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Market Evaluation and Selection

In small companies IMS is often a reaction to a stimulus. IMS of a small company is based on: Low uncertainty about foreign markets Low perceived difficulty of acquiring information about foreign markets Low cultural distance Low geographic distance

Without scanning a company may Overlook opportunities and risks Examine too many or too few possibilities Source for global business knowledge a wealth of information on all countries in-depth analysis of selected industries

Segmentation allows managers to focus on common aspects of countries and avoid information overload. Segmentation Criteria Geographic location: The location fo the market. (e.g. Scandinavian countries, Middle East) Political factors: Broad political characteristics (e.g. Iron Curtain) Demography: Population characteristics Economy: Economic development level Industrial Structure: Characteristics of business population Technology: The degree of technological advancement Cultural characteristics / Lifestyles / Attitudes .....


Benefits Size of the market Purchasing power of customers Future prospects of a country * Costs Bribes Relatively primitive or undeveloped economy Local laws and regulations setting standards * Risks Political/Economic/Legal Risks Rate attractiveness of different countries relative to each other.

Some companies are more compatible with the firm itself. 1. Cultural distance 2. Administrative and political distance 3. Geographical distance 4. Economic distance



Journey to Sharahad Exploring cross-cultural differences

Interactive Practice

Voyage Beijing

Individualized reports prepared by market research and business consulting companies Studies prepared by research organizations that are much cheaper than individualized reports Government Agencies International Organizations (WTO, IMF, OECD) Trade Associations Information-service Companies (e.g. IGEME Library) Internet (e.g.

Market Size Ease and Compatibility of Operations Geographic proximity Share similar language, culture and legal system Similar market/economic conditions

Competitive Risk Find countries where there is no significant competition Avoid overcrowded markets Clusters are an exception

Costs and Resource Availability Bureaucracy

Political Risk BERI, BMI Euromoney Risks



Your company that has to choose between making a $100 million investment in Russia or the Czech Republic. Both investments promise the same longterm return, so your choice is driven by risk considerations. Assess the various risks of doing business in each of these nations. Which investment would you favor and why?



Score (1-4)

Overall BERI Index

Political stability Economic growth Currency convertibility

Labor cost/productivityShort-term credit Long-term loans/venture capital Attitude towards foreign investors Nationalization Monetary inflation Balance of payments Enforceability of contracts Bureaucratic delays Communications (phone, fax, internet access) Local management and partner Professional services TOTAL 1.5 1.5 1.5 1.5 1.5 1 1 1 0.5

Step 6: Compare Attractive Countries Opportunity-Risk MatrixIII II


Step 6: Compare Attractive Countries Country Selection Grid

Step 6: Compare Attractive Countries Attractiveness Strength Matrix

Step 6: Compare Attractive Countries Attractiveness Strength MatrixCOUNTRY ATTRACTIVENESSMEDIUM HIGHInvest / Grow Try Harder Divestment or Joint Venture

Try Harder

Proceed with care


Harvest / Generate Cash






Your company wants considers internationalizing. The options that you consider include: Egypt, Russia, Poland, Ukraine, Iran Read the Euromonitor reports for these countries and conduct: An environmental risk analysis Market drivers analysis Cost-Benefit analysis Etc.

Finally decide which countries are more attractive.

12 3 4


Source: EuroMonitor reports

High level scan of markets has identified some interesting similarities and differences: The forecasted market growth rate is highest in in ______ followed by _____ and _____. Consumers are considered to be most sophisticated in ______ followed by _____ and _____. ___ and ___ have the highest sensitivity to price, prioritizing functional benefits. Consumers are interested in modern, novel and advanced products in ___ and ___ Western lifestyles are affecting customer trends in ___ and ___. Economic factors affect purchasing decision negatively in ___ and positively in ___. Legal factors became a major force in ___. The effect of cultural factors and traditions on cosmetics and toiletries spending is highest in ___. Contraband products are threatening the cosmetics and toiletries industry in ___.

Priority markets (high level insight)

What the data tells us A high level scan of priority markets has identified some interesting similarities and differences:

Growth Performance in Bath and Shower Products

Importance of Bath&Shower Products in Cosme. &Toiletries

Consumer Sophistication

Growth Performance in Cosmetics and Toiletries

Dominant Subsector in Cosmetics and Toiletries

Competitive Landscape

Socio-Macroeconomic Level

Retail Development

Barriers to Entry

Price Sensitivity

Consumers are considered to be most sophisticated in Russia followed by Ukraine and Poland Iran and Egypt have the highest sensitivity to price, prioritising functional benefits over emotional Iran has high government control over retail developmentImplications:

weak strong

Turkey Russia Ukraine Poland Iran Egypt

Hair care Fragrances Skin care Skin care Hair care Man care

Companies need to invest in obtaining specific market and consumer insights to inform its business strategies Each priority market needs to be handled discreetly The gathering of insights by market should consist of desk based and primary research (qualitative and quantitative).