SELECTING THE BEST COUNTRIES TO MARKET THE PRODUCT -

Any company, must determine how ready it is to make that move. This involves a global assessment of the industry to determine the best country or regional markets for the company’s products, and an assessment of the best strategies for entering those markets. At the same time, an assessment must be made of the principal competitors throughout the world. Information is gathered on those global competitors present in the U.K. market, but it’s necessary to look elsewhere in the world to determine who else must be dealt with either `defensively’ because of the threat that company might hurt the company in the U.K. market, or in the `offensive’ arena when the company goes into foreign markets.

Strategies for developing your business overseas

The Need For an International Business Plan – An international business plan is an essential tool to properly evaluate all the factors that would affect the company’s ability to go international.

It should define:

* commitment to international trade;

* export pricing strategy;

* reason for exporting;

* potential export markets and customers;

* methods of foreign market entry;

* exporting costs and projected revenues;

* export financing alternatives;

* legal requirements;

* transportation method; and

* overseas partnership and foreign investment capabilities.

Since the number of world markets to be considered by the company is very large, it is neither possible nor advisable to research them all. Thus, time and money are spent most efficiently by using a sequential screening process. The first step in this sequential screening process for the company is to select the more attractive countries for the product. Preliminary screening involves defining the physical, political, economic and cultural environment and the financial resources required to execute this plan.

What is more important than a massive global strategic planning effort is an initial sense of direction regarding the attempt to enter foreign markets and to assist in this step, the company may be put in contact with various agencies that provide information on key markets throughout the world, such as: Department of Trade and Industry, United Nations and the European Community, or JETRO for Japan. The company should be planning to attend overseas trade shows as a very effective means of developing a global overview of their business in a short time. Some of this information can be gathered from secondary sources, but invariably it’s necessary for a company to do primary research. Information can be gathered at a very low cost, even free, however, it’s necessary to pay for important information, and the company must budget for this expense or investment. When the company has made its global assessment and has chosen its means for entering the global market and has selected its initial target markets, it is ready to move to the next stage, where it will develop specific foreign market entry plans.

When going into international markets, it must earn a niche in new markets and it will only do that if it has some competitive advantages in the new markets. Therefore, the company must identify the strengths which has made it viable in the home market, and transfer those strengths overseas. If it doesn’t know why it has been successful in the home market, it won’t know how to penetrate foreign markets successfully.

Market Demand – As in the domestic market, product demand is the key to setting prices in a foreign market. What will the market bear for a specific product or service? What will the estimated consumer price for your product be in each foreign market? If your prices seem out of line, try some simple product modifications to reduce the selling price, such as simplification of technology or alteration of product size to conform to local market norms. Also keep in mind that currency valuations alter the affordability of goods. A good pricing strategy should accommodate fluctuations in currency.

Competition – As in the domestic market, few exporters are free to set prices without carefully evaluating their competitor’s pricing policies. The situation is further complicated by the need to evaluate the competition’s prices in each foreign market an exporter intends to enter. In a foreign market that is serviced by many competitors, an exporter may have little choice but to match the going price or even go below it to establish a market share. If, however, the exporter’s product or service is new to a particular foreign market, it may be possible to set a higher price than normally charged domestically. Monitoring how other U.K. firms sell in the markets chosen are also key factors, as well determining whether the customer will be approached direct or by a representative.

Companies that succeed in foreign markets have established a strong, viable position in the home market. The company should ensure that they have a business plan for the next three to four years for domestic operations. That plan should address some of the issues described earlier, and develop the strategies and action programs that will ensure domestic market success. For each target market, the market entry plan should include such items as: The company’s objectives for that market, including target market share, sales targets for the first few years, profit objectives, targeted breakeven period, and other quantitative and qualitative objectives.

Background material on the country relating to the economy, politics, cultural issues, trends in the economy, and other country related matters that will affect the company’s performance in that country. The opportunities and obstacles in the country for the company in its business sector. Strategy for the method of entering the market, whether it be through an agent or distributor relationship, licensing, joint venture, acquisition or some other method. An important determinant of that strategy will be the company’s value adding chain and its selection of the activities it wants to perform in a country and those it wants to retain in the U.K.