Choosing International Market Location
Evaluating National Context of Potential Locations
Ahsan Hameed (24.01.2016)
This report presents the literature on factors, which are important to consider while evaluating the national perspective of foreign markets. Although, the importance of selecting an effective market entry method is significant, but the selection of the country (location) is also significantly important for effectively operating in another country. A company, that decides to start its business in other countries, should also analyse the situation of another country. The Irish Small and Medium Enterprises (SME’s) has to pass through four phases of internationalisation including, exploring reason of going for internationalisation (both import and export), evaluating choices of international market, and the selection of market entry method and analysing the challenges of internationalisation (Hynes, 2010). When companies are deciding about internationalisation, there are many choices of countries, where they can go, but the selection of potential location must be evaluated on the basis of evaluation of national perspectives of each country.
According to Sakarya (2007), most companies are mostly emphasizing on growth opportunities and sourcing opportunities in potential country, when they are making decisions about internationalisation. In addition, there are certain factors, which are analysed during selection of potential international market such as, customer receptiveness for accepting foreign products, level of cultural distance, future market potential, macro factors and available support from industry in another country.
The national perspective of potential locations can be analysed through different models, which are helpful for identifying the environmental factors, which may potentially affect the strategic performance in a foreign country. The Lahti (2010) proposes the “Porter’s Diamond Model” that analyses the environmental impact through four determinants; (a) Factor conditions, (b) Demand condition, (c) Firm Strategy Structure and Rivalry and (d) Related and Supported industry. According to Doole and Lowe (2012) the framework of 12C’s is another framework for evaluating the national perspective of the foreign country that evaluates certain factors such as, country, culture, channels, commitments, currency, communication, capacity to pay, caveats, contractual obligations, consumptions, choices and concentration.
In concluding the discussion, the research findings have also revealed that companies, when choosing the international countries (locations), must evaluate the national perspective on the basis of certain factors, such as growth opportunities, sourcing opportunities, future potential, cultural distance, industry support, customer receptiveness and other environmental factors (internal, external and competitive). There is also proposed idea of using 12C model and porter’s diamond model in order to evaluate the national context of potential locations.
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