Unit_10_Analyzing_International_Opportunities(6) - Chapter...

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Analysing International Opportunities Chapter 12 by Ooi Soon Beng
Macroeconomics After studying this chapter, you should be able to: Explain each of the four steps in the market- and site- screening process. Describe the three primary difficulties of conducting international market research. Identify the main sources of secondary international data and explain their usefulness. Describe the main methods used to conduct primary international research.
The screening process for potential new markets and sites involves four main steps. The attraction to distant markets require location decisions be screened in a systematic manner.
Macroeconomics
For a potential market , determine the basic product demand. Must explore the suitability of a nation’s climate. Whether there are bans on products (alcohol in Islamic nations).
Can you sell ice cream to the Eskimos ?
Akutaq
For a potential site , determine the availability of resources. Availability of raw materials. Imports of raw materials may face tariffs, quotas, or other trade barriers. Availability of labor is important for labor- intensive products. Availability of financing if financing is not available or when interest rates are high at home.
Managers must understand business environment before making market and site selection decisions. Cultural Forces Political and Legal Forces Economic and Financial Forces Other Forces
Market selection Global product Tailored product Site sélection Education level Technical skills Work ethic
Political and Legal Forces Government Regulation Government Bureaucracy Political Stability
Government Regulation Governments can create barriers to investment by: 1) placing restrictions on the foreign equity ownership 2) forcing the formation of joint ventures with local firms 3) restrict foreign companies from repatriating profits 4) impose strict environmental regulations 5) bar foreign companies from competing in certain sectors 6) require foreign companies to divulge certain product information .
Restrict Foreign Equity Ownership In the USA , radio and television licenses are regulated by the government who believe that only Americans can protect freedom of speech. To get around this, Australian-born billionaire Rupert Murdoch in 1985 became a naturalized US citizen when he wanted to acquire Fox News .
Bar Foreign Companies Coca-Cola is still banned in Cuba and North Korea today! Coca-Cola was banned in China for 30 years until 1978. Coca-Cola quit India in 1977 and returned in 1993 after India liberalized its economy. After 60 years, Coco Cola resumed business in Myanmar in 2013.
Bar Foreign Companies The Indian retail market is estimated to be US$500 billion and one of the top five retail markets in the world. Until 2011, India denied FDI in multi-brand retail and single-brand retail was limited to 51% ownership.
Strict Environmental Regulations South Korean steel maker Posco received environmental clearance to build a US$12 billion plant in India in 2011, after 8 years delay.

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