assessing countries’ attractiveness suresh george

Assessing Countries’ Attractiveness

Suresh George

Outline of the lecture

• In depth Analysis of Markets• Market & Sales Potential• Resources and databases for the search

Recap of Lecture 5

Introduction• Micro Analyses of selected markets• No Market is 100% attractive on all variables- Trade-

offs based on firm and market attractiveness • Attractiveness is a fluid concept- Change over time

with macro-economic developments/country specific events e.g Turkey in 2013

• The use of Industry specific variables to qualify markets

Perform an in-Depth Market Analysis of the two best markets

The deployment of resources in target market

Source:Janavaras.B, Paladini .S and George S (2013). Going Global: A Practical Guide Pearson

Contacts• Research potential agents, distributors,

foreign governments, associations, and organizations that can help the company establish itself in the new countries

• Select the strongest contacts by clicking on the bubbles corresponding to the strongest contacts in the software

• Evaluate each contact’s quality and strength on a scale 1 – 5, 1 being least favorable and 5 being most favorable

Assess market PotentialIndustry market potential = Likely sales for all firms in industry over specific timeVariables • Size and Growth of market and trends in the industry• Tariff and non tariff trade barriers to entry• Regulations• Availability of distribution for your products• Unique customer requirements and preferences• Industry specific potential indicators of demand Methods • Simple trend Analysis• Monitoring of Key industry specific indicators, Key customers• Following your key customers around the world• Supplier network data and information• International Trade fairs

Market and Company Sales Potential in GMMSO3

Total Market Potential (TMP)- Estimate the total market potential (TMP) in both selected top country for your product by using the formula:

TMP = a x b x c Where, a = Number of potential (eligible/qualified) consumers:b = Frequency of purchase on an annual basis:c = Selling price of the product

Country 1 Country 2a = Number of potential (eligible/qualified) consumers:

b = Frequency of purchase on an annual basis:

c = Selling price of the product

TMP Evaluation of the TMP on a

scale of 1-51 2 3 4 5 1 2 3 4 5


Company Sales Potential (CSP)Estimate of share of the Annual Industry sales expected in a target marketVariables• Pricing and financing of sales• Financial Resources• HR assets• The partner capabilities• Access to distribution Channels• Market penetration timetable – Gradual ( cede market share to competition) /Vs

rapid market entry( FMA at expense of firm resources and capabilities0• Special Links/Contacts with Market• Firm Reputation/Brand EquityMethodAnalysis of the competitive environmentTrade AuditsSurvey of customers/distributorsEstimates from local partnersTest Marketing

Finding CSP from known sources

Estimate company sales potential (CSP) for the product:CSP = Total Market Potential (TMP) x Desired Market Share %

Country 1 Country 2

Total Market Potential (TMP)

Desired Market Share (%)

Company Sales Potential (CSP)=

TMP X desired market share

Use of Proxy Indicators- Use information about a known category to infer potential of another ProductAnalogy method – Use of known statistics of one country correlated to another


Competitive Analysis• Choose the top two competitors that the company

will have to compete with in each country• Will local or international competitors be a bigger

threat to the company’s success? • Do consumers in the specific countries favor local

companies over international companies?• Rate the two counties threat of competition on a

scale of 1-5, 1 being the biggest threat and 5 being the less threatening.

CSP on GMMSO3Country Market X Competitor 1 Competitor 2Competitor Name: Product/Service Name:

Location of Headquarters (country):

Total Sales (countrywide): Total Sales (worldwide): Number of Employees

Profile Distribution E-Commerce: Pricing Strategy:

Product Attributes and Benefits:

Promotion Strategy Quality: Service: Target Market Profile:

Evaluation Criteria Country 1 Country 2Degree and Level of Market Competition in each country

1 2 3 4 5 1 2 3 4 5

MARKET ENTRY CONDITIONS

Import RegulationsUse the matrix below to explain what types of regulations are present in each country.

Regulations Country 1 Country 2Administrative Barriers 1 2 3 4 5 1 2 3 4 5

Import Licensing Requirements

Quotas

Tariffs

Any additional regulations

Explanation for each of the regulations and your perception of its impact on your product

Foreign Direct Investment (FDI) Screening

• Can foreign companies borrow locally?• Does the government restrict the amount or type of investment?• Does the government restrict the Repatriation of Earnings• Are foreign based companies allowed 100% Equity ownership of domestic firms? • Are foreign companies allowed to establish their own retail establishments?• Long Term Prospects for Growth & returns• The cost of doing Business vs. Market potential – Consider price, availability of

commercial infrastructure, tax rates, wages, skills and capital markets• Country Risk including regulatory, financial, political, cultural barriers and legal

environment for IPP• The intensity of competition from other firms present in the market or those who

can move there• Government Incentives – Tax holidays /Low cost Loans etc

Source: A.T. Kearney 2012 FDI confidence Index

FINANCIAL AND MARKET ENTRY CONDITIONS

Tax Rates Tax Rates Country 1 Country 2

1 2 3 4 5 1 2 3 4 5

Corporate Tax rates are favorable

Personal Tax rates are favorable


Explanation for each of the Tax rates and your perception of its impact on your product/service

Foreign Exchange Performance

Foreign exchange rate performance

Country 1 Country 2

1 2 3 4 5 1 2 3 4 5The country’s currency is convertible

The country’s current account is in good standing (Balance of Payments)

The currency of the country has been stable


Explanation for each of the statements and your perception of its impact on your product/service

Labor issuesLabour Issues Country 1 Country 2 1 2 3 4 5 1 2 3 4 5Child labor issues Labor wage rates )

Management-labor relations

Strength of labor unions


Explanation for each of the issues and your perception of its impact on your product/service

Country InfrastructuresCountry Infrastructure Country 1 Country 2 1 2 3 4 5 1 2 3 4 5Banking system Energy Internet connections Telecommunications system Transportation systems Any additional regulations Explanation for each of the infrastructure issues and your perception of its impact on your product/service

Market Channel ConditionsMarket channel conditions Country 1 Country 2

1 2 3 4 5 1 2 3 4 5Distribution channels are regulated by the government

Existing channels provide adequate national market coverage

The company will be able to distribute its product/service using existing channels


Explanation for each of the market channel conditions and your perception of its impact on your product/service

Overall Market RankingVARIABLES WEIGHT AVERAGE RANK WEIGHTED TOTAL

Country 1 Country 2 Country 1

Country 2

CONTACTS (average) MARKET & COMPANY SALES POTENTIAL

COMPETITION

COUNTRY ENTRY CONDITIONS

FINANCIAL & MARKET CONDITIONS

Total weight (100%)

Average rank sum

Weighted Total

Country 1 Country 2 Country 1 Country 2

TOOLS AND RESOURCES

Market Potential Index

http://globaledge.msu.edu/knowledge-tools/mpi

http://globaledge.msu.edu/knowledge-tools/mpi

Industry potential Data Sources• Global Edge• Export.Gov• UKTI• UNCTAD• WTO• DoingBusiness.org• IMF• AT Kearney• US Commercial Service - Market Research Library- http://

www.buyusainfo.net/adsearch.cfm?search_type=int&loadnav=no• Country Commercial Guides http://www.state.gov/e/eb/rls/rpts/ccg/

http://www.buyusainfo.net/adsearch.cfm?search_type=int&loadnav=no

http://www.buyusainfo.net/adsearch.cfm?search_type=int&loadnav=no

http://www.state.gov/e/eb/rls/rpts/ccg/

References• Janavaras.B, Paladini .S and George S (2013). Going Global: A Practical

Guide Pearson

assessing countries’ attractiveness suresh george

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