How Can US Companies Get Ready For Foreign Markets?

Carnot Sylvestre, MS

Before venturing into foreign markets with their products or services, there are some critical issues that US companies must first address. Indeed company executives and managers must take into consideration certain uncontrollable elements in the domestic as well as in each foreign environment in which their companies wish to operate.

Domestic uncontrollable elements
Once a company decides to actively enter foreign markets with its products, it will quickly find that it is not enough to blend its price, product, promotion, channels-of-distribution, and R&D activities to capitalize on anticipated demand and adjust to changing market conditions, consumer tastes, or corporate objectives. The company must also consider certain home-country elements_ political and legal forces, economic climate, competition_ that can directly impact its foreign venture.

Political and legal forces. The company must be ready to comply with any US foreign policy decision such as trade restrictions, embargoes, tariffs, quotas, etc., which can affect its operations in any specific foreign market. The US State Department, the Department of Commerce and the Treasury Department among other sources provide information on laws and regulations concerning trade and commerce between US companies and foreign firms or specific countries.

Economic climate. Management must determine whether the economic climate in the USA is stable enough to be favorable to foreign investment. Any direct foreign investment requires a huge initial capital outlay; managers must make sure that prevailing economic conditions in the USA are strong enough to help the company maintain domestic sales growth, satisfy its obligations toward stakeholders and provide adequate financial resources to support the foreign venture.

Competition. Managers must also assess whether the state of the competition at home is conducive to investment in foreign markets; they must be satisfied that the company’s base in the US is lucrative enough to warrant an adequate and strong international marketing programs. Obviously, no companies would want to abandon profitable domestic markets to their competitors while they pursue foreign ventures.

Foreign uncontrollable elements
Proper market research will help the company’s managers identify and address the following foreign uncontrollable issues prior to making a definitive commitment to enter non-domestic markets: political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, cultural forces.
These foreign uncontrollable elements of multinational marketing will be described extensively and posted as Part II of “How Can Companies Get Ready For Foreign Markets?”

In addition to the domestic and foreign uncontrollable elements, a company willing to enter foreign markets must be ready to adjust its marketing mix to meet the requirements of each foreign market; its managers must also consider such critical issues as self-reference criterion and ethnocentrism, standardization versus adaptation, global orientation versus international orientation as well as segmentation, targeting and positioning.

These critical issues will be explained and posted as Part III of “How Can Companies Get Ready For Foreign Markets?”