Internal & External Environment

1. GLOBAL ENTREPRENEURIAL ECOSYSTEM-INTERNATIONAL MARKET RESEARCH Virginia Arteaga-haid global business advisor

3. Internal & External Environment

4. Internal Environment Export readiness assessment: Making good choices determines the success of entry and operations in foreign markets. The more you know about an opportunity, the better equipped you will be to exploit it. Data and information are critical. • Goals and preferences of senior management • Experiences and capabilities of employees • Technical and production capabilities

5. Alignment of Philosophies and Benefits Internal Goals Exporting Benefits • Do you foresee exports contributing to sound, specific company goals? • Do you want foreign sales to be a more significant facet of your business? • Are you willing to wait the 2-4 times longer it may take to develop new export business, compared with domestic selling? • What demands will the venture place on company resources? • Exports increase sales and income • Exports diversify market risk; offset lags in domestic demand • Exports extend product life cycles • Exports use idle capacity; reduce unit costs

7. External Environment Political/ Physical geography Economical/ Environmental currency fluctuations and protected industries and sectors Social/ Cultural Technological

8. External Environment • Widely differing laws and business practices exist in other countries • COMMON LAW UK, federal courts of US, former UK colonies Based on tradition, precedent and customs • WRITTEN CODE LAW (CIVIL LAW) Russia, Japan, parts of Europe Detailed set of laws organized into codes, rarely revised, greater consensus • RELIGIOUS LAW (THEOCTRATIC LAW) Saudi Arabia, Iran Law based on religious precepts

9. Export Plan. Global Market Research

10. Global Market Research: Is the process of analyzing company readiness to export, assessing the suitability of products and services for foreign markets and sales potential in identified countries, and choosing qualify business partners. • Which markets are best to pursue? • What’s the best entry strategy for each target market? • What’s the action plan to implement the strategy? • Use market research to learn your product’s potential in a given market, where the best prospects exist for success, common business practices

11. GLOBAL MARKET RESEARCH FIRST QUESTION: Will your company be a reactive exporter or proactive exporter ? Being proactive: Best ways to grow your business and keep it on a sustainable path, and always consider your own experiences or knowledge of countries you have visited, or counties where you have found potential buyers. PRIMARY AND SECONDARY MARKET RESEARCH Primary Market research consist in collecting information directly from the foreign marketplace through interviews, surveys and other direct contacts with potential customers; this is very time consuming and expensive. Secondary Market Research: this is basically trade statistics for a country by industry and by product, and focusing in market potential. This is relatively easy and less expensive. STEPS FOR A SUCCESSFUL GLOBAL MARKET RESEARCH: • Screen potential markets. Statistics (import-export) by country-volume-value-port; competition, business practices, foreign barriers, incentives and regulations.

12. Identify and Select Best Markets-screening Market Potential Matrix-Based upon statistics Columns/Criteria • Largest export markets, latest year • Fastest growing export markets, past 3 yrs • Fastest growing export markets, latest year • Largest importing countries, latest year • Fastest growing importing countries, past 3 yrs • Fastest growing importing countries, latest year • Strong share of import market, latest year • Limited competition from local producers • High receptivity to products from your country • No significant market barriers • Recommended as a “best” export market

13. Select two countries in which you think your product has the best market potential • Review the profile of each country-basic data • Research information about the specific industry you want to sell • Research information about preferential treatment, FTA, import duties, compliance and intellectual property protection; trade barriers • Rate each country and select 1 to 3 What to do after the market research assessment

14. There are more than 200 countries worldwide, it is not possible to target them all, management needs to narrow the list of potential markets. • Exporting companies generally prefer countries with low trade barriers, qualified intermediaries, and reliable marketing infrastructure • If you outsource, you have to choose the most appropriate supplier countries. • Failure to do right market selection can be very costly • Country ranking are not static, they evolve over time due to shifting economic events, emergent technologies, or country-specific developments. Screen countries to identify target markets

15. Targeted products and Markets

16. 4P’s • Localization/adaptation: Whether/how to adapt product, packaging, literature • Distribution: Whether to sell direct to buyer or use local rep, sales office, etc. (locating a foreign buyer) • Advertising & promotion: (Whether/how to promote and media to use • Product pricing: Base price and whether /how much to discount • Export Mode: Whether to export directly or use domestic export representative

17. Screening countries for permanent presence • To do international business should be seeing as a long term investment • You should consider other factors: country risk, regulatory, political, economic and cultural barriers, and the legal environment for protecting your products and services • Government incentives • Long term growth prospects • Cost of doing business • Competitive environment –local and international

18. Screening industry market potential • There are several methods for estimating industry market potential: • Attending international trade shows • Ask supplier network • Monitor key industry-specific indicators –specific drivers • Monitor key competition • Perform simple trend analysis Best resources: • Best market reports • Country commercial guide • Industry reports • International market report

19. Definition of Products & Services for Target Market

20. Provide products and services for the targeted markets Individualism vs collectivism Power distance Uncertainty avoidance Masculinity vs. feminity • Language, religion, views on education, social mobility, economic philosophy • Society & culture- Hofstede’s dimensions

21. (New) Product Development Modification Process The adaptation and separate version decision process includes Standardization pressures are internal to the company and include • Differences in technical standards (Example: NTSC or PAL) • Variations in customer needs, behavior and ability to buy (geography, temperature, income) • Government standards and restrictions (CE Mark) • Economies of scale in R&D and production (reduced with each product modification) • Product usage (micro chip) • Company size • Country of origin effect

22. Technical Compatibility and Product Standards • Power usage (voltage) • Power outlet configuration • European certification and compliance requirements: CE Mark, e mark, ROHS, Weee • CCC, SABS • Other country certification requirements

23. After Sales Service and Support Requirements • Can be presented as customer centric and / or regulatory issues • Customer centric because addressing these items becomes a part of localizing or adapting a product • Regulatory because a foreign government may require changes as a part of a non tariff barrier (Weee) • Efforts for appropriate support include • Marketing materials and translations • Support materials (end user, and technical) • Training (end user, and technical) • Product modification • Product warranties ITC 2010

24. Product Liability Implications-commercial practices • International sales / distribution agreement limit liability of potential damages in the use of the product in foreign markets, • Make sure that a distributor does not add to or change warranty statements • Distributor carries ample liability coverage September 10, 2014.

25. Legal / Regulatory Requirements for Pricing • Import Licenses – Not having may keep the importer from being able to pay the exporter. Importers obtaining license and exporters mitigating risk will affect price. • Government standards and testing – foodstuffs, consumer products may have varied requirements in different nations. Most will fall on the exporter or manufacturer. • Product labeling – affecting printing / packaging costs • Quotas – Limits on the import of certain products. Pricing must be set appropriately not to exceed quota. • Government procurement barriers – Control on the amount of local content in products can increase or decrease the cost of goods. • Service and investment barriers – Preferential treatment for local services requires a firm to manage pricing in order to compete. ITC 2010

26. Selecting Foreign Partners • Once you have selected your target market, the next step is to decide on the type of partner the firm needs for foreign venture. This partners are vital to the international business success. • Partners include such entities as distribution – channel intermediaries and suppliers, as well as collaborative venture partners such as joint venture partners and franchises. • Companies must exercise great care when choosing partners, common goals and objectives. • Other aspects when seeking foreign partners include: financial resources and stability; competent manager; technical staff; sales personnel; strong knowledge of the industry; good reputation in the market; ready access to distribution channels you can use; sense of commitment and loyalty to the exporter (YOU).

27. Estimate company sales potential • Once your company has a list of promising country markets, verified industry market potential, and identified qualified business partners, the next major activity is to “estimate company sales potential in each market” • In order to estimate sales potential can be challenging, it requires to obtain fine information from the market, making forecast about expenses and revenues requiring judgment and knowledge obtained from the target market • In estimating company sales potential, managers collect and review research findings addressing the following key concerns: • Risk tolerance of senior managers, financial and human resources, pricing and financing of sales, network in the market, partners capabilities, access to distribution channels, local and third country competition, market penetration timetable.

28. THANK YOU Email: varteaga@dcccd.edu Phone: 214-8605862YOU