How Can US Companies Get Ready For Foreign Markets? Part II

Carnot Sylvestre, MS


Foreign uncontrollable elements
Once a company’s managers are satisfied that the marketing uncontrollable elements in the home country are favorable to a foreign venture, they must conduct a thorough market research that includes a cross-cultural analysis for each country they are willing to enter. This will help them identify and address the following foreign uncontrollable issues: political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, cultural forces.

Political/legal forces. Is there political stability in the foreign country being considered? Are trade laws in the foreign country transparent enough or are they ambiguous when it comes to foreign investments? Are commercial contracts binding or are they open to the interpretation of different local authorities? Will the company have an “alien status” and be viewed as an exploiting outsider and receive prejudiced or unfair treatment at the hands of politicians and legal authorities?

Economic forces. What is the foreign country’s per capita income or the average expenditure of its average citizen on products similar to the ones offered by the company? Where is most of the population located? What is the attitude of the citizens of the foreign country toward the company’s product category? Is there room for the company’s products in the foreign market? Are there qualified companies with whom the company can enter into partnerships or joint ventures or will it have to go solo from the start? How stable is the currency in the foreign country? Are the rules of free market economy being observed?

Competitive forces. Which competitors are already established in the country? What are their individual shares of the market? How long have they been established in the market? What is their positioning? What competitive advantages does the company have in regard to the competition?

Level of technology. Are there vast differences in the level of technology between the company’s home country and the foreign market? Does adequate technical expertise exist in the foreign market for product support? Will the company have to train technicians or provide product support on its own?

Structure of distribution. Will the company have to handle its own distribution or will it use an intermediary? Do adequate logistical capacities such as warehouses, control systems, means of transportation exist?

Geography and infrastructure. What is the climate in the foreign country the company wants to penetrate? What kind of raw materials are available? How big is the population and how is it distributed across the country? What is the population growth? What is the level of education? What is the level of unemployment? How strategically is the country located in terms of international trade routes? Are roads and telecommunication systems adequate and accessible?

Cultural forces. Are there unique cultural aspects that directly influence business practices and consumer preferences in the foreign country that are different from those found in the home country’s culture? Are there specific connotations relative to the foreign culture such as history, language, shapes, colors, numbers, and religion that the company must pay special attention to? Will the local environment force the company to significantly or completely alter its products?

In Part III of “How Can US Companies Get Ready For Foreign Markets?” it will be explained how a company willing to enter foreign markets must be ready to adjust its marketing mix to meet the requirements of each foreign market and why it is important for managers to 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.