In today's extremely competitive business environment, securing foreign marketshare is essential for many companies to succeed well into the future. But to achieve this, it is imperative to first identify, assess and choose the right markets to pursue. Although market selection may seem obvious to some, selecting the wrong ones can be disastrous.

By establishing a set of guidelines and performing a thorough analysis, you will reduce the risks. To make the job easier, consider some of our guidelines below.

Research Trade Barriers, Competition and Culture

Identify trade barriers that could impact your products. These may include duties, taxes, quotas, labeling requirements, health standards and red tape. If excessive, your goods may be restricted or too expensive.

Study competitors, their products, prices, distribution methods, consumers and level of after-sale service. If intense competition exists, consider smaller markets that may be unattractive for big multinationals, but large enough for you.

Sensitivity to foreign cultures is not only polite, it is good business. Study a culture’s character in advance. If your product design is not suitable, evaluate the costs to adapt.

Investigate Intellectual Property Protection and Other Laws

Many countries claim to enforce intellectual property laws, but do not. Investigate how piracy is handled. If protection is not a priority, avoid this market.

Assess each country’s legal practices, safety and environmental regulations, and commercial code. Confusing and bureaucratic requirements can be expensive to satisfy. In some nations, the accused is presumed guilty until proven innocent and judges may unfairly favor domestic sales agents or consumers.

Study Economic Indicators and Levels of Stability

Research how much of your product each target market produces domestically, imports and exports. If demand is increasing, review the country’s economic growth rate and per capita income. If indicators are positive, examine currency and political risks.

For nations with soft currencies or insufficient reserves, determine if creative financing solutions are justified. If you accept foreign currencies, understand the risks as well as the costs to guard against fluctuations. Keep abreast of political risks and potential civil unrest.

Scrutinize Human and Physical Infrastructure

If your product requires a skilled support staff, make certain it is available. If not, calculate the expense of obtaining support from other locations.

The lack of physical infrastructure also may curtail profits. Unreliable phone networks, inoperable roads during poor weather or undependable refrigerated storage for frozen foods, for example, can be costly problems. Plus, shipping costs using circuitous routes can quickly add up. If the infrastructure is not up to par, consider licensing your technology.

Correctly Weigh the Factors

Establish the criteria you feel will best determine markets to pursue—and accurately weigh the factors. While experienced traders may expand into several markets simultaneously, beginners should pursue only a few until sufficient experience is obtained.

Success is best achieved if research reveals all hidden costs. And keep in mind: while the right foreign markets may exceed export expectations, the wrong markets can be extremely costly in terms of time and money.

This article appeared in September 2005. (CM)
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John Manzella
About The Author John Manzella [Full Bio]
John Manzella, founder of the Manzella Report, is a world-recognized speaker, author of several books, and an international columnist on global business, trade policy, labor, and the latest economic trends. His valuable insight, analysis and strategic direction have been vital to many of the world's largest corporations, associations and universities preparing for the business, economic and political challenges ahead.




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