International Business Seminar Analyses of National Markets

1
International Business SeminarAnalyses of
National Markets
From World Business, J. Hill, 2005 Rev 2/22/07
2
National Markets Analysis Outline Modified
Figure 5-1
Analysis of National Markets
Commercial / Business Market Analysis

• The Shaping of National Cultures
• Historic Factors
• Geographic Factors

• Macro/ Current Country
• Business Environment Analysis
• Socio-Political
• Legal
• Economic
• International Position

Operating Context Conditions
Industry Analysis
Product-Market Fit
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Key Points

• Thorough examinations of national markets entail
• Reviewing background info on country history and
  geography
• Assessing the current political, cultural,
  economic, and international situations
• Evaluating its commercial and industry
  environments

4
Key Points

• Historic background traces national cultural
  political development and economic change.
• Geographic factors affect national economic and
  infrastructure development.
• Managers examine the current political, legal,
  economic, and international situations.

5
Key Points

• National economic positions should be assessed in
  their regional context first, followed by
  examinations of economic indicators, private
  sectors, and memberships of international
  organizations.
• Analyses of country balances of payments show how
  nations are performing in international trade.

6
Key Points

• Business environment analyses review current
  general factors affecting operations in foreign
  markets, including
• Cultural analyses looking at national backgrounds
  and behaviors.
• Commercial industry analyses comprise
  examinations of specific national and global
  industry conditions and structure.

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Shaping of National Cultures

• Historic Influences on National Culture
  Development
• Geographic Influences on National Culture
  Development

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Historic Influences on National Culture
Development

• Political trends, power bases and sensitivities
  powerful families key leaders
• Industrialization, Economic Change and
  Development agriculture-industrial-service
  sector breakdowns as key indicators
• Cultural development, ethnic, cultural and
  linguistic differences size of groups and extent
  of rivalries
• External influences on country behaviors

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External Influences on Country Behaviors

• National participation and membership of global
  treaties and conventions UN, IMF, WTO, World
  Bank, IMO, ICAO and so on
• Participation in Regional Political
  Organizations Organization of American States
  (OAS), Organization of African Unity (OAU).
• Historic Events and National Rivalries China
  and Taiwan North versus Southern Ireland

10
Geographic Influences

• Geographic Influences on National Development
• Country location on world map affects
  political, trade, commercial relationships
• Climate affects population concentrations, food
  supplies, work conditions, national mindsets
  (e.g. fatalism in developing nations)
• Population concentrations affects market demand
  and marketing approaches (e.g. ethnic groups)
• Resources agricultural food supplies, energy
  sources, mineral supplies
• Topography affects population, distribution

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Geographic Influences

• Geographic Influences on Infrastructure
  Development necessary in foreign, especially
  developing markets
• Utility and Energy Assessments water, sewer,
  energy availabilities
• Communication infrastructures telephones,
  radio, TV, print media availabilities
• Transportation infrastructures extent of
  development of highways, waterways, rail, port,
  harbor and airport facilities

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Commercial Analysis

• Current Business Environment Analyses
• Macro Situation/Position Analyses
• Culture Demand Analyses
• Industry-Specific Analyses
• Competitive Analyses
• Supply Chain Analyses
• Attractiveness Success Factors

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Current Business Environment Analysis

• Current Political Situation
• Current Legal Factors
• Current Economic Situation
• Current International Position
• Current Cultural Demand Factors

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Current Business Environment Analysis

• Current Political Situation
• Political system democracy v.s. authoritarian
  systems extent of democracy (1 party
  democracies)
• Parliamentary Assemblies who has power
  frequency of elections
• Key political parties and philosophies (right,
  left wing, special interests)
• Political risk, elections, and the likelihood of
  political change

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Current Business Environment Analysis

• Political Risk, Elections and the Likelihood of
  Political Change
• Internal frictions ethnic or religious groups
  and their influence on national politics
• External influences impact of globalization,
  westernization, privatization
• Economic problems inflation, unemployment,
  growth, trade (e.g. protectionism)
• Political problems government expenditure
  priorities taxation levels, social welfare,
  corruption, business legislation

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Current Business Environment Analysis

• Current Economic Position
• Comparative economic analyses country versus
  regional performance puts national economic
  performance into perspective
• Country-specific economic analyses
• General economic indicators GDP size, GDP per
  capita government income/expenditures growth,
  inflation
• Private-sector performance public/private
  expenditures agriculture-industry-services key
  industries and sectors
• International economic and trade policies tariff
  levels, WTO, trade bloc membership

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Current Business Environment Analysis

• Current International Position
• Analyzing Country Balance of Payments
• Current Account merchandise trade balance, goods
  and services balance, income account, unrequited
  (one-time) transfers
• Capital Account capital account, direct
  investments, portfolio investments, monetary
  transactions
• Financial Accountdirect investments portfolio
  investments financial derivatives other
  investments
• Net Errors and Omissions
• Reserves and related items show how B/P surpluses
  are used or how deficits are financed

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Current Business Environment Analysis

• How Managers use Balance of Payments Data
• Merchandise trade balance Imports and exports
  protectionist tendencies, currency adjustments
• Services laws requiring local carriers
• Investments restrictions for capital flight
• Balance of payments effects on currency values
  B/P surpluses (currency strengthening) B/P
  deficits (currency weakening)
• Inflation rate effects on balance of payments and
  currency values high inflation likely currency
  devaluations

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Current Business Environment Analysis

• Financial Aspects Capital Markets, Taxation
  Policies, and Currency Issues
• National capital markets long, medium, short
  term capital sources (stock markets, banks)
• Corporate taxation and taxes rates, exemptions
• Currency considerations convertibility
  stability preferences for depreciating
  currencies for exports and investments

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Current Business Environment Analysis

• Legal Infrastructures
• Industry ownership limitations off limits
  sectors ownership restrictions
• Monopoly and anti-trust laws affects
  acquisitions
• Intellectual property laws procedures,
  effectiveness, enforcement
• Consumer protection laws warranties,
  advertising, deceptive practices
• Environmental laws recycling, pollution,
  chemical use
• Local company organization affects
  shareholder/owner responsibilities, liabilities,
  obligations

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Current Business Environment Analysis

• Demand Analysis Customer and Marketing
  Considerations
• Customer concentrations where located
• Customer segmentation issues profiles, location
• Marketing research services availability

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Current Business Environment Analysis

• Cultural Analysis
• General national backgrounds climate, history,
  government, education, population, religion,
  language
• Interpersonal relations family unit, dating,
  appearance, visiting, greetings, eating habits,
  tipping, gender relations, body language,
  gestures
• Lifestyles eating habits, recreational sports,
  diet, refreshments (alcohol)
• General attitudes family, friends, punctuality,
  modesty, religiosity, surprises, materialism,
  social classes, ethnic identities, male-female
  relations

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Industry Analysis

• Market Size Growth
• Competitive Structure Forces
• Competitors firms global, regional, national
  competitors overlaps
• Industry characteristics
• Profitability
• Change trends cycle speed
• Key success factors

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Industry Analysis

• Supply Chain Analyses
• Supplier considerations location, quality
• Manufacturing Investment and Site-Location
  Decisions
• Investment permissions fit with government plans
• Investment incentives for undeveloped regions
• Infrastructure connections roads, energy
• Labor quality and availability education system
• Labor laws wages, work hours, safety, benefits
• Information technology/E-commerce issues
• Cost chain considerations wage rates,
  depreciation rates, taxes