chapter eight global market participation. copyright © houghton mifflin company. all rights...
TRANSCRIPT
Chapter Eight
Global Market Participation
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 8 | Slide 2
Evaluating National Markets
• Where in the world do we look for markets?
• What should we consider when assessing market opportunities?
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 8 | Slide 3
Market Considerations
• Stand-alone market attractiveness• Strategic importance of markets
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 8 | Slide 4
Stand-Alone Market Attractiveness
• Factors– Market and target segment(s) size– Growth rate– Market share potential– Government incentives
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 8 | Slide 5
Strategic Importance of Markets
• Current and future battlegrounds where global competitors engage each other
• May not currently be attractive but are strategically important nonetheless
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 8 | Slide 6
Targeting Lead Markets
• Have demanding customers who push for quality and innovation
• Examples:– Plastics = Japan– Italy = Textiles, Clothing– France = Wine
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 8 | Slide 7
Geographic Market Choices
• Developed Economies
versus • Developing
Economies
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 8 | Slide 8
Attractiveness of Developed Economies
• Triad – Europe, Japan, USA• 10 developed countries account for 50%
world international trade and 90% of FDI• Consumers with considerable disposable
income • 80% of sales for many industries • Global competitors should have positions in
all three areas• Few are strong in more than two!
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 8 | Slide 9
Challenges of Developed Markets
• High competition• Market fragmentation• Established brand and product loyalty• Aging populations• Labor costs are high• Government regulation (highest
product quality standards)
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 8 | Slide 10
Attractiveness of Developing Markets
• Latin America, Africa, the Middle East and parts of Asia
• Trade and investment liberalization• Market growth may be higher • Middle class growth• Competition may be less intense
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 8 | Slide 11
Challenges of Developing Markets
• Political risk• Weaker distribution infrastructures• Economic risk – Big fluctuations in
economies; currency and market volatility• Some trade and investment restrictions
remain• Middle class may still be small –
Predominated by small elite and large impoverished classes
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 8 | Slide 12
The Search Begins…
• Macrovariables – Describe total market in terms of
economic, social, geographic, political information
• Macrovariables are especially useful for determining which countries to reject!
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 8 | Slide 13
Geographic Indicators
• Size of country, in terms of geographic area
• Climatic conditions• Topographical characteristics
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 8 | Slide 14
Demographic Characteristics
• Total population• Population growth
rate• Age distribution of
the population• Degree of
population density
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 8 | Slide 15
Economic Characteristics
• Total gross national product• Per-capita income (also income growth
rate)• Personal or household disposable
income• Income distribution
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 8 | Slide 16
The Search Continues…
• Microindicators– Indicators (proxies) for specific markets
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 8 | Slide 17
Microindicators of Market Size
Televisions Scientists and
engineers Hospitals Physicians Coffee
consumption Hotel beds
Steel production Rice production Number of farms Electricity
consumption Passenger cars Telephones
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 8 | Slide 18
Other Criteria
• Political conditions• Competition• Market similarity
– The less the psychic distance the lower the risk
– But similarities can be overestimated• Canadian retailers in the USA (service levels
and pricing)
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 8 | Slide 19
Similarity to the United
States
Position in Investment Sequence
Canada 1 2United Kingdom 3 1France 5 4Japan 8 5Argentina 10 15Mexico 11 8Brazil 14 7Philippines 16 17South Korea 17 18