When conducting foreign market research, businesses tend to be overwhelmed with the amount of data they need. There’s good reason for this. Just to answer seemingly basic questions—such as whether or not to expand in a particular market, whether or not the timing is right, or how to expand—a great deal of information needs to be gathered and analyzed.
This, no doubt, is essential in making informed decisions and ultimately improving the bottom line. As a result, for companies new to international trade, the following factors should be evaluated and included in a global business strategy.
To determine the potential for growth, it’s important to analyze changes in per capita income, energy consumption, gross domestic product per capita, purchasing power parity, and levels of disposable income. Other factors to consider include inflation and currency exchange trends, strength of domestic industries, and stability of the financial sector.
A number of social factors also should be considered and analyzed. These include demographics, literacy rates, soundness of the education system, frequency of epidemics, health care costs, life expectancy, annual population growth, and population distribution in urban and rural areas.
An analysis of political risk, especially in developing countries, can determine if a level of volatility is or may be harmful to your business interests. Sources of instability are typically caused by irresponsible governmental actions, kidnappings, extortion, and terrorism.
A country’s resource base, including fertile agricultural acreage, natural resources, and size and educational levels of the labor force, is the foundation of its technological base. Importantly, investment in utilities, as well as in transportation, communication and educational infrastructure significantly impacts levels of future productivity.
All facets of an international business operation—from negotiations, production, distribution, marketing and human resource management—are affected by cultural characteristics. Your understanding of social structure, religion, values, needs and preferences can determine success.
Similarly, all aspects of a legal system and its procedures must be factored in the target market decision-making process. In short, the enforcement of intellectual property rights can play a major role in determining which markets not to pursue.
Barriers to trade may take various forms, from tariffs and taxes to non-tariff barriers such as quotas and embargoes. Depending on costs, some barriers make market entry extremely difficult.
Additional information, including local industry associations, government entities and contacts, trade fairs, distributors, and licensing or joint venture partners, should be reviewed and built into your strategy. As such, firms considering expanding internationally must not only perform thorough market research, but understand what the data means and how to assess it.
» Advanced Search
Get an inside perspective and stay on top of the most important issues in today's Global Economic Arena. Subscribe to The Manzella Report's FREE Impact Analysis Newsletter today!
Understand dynamic global markets.
Understand what’s occurred and more accurately assess what’s ahead. Improve your corporate strategic plan, seize the right opportunities, and boost competitiveness and profits.
Informative, analytical and policy-oriented perspectives.
Comprehend the impact of past events and fully grasp and prepare for the challenges ahead.