Global Business week 5

Global Business Week 5: Deciding Which Markets to Enter

Introduction

  • Presenter: P Pearson
  • © 2026 Pearson Education Limited. All Rights Reserved.

Market Determinants

Figure 8.1: Potential Determinants of the Company’s Choice of Foreign Markets

  • Source: Svend Hollensen.

International Market Segmentation

Figure 8.2: Steps in International Market Segmentation

  • Step 1: Selection of the relevant segmentation criteria
  • Step 2: Development of appropriate segments
  • Step 3: Screening of segments to narrow down the list of markets/countries
  • Step 4: Microsegmentation: develop segments in each qualified country or across countries
  • Post-market-selection decisions include:
    • Sequence incremental or simultaneous entry to selected markets?
    • Concentrated or diversified entry to selected markets?
    • Management of product/market portfolio.

Basis of International Market Segmentation

Figure 8.3

  • General Characteristics (High degree of measurability, accessibility, and actionability)

    • Geographic
    • Demographic
    • Political factors
    • Economy
    • Industrial structure
    • Technology
    • Language
    • Religion

  • Specific Characteristics (Low degree of measurability, accessibility, and actionability; high relevance in specific situations)

    • Cultural characteristics
    • Attitudes and tastes
    • Lifestyle
    • Personality

Business Environment Assessment

Table 8.1: Criteria Included in the Overall BERI Index

  • Criteria:
    1. Political stability
    2. Economic growth
    3. Currency convertibility
    4. Labour cost/productivity
    5. Short-term credit
    6. Long-term loans/venture capital
    7. Attitude towards foreign investment and profits
    8. Nationalization
    9. Monetary inflation
  1. Balance of payments
  2. Enforceability of contracts
  3. Bureaucratic delays
  4. Communications: phone, fax, internet access
  5. Local management and partners
  6. Professional services and contractors

  • Weights and Scoring:

    • Scored on a scale from 0 to 4:
    • 0 = unacceptable;
    • 1 = poor;
    • 2 = average;
    • 3 = above average;
    • 4 = superior.

  • Interpretation of Total Points:

    • > 80: Favorable environment for investors, advanced economy
    • 70-79: Not so favorable, but still an advanced economy
    • 55-69: Immature economy with investment potential, likely newly industrialized country (NIC)
    • 40-54: High-risk country, possibly less-developed country (LDC); quality management needed for realization
    • < 40: Very high risk; investment would require extraordinary justification.

Market Attractiveness and Competitive Strength Analysis

Table 8.2: Dimensions of Market/Country Attractiveness and Competitive Strength (MACS)

  • Source: Svend Hollensen
  • MACS Matrix (High market attractiveness vs. competitive strength):
    • High (5), Moderate (3), Low (1) with stratified entries:
    • Invest/grow
    • Dominate/divest joint venture
    • Harvest/divest combine/license

Market Attractiveness Analysis (A)

  • Factors Evaluated:

    • Market size
    • Market growth
    • Buying structure
    • Prices
    • Buying power
    • Market access
    • Competitive intensity
    • Political/economic risks

  • Results Calculation:

    • Total market attractiveness = Result / 100

Relative Competitive Strength Calculation (B)

  • Factors Evaluated:

    • Products accordance with market demand
    • Pricing conditions
    • Marketing presence
    • Financial results
    • Obtainable market share

  • Results Calculation:

    • Total relative competitive strength = Result / 100

Micromarket Segmentation

Figure 8.7: Micromarket Segmentation Overview

  • Segments Identified:
    • Segment 1
    • Segment 2
    • Segment 3
    • Segment 4
    • Segment 5
  • Application: Chosen fields of operation of companies in product-country matrix

Preliminary Market Screening

Figure 8.8: Secondary Data Usage and Regional Macroscreening

  • Data Sources: Secondary data (desk research)
  • Criteria:
    • Market size/growth
    • Buying power of customers
    • Culturally similar markets
  • Goals: Identify markets with highest potential and assess specific product/market criteria.

Classification Variables in the MACS Model

Table 8.3: Key Variables

  • Market Attractiveness (MA) Scoring Variables:
    • Economic position (GDP per capita)
    • Market focus (quality/price)
    • Planned construction projects
    • Market size and growth in specific sectors
    • Fire safety awareness and compliance with standards

Measurement and Evaluation of Screening Variables

Table 8.4

  • Market Attractiveness Weight:
  • Scores for Specific Countries: Saudi Arabia, Jordan, Kuwait, Oman, Qatar, UAE
  • Key Variables Evaluated: Fire safety, local market knowledge, presence of local partners, etc.
  • Total Score Calculation: Comprehensive evaluation across specified variables for each country.

Visualization of Market Strategies

Figures 8.10 to 8.15

  • Market Expansion Matrix and Observational Strategies: incremental vs. simultaneous strategies, examined through frameworks like the waterfall and shower approaches.
  • Example from Bosch and Sunquick showing market shares over time and various strategies employed.

Summary of Factors Affecting Market Decisions

  • Evaluations must include both macro-level market attractiveness factors as well as micro-level competitive considerations.

Conclusion

  • Careful analysis of potential markets leads to informed decisions on international expansion strategies.
  • Strategies should be adapted based on specific conditions of individual countries, including political, economic, and operational factors.