This document discusses screening potential international markets and selecting entry modes. It describes a four step process for screening markets: 1) identify basic appeal, 2) access the national business environment, 3) measure market or site potential, and 4) select the market or site. Factors to consider when measuring potential in industrialized versus emerging markets are provided. The document also outlines different entry modes including exporting, contractual agreements, and investment options.

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Analyzing International Opportunities
and Selecting Entry Modes
DY Chhunsong
Lecture 8
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Fundamentals of Global Business Management
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Analyzing International
Opportunities

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Screening Potential Markets and Sites
To search for potential markets and sites, four steps are
recommended: 1) identify basic appeal, 2) access the national
business environment, 3) measure market or site potential, and
4) select the market or site.
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1. Identify Basic Appeal
Determining Basic Demand: The demand of a company’s
products determines whether or not the company should invest.
Determining Availability of Resources: Resources such as raw
materials, labor, and capital markets should be available if a firm
wants to enter a new market.

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2. Access the National
Business Environment
Cultural Forces: Language, attitudes towards business, and
traditions determine whether or not a product can be sold.
Political and Legal Forces: Government regulation, government
bureaucracy, and political stability can affect a firm’s operations.
Economic and Financial Forces: Fiscal and monetary policies are
of importance for a company’s investment.
Other Forces: Cost of raw materials, country image, cost of labor
determine a company’s revenue.
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3. Measure Market or Site Potential
The different levels of economic development require varying
approaches to researching market potential.
Levels of economic development of a nation include
Industrialized Market and Emerging Market.

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3. Measure Market or Site Potential:
Industrialized Markets
Some factors to be analyzed in Industrialized Markets:
• Names, production volumes, and market shares of the largest
competitors
• Volume of exports and imports of the product
• Structure of the wholesale and retail distribution networks
• Total expenditure on the product (or similar) in the market
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3. Measure Market or Site Potential:
Industrialized Markets (1)
• Background of the market, including population figures,
important social trends, and a description of the kinds of
marketing approaches used.
• Retail sales volume and market prices of the product
• Future outlook for the market and potential opportunities

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3. Measure Market or Site Potential:
Emerging Markets
Companies that consider entering emerging markets often face
special problems related to a lack of information.
Some variables can take into account when analyzing market
potential of emerging markets:
• Market Size: It can normally be obtained through total
population or the amount of energy it produces and consumes.
• Market Growth Rate: Market is even more important and can
be learned through GDP and energy consumption.
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3. Measure Market or Site Potential:
Emerging Markets (1)
• MarketIntensity:Learnaboutbuying power of individuals and
can be learned via GDP per capita.
• Market Consumption Capacity: Learn how many middle
class people who have sufficient buying power.
• Commercial Infrastructure: Access the channelsofdistribution
and communication (telephones, tv, fax, internet..).

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3. Measure Market or Site Potential:
Emerging Markets (2)
• Economic Freedom: Learn about the extend to which free-
market progresses (government policies and interventions seen?).
• Market Receptivity: Learn how the nation opens its door for
international trades.
• Country Risk: Access the political, economic, and financial
risks having on international business in the country.
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4. Select the Market or Site
Managers of the companies may want to clarify about the obtained
information by conducting field trips and competitor analysis.
• Field Trips: Seeing the real pictures, attend meetings, and
negotiate if needed.
• Competitor Analysis: Check about the number of competitors,
market share of each competitor, whether each competitor’s
products has small or mass appeal, whether each competitor
focuses on high or low quality…….

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International Research
Market Research: Collection and analysis of information in order
to assist managers in making informed decisions.
International Market Research is a market research that seeks
information about national business environments which include
cultural practice, politics, regulations, and the economy.
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Difficulties of Conducting
International Research
Availability of Data: In industrialized countries, information is
abundant; it is less available in emerging and developed nations.
Comparability of Data: Data needs to be defined since definitions
for some key terms as such poverty is defined differently globally.
Cultural Problems: Cultural variables may interrupt the
interpretation of data, especially languages.

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Secondary International Data
Secondary Market Research: Process of obtaining information
that already exists within the company or that can be obtained from
outside sources.
It can be from International Organizations, Government Agencies,
Industry and Trade Associations, Service Organizations, and
Internet and World Wide Web.
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Primary International Research
Primary Market Research: Process of collecting and analyzing
original data and applying the results to current research needs.
It can be done through Trade Shows and Trade Missions,
Interviews and Focus Groups, Surveys, and Environmental
Scanning.

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Selecting Entry Modes
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Entry Mode
Institutional arrangement by which a firm gets its products,
technologies, human skills, or other resources into a market.
It can be done via three modes: 1) Exporting, Importing, and
Countertrade, 2) Contractual Entry, and 3) Investment Entry.

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1. Exporting, Importing, and Countertrade
Companies export because they want to expand sales, gain profits,
and gain experiences.
Companies import because they want to obtain less expensive
goods or those that are simply unavailable in the domestic market.
Countertrade is the practice of selling goods or services that are
paid for, in whole or part, with other goods or services.
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2. Contractual Entry Modes
Licensing: Practice in which one company owning intangible
property (the licensor) grants another firm (the licensee) the right to
use that property for a specified period of time.
Franchising: Practice by which one company (the franchisor)
supplies another (the franchisee) with intangible property and other
assistance over an extended period.

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2. Contractual Entry Modes (1)
Management Contract: Practice in which one company supplies
another with managerial expertise for a specific period of time.
Turnkey (build-operate-transfer) Projects: Practice by which
one company designs, constructs, and tests a production facility for
a client firm. It is large-scale and often involves government
agencies comparing to Management Contract.
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3. Investment Entry Modes
Wholly Owned Subsidiaries: Facility entirely owned and
controlled by a single parent company.
Joint Ventures: Separate company that is created and jointly
owned by two or more independent entities to achieve a common
business objective.
Strategic Alliance: Relationship whereby two or more entities
cooperate (but do not form a separate company) to achieve the
strategic goals of each.