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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:

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– 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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