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Lesson#17
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DETERMINING EXPORT POTENTIAL IN INTERNATIONAL
MARKETS-1
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DETERMINING EXPORT POTENTIAL IN INTERNATIONAL MARKETS
Analysis of Industry Market Potential
Stage Two: Analysis of Industry Market Potential:
After the foreign country markets are screened on the basis of
their macro environments, the short listed
markets are further analyzed for the industry potential. In the
following are the factors that are evaluated
to determine the industry potential;
Market Access:
– Limitations on
trade: tariff levels, quotas
– Documentation and
import regulations
– Local standards,
practices, and other non-tariff barriers
– Patents and
trademarks
– Preferential
treaties
– Legal
considerations: investment, taxation, repatriation, employment, code of laws
Product Potential:
– Customer needs
and desires
– Local production,
imports, consumption
– Exposure to and
acceptance of products
– Availability of
linking products
– Industry-specific
key indicators of demand
– Attitude toward
products of foreign origin
– Competitive
offerings
– Availability of
intermediaries
– Regional and
local transportation facilities
– Availability of
manpower
– Conditions of
local manufacture
At the end of the stage two analysis, international marketers
would be able to identify promising
international markets with strong industry potential.
Stage Three: Analysis of Company Sales Potential:
The third stage of the screening process involves assessing
company sales potential in those countries
that prove promising based upon the earlier analysis. Following
factors are considered for evaluating
international markets for firm sales and profit potential;
Sales Volume Forecasting:
– Size and
concentration of customer segments
– Projected
consumption statistics
– Competitive
pressures
– Expectations of
local distributors/agents
Landed Cost:
Page
53
– Costing method
for exports
– Domestic
distribution costs
– International
freight and insurance
– Cost of product
modification
Cost of Internal Distribution:
– Tariffs and
duties
– Value-added tax
– Local packaging
and assembly
–
Margins/commission allowed for the trade
– Local
distribution and inventory costs
– Promotional
expenditures
Other determinants of Profitability:
– Going price
levels
– Competitive
strengths and weaknesses
– Credit practices
– Current and
projected exchange rates
The three stage analysis would thoroughly evaluate international
markets for macro level, industry level
and firm sales and profit potential. The country markets that
appear to be potential opportunity on the
three stage analysis may then be targeted for exports.
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