet does not overlook potential locations. Let’s now discuss each of the four steps above in detail.


Step 1: Identify Basic Appeal


We have already seen that companies go international either to increase sales (and thus profits) or to access resources. The first step in identifying potential markets is to assess the basic demand for a product. Similarly, the first step in selecting a site for a facility to undertake production, R&D, or some other activity is to explore the availability of the resources required.


FIGURE 12.1 Screening Process for Potential Markets and Sites




Determining Basic Demand


The first step in searching for potential markets means finding out whether there is a basic demand for a company’s product. Important in determining this basic appeal is a country’s climate. For example, no company would try to market snowboards in Indonesia, Sri Lanka, or Central America because they receive no snowfall. The same product, on the other hand, is well suited for markets in the Canadian Rockies, northern Japan, and the Swiss Alps. Although this stage seems simple, it cannot be taken too lightly. A classic example is when, during its initial forays into international business, Wal-Mart (www.walmart.com) found ice-fishing huts in its Puerto Rico inventory and no snowshoes at its stores in Ontario, Canada.


Certain countries also ban specific goods. Islamic countries, for instance, forbid the importation of alcoholic products, and the penalties for smuggling are stiff. Although alcohol is available on the planes of international airlines such as British Airways (www.ba.com) and KLM (www.klm.com), it cannot leave the airplane and consumption cannot take place until the plane has left the airspace of the country operating under Islamic law.


Determining Availability of Resources


Companies that require particular resources to carry out local business activities must be sure they are available. Raw materials needed for manufacturing must either be found in the national market or imported. Yet imports may encounter tariffs, quotas, or other government barriers. Managers must consider the additional costs of importing to ensure that total product cost does not rise to unacceptable levels.


The availability of labor is essential to production in any country. Many companies choose to relocate to countries where workers’ wages are lower than they are in the home country. This practice is most common among makers of labor-intensive products—those for which labor accounts for a large portion of total cost. Companies considering local production must determine whether there is enough labor available locally for production operations.


Companies that hope to secure financing in a market abroad must determine the availability and cost of local capital. If local interest rates are too high, a company might be forced to obtain financing in its home country or in other markets in which it is active. On the other hand, access to low-cost financing may provide a powerful inducement to a company that is seeking to expand internationally. British entrepreneur Richard Branson opened several of his Virgin (www.virgin.com) Megastores in Japan despite its reputation as a tough market to crack. One reason for Branson’s initial attraction to Japan was a local cost of capital that was roughly one-third its cost in Britain.


Markets and sites that fail to meet a company’s requirements for basic demand or resource availability in step 1 are removed from further consideration.


Step 2: Assess the National Business Environment


If the business environments of all countries were the same, deciding where to market or produce products would be rather straightforward. Managers could rely on data that report the performance of the local economy and analyze expected profits from proposed investments. But as we saw in earlier chapters, countries differ significantly in their cultures, politics, laws, and economies. International managers must work to understand these differences and to incorporate their understanding into market- and site-selection decisions. Let’s examine how domestic forces in the business environment actually affect the location-selection process.


Cultural Forces


Although countries display cultural similarities, they differ in language, attitudes toward business, religious beliefs, traditions, customs, and countless other ways. Some products are sold in global markets with little or no modification. These products include industrial machinery such as packaging equipment, consumer products such as toothpaste and soft drinks, and many other types of goods and services. Yet many other products must undergo extensive adaptation to suit local preferences, such as books, magazines, ready-to-eat meals, and other products.


Cultural elements can influence what kinds of products are sold and how they are sold. A company must assess how the local culture in a candidate market might affect the salability of its product. Consider Coca-Cola’s (www.cocacola.com) experience in China. Many Chinese take a traditional medicine to fight off flu and cold symptoms. As it turns out, the taste of this traditional medicine—which most people do not find appealing—is similar to that of Coke. Because of Coca-Cola’s global marketing policy of one taste worldwide, the company had to overcome the aversion to the taste of Coke among Chinese consumers. It did so by creating a marketing campaign that associated drinking a Coke with experiencing a piece of American culture. What initially looked like an unattractive market for Coke became very successful through a carefully tailored marketing campaign.

Homework is Completed By:

Writer Writer Name Amount Client Comments & Rating
Instant Homework Helper

ONLINE

Instant Homework Helper

$36

She helped me in last minute in a very reasonable price. She is a lifesaver, I got A+ grade in my homework, I will surely hire her again for my next assignments, Thumbs Up!

Order & Get This Solution Within 3 Hours in $25/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 3 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 6 Hours in $20/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 6 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 12 Hours in $15/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 12 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

6 writers have sent their proposals to do this homework:

University Coursework Help
Helping Hand
Homework Guru
Best Coursework Help
Writer Writer Name Offer Chat
University Coursework Help

ONLINE

University Coursework Help

Hi dear, I am ready to do your homework in a reasonable price.

$37 Chat With Writer
Helping Hand

ONLINE

Helping Hand

I am an Academic writer with 10 years of experience. As an Academic writer, my aim is to generate unique content without Plagiarism as per the client’s requirements.

$35 Chat With Writer
Homework Guru

ONLINE

Homework Guru

Hi dear, I am ready to do your homework in a reasonable price and in a timely manner.

$37 Chat With Writer
Best Coursework Help

ONLINE

Best Coursework Help

I am an Academic writer with 10 years of experience. As an Academic writer, my aim is to generate unique content without Plagiarism as per the client’s requirements.

$35 Chat With Writer

Let our expert academic writers to help you in achieving a+ grades in your homework, assignment, quiz or exam.

Similar Homework Questions

Social science issues related to war - The walt disney studios harvard case study analysis - What is the last stage in the conflict assessment guide - A person who demonstrates a foible most probably deserves - If a substance is completely consumed in a chemical reaction - Anne moody coming of age in mississippi pdf - The family crucible chapter summary - Apple cinnamon monkey toaster - "A" WORK POWERPOINT IN 15 HOURS or LESS - 125 mcg to mg - HIV/AIDS Specialty Care for Pregnant women - Lake tali karng hike map - Ferocity in a simple sentence - Justification memo - Verse - What is environmental scanning strategy - Innkeepers of america exercise answers - Why is foopets not free anymore - 1534 jacques cartier 1984 canadian dollar value - Linux implementation proposal - 261 hemmant tingalpa road - Telstra accessory repayment option - 24 volt dc wire size chart - Peer Leadership Case study - Jonah deaf movie - Steel axes for stone age australians - Week 3 conflict resolution paper graded - Loreto grammar school staff list - How painful was foot binding - Self-Concepts - Health indicators graphical representation - Montana 1948 justice quotes - If prices fall, then real wealth __________ and the quantity of aggregate demand __________. - 12n9 4b 1 cross reference - Cloud computing - The story of an hour discussion questions answers - Kelly consulting adjusted trial balance may 31 2016 - Ozone destroying chemicals crossword - It's like pulling teeth case study - Case Study 4 The Space Shuttle Disasters - What is the ionic compound for nabr - Standard floor tile sizes australia - Strayer center city - Difference between rfc and rfc d account - Factor label method worksheet with answers - Pykes creek jet ski - Kiss earth and environmental science - A scandal in bohemia comprehension questions - Marie de france lanval full text - The professor and the madman cliff notes - Gr dscf to ppm - Faking confidence ppt - Strategic choice and evaluation paper str 581 week 4 - Brett davis denture clinic - Scs 100 theme 1 comparison template - I tituba black witch of salem chapter summary - Pea plant crosses worksheet answers - Chapter 3 checkpoint questions introduction to java - How to generate crn number - Bible (MUST be able to download book!!!!!) - Strengths and weaknesses of psychodynamic perspective - How to read an analog voltmeter - Lesson 4.7 flowchart thinking answers - HR_GLOB_FIN (U3) - Public relations lecture notes - Jetblue and the new revenue recognition standard - Vocabulary for gifted students - Peer graded assignment the five layer network model - Physical Activity Log and 1 Page Reflection Assignment - Reflection paper - Wiseman's framework of strategy development - Finance assignment,1250 words 18 hrs - Driving test anytime login - Kanashimi wo yasashisa ni osu - Richard neustadt presidential power - Forty thousand headmen lyrics meaning - Reading borough council rent - Rsh hong kong limited - Solving fractional equations homework answers - Leader in action formula isagenix - Short essay - 9x 2 4y 2 36 graph - Linear expansion apparatus parts and function - Intermediaries play an important role in coordinating _______. - Dpb51 3 phase voltage relay - Methanol water equilibrium data at 1 atm - Oman arab bank al khuwair branch - Reed smith application process - Ops 571 week 2 process designs and supply chains - 7 important historical events that you believe influence sexuality today - A responsibility accounting performance report displays - Flash of silver the leap that changed my world - Assignment help - Week 5 Assignment - Guy fawkes homework help - East sherbrooke forest walk map - 150 Word Essay - In the field of logic, inductive arguments __________. - Independent sample t test spss - Presentation essay