Breaching International Markets Essay Example For Students

Breaching International Markets Essay Measuring a potential business venture has many aspects which the international manager must be aware of in order to convey the correct information back to the decision makers. Being ignorant to any of the aspects can lead to a false representation of the project, and hence an uninformed decision being passed. In order for a business to survive it must grow. For growth to be optimal, management must first be able to identify the most attractive prospective leads. The country as a whole, specifically geography, government, and financial aspects must be looked at in order to yield the best possible picture of the market a company wishes to enter. Concentration should be placed on gathering reliable facts that are backed up by more than one source. It is to be hoped that after creating a picture of the market, managements analysis of the potential business venture and plan of action will be structured as to avoid losses and to find the most profitable scenarios. The success of the multinational corporation lies on the shoulders of its management. International management and organization-design expert Henry Mintzenberg says every CEO has three essential duties: direct supervision, development of the organizations strategy, and management of the organizations boundary conditions. Top managements responsibility at and beyond the organizations boundaries is largely a communication responsibility; however, no commonly accepted model exists for decision, execution, and assessment of communication opportunities. Within even some of the largest and most venerable organizations, the process used is haphazard and inconsistent. The Wyatt Companys survey of communications professionals showed that just 58.1 percent agreed that their organizations communication objectives are linked to business objectives, and 83.3 percent reported that their organizations conduct no formal review of return on communications investment. CEOs must establish and reinforce an organizations image in public by viewing each target public as a client; by doing research, looking at trends, and talking to experts, a CEO focuses on selling what the client wants to buy.1Finding a country to conduct business in can be a very easy task depending on if the organizations top management follows the advice of Mr. Mintzenberg. The way a company normally discovers where to conduct research is through leads on potential operations from outside sources. The selection of which leads to investigate becomes the difficult task. After sifting through the leads and finding the right ones to investigate management must formulate an international marketing plan. This further helps management in locating potential markets for their products. The first step is to use secondary research to find out what the sales potential is in a given market. Asking the questions of need, demand, and support gives one a starting point for research. If we were a company that sold pants we might want to ask the following questions. Is there a need for pants? Is it cold enough there to wear pants? Do people that demand the pants have money? These are the questions that one should ask of potential markets. Table 1-located at the end of the paper-shows the statistics that are needed for a general market picture. After gathering the information from the secondary research, the picture of a potential market becomes more evident. However, to make the picture clearer, one must conduct primary research. This research outlines the specifics of the potential market that directly pertain to the product. Robert Douglas book, Penetrating the International Market, addresses the issue of locating potential markets in greater detail.2 After finding a lead that contains profitable markets it is necessary to analyze the venture as a whole. The decisions of companies must be based on the facts of reliable sources on all investments. To gather the information needed for investment projects, m anagement must organize a competent feasibility team. The members of this team should be comprised of employees of the company, this is so that the knowledge will stay within the company. If the resources are not available for an employee conducted study then outside consultants may be used, it may also be beneficial to use a combination of the two. The first step in conducting a study is to design it by using project objectives as the base. During the second step the team must be staffed with people that have the ability to solve problems in any situation. In the third step the team should be properly placed and instructed. In the fourth and final step the product of the feasibility study should be properly communicated to the decision-making management.3 Table 2-located at the end of the paper-shows a general timeline that a company follows through the progression of a feasibility study. The design of a feasibility study first assumes that a company possesses the skills and resour ces necessary to be competitive in the market under analysis. Management must know the limits of its operations abroad. The operating margin for the expense of establishing and starting operations abroad should be easily recoverable within a reasonable time period. The design should also include the managements goals, which comes down from the investors of the company. The goals of management should be to acquire specific knowledge of the partner, in a joint venture situation, as well as the financial aspects, and the business-environment. The currency of the host country along with the political situation, and the economy are finer points of detail that the study must cover when analyzing the business-environment.4 In a less formal sense the design of the study should cover relevant material so that when viewing the final report decision-makers will know with what they are becoming involved. Siddhartha es un EssayBy the beginning of the week the team was eager and ready to start work on the study. Using the contact list and each individuals daily schedule the team was sent about to gather information. From each contact on the prepared list each member was expected to gain at least two additional contacts. While meeting with contacts the team was asked to differentiate between opinion and fact. This is because misinformation gathered by inexperienced people is very abundant. Fortunately for Walbecker the team he had assembled was able to distinguish between relevant and irrelevant material. During the study the team was also required to take notes every day. They were also encouraged to go outside of the metropolitan area in order to gain a better feeling of the country and its people. Upon return of the team from Athens, Walbecker concluded the following: the rate of return would be 16 percent, the partners had good integrity and intentions, the political situation was not extremely stable, the ownership option was good for other projects if the Patras investment was slow, and there were no technical or market developments evident to slow down progress in construction. From these findings Walbecker had to persuade the Board to agree to the venture. He concentrated on the soundness of the venture, the reliability of the partners, and the advantages of Greece. Using market analyses and forecasts, an audit of Titans financial affairs, the geological report, plant layout and consolidated capital estimates, and a business-environment report, which covered the political situation, the economy, partner evaluation, and an outlook on the countrys currency-the Drachma-Mr. Walbecker was prepared to start finalizing the report. Concluding the report were the financial details on the US$4.5 million equity needed by Yankee. Before giving a formalized presentation to the Board and other important associates, Mr. Walbecker had informal discussions over breakfast with the three top executives at Yankee about the project. The reason for this was not only to give the executives a briefing about the information that was gathered, but also to get an idea as to result of the vote on the project. After the formal presentation, the Board was given one month to decide on accepting or rejecting the project. At the conclusion of one months time from the formal presentation the Boards vote revealed the acceptance of the project. This example should have revealed the importance of the site selection, gathering, and transmission processes used in conducting a feasibility study. The main point of conducting a feasibility study is to find the intricate details which are necessary to make the right choice for expansion. The example presented above is just one particular situation. In trying to maintain brevity, the paper could not possibly include all of the suggested actions that management should take in every situation. Management must be able to adjust and plan a course of action to find the details of their particular situation that are essentials to making a viable decision. As an overall idea in dealing with foreign counterparts one should be objective in judgment and abundant in knowledge of the persons/peoples backgrounds. Knowledge is a valuable resource when expanding operations. Conducting venture analysis is one way in which a company can perceive how the investment will contribute to future operations. Table 1: List of statistics that portray the market situation. Essential Market Statistics: 1. Population by language, religion, ethnic groups2. Population by age, income, major occupations3. Population by regions and centers-with growth rates4. Number of households and rate of creation5. Percentage of households with car, radio, refrigerator,TV set, washing machine, running water, electricity. 6. Per capita disposable income (per capita national income less taxes and savings) broken down by region7. Personal and household consumption pattern; changes over ten years. 8. Government purchases of goods and services, broken down by product groupings and buying agency. 9. Type, number, and purchasing of state enterprises10. Imports, and exports, by product and by origin or destination11. Statistics on market for your product (internal production plus imports less exports)* Source: Penetrating the International Market, p.27-8. Table 2: Diagram showing the timing of project events over a 12 month period. Months Actions0 Project received by outside party123 Preliminary evaluation by company completed45 Initial screening in country completed6 Decisions to conduct study, employ intelligence service7 Departure of study team for country89 Completion of field work1011 Completion of Report12 decision by Board on acceptable terms* Source: Multinational Management, Venture Analysis. p.58. Business