MKT Chp 4
Terms
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- Is the danger that political and military upheaval will change the nation’s economic rules and regulations overnight
- political risk
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revolution, external aggression
type of political risk - general instability stage :1
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import restrictions,local content rules, taxes ,export req.
type of political risk - level 3: operations
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nationalism, contract revocation
type of political risk - level 2: expropriation
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repatriation restrictions, exchange rates
type of political risk - level 4: finance
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Climate is most obvious environmental factor affecting people’s behavior
one of the environmental dimensions - Physical Environment
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Cultural influences are pervasive in most country markets
one of the environmental dimensions - Sociocultural Environment
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The level of economic development is a major determinant of local buyer behavior
one of the environmental dimensions - Economic Environment
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The institutional framework within which markets function is designed to enable or prohibit certain business practices
one of the environmental dimensions - Regulatory Environment
- The local marketer must read competitive signals to judge the competitors’ future actions
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Competitive Signaling
(ways to research a competitor) -
It is possible to get a sense of the financial capability of the competition from annual reports, 10K or corresponding stock exchange filings
Understanding the organizational structure of the competitors helps gauge their local strengths - ways to research a competitor
- The first cut is used to identify candidate countries
- Country Identification
- Involves rating the identified countries on macrolevel indicators
- Preliminary screening
- Involves assessing market potential and actual market size and other country related factors
- In-depth screening
- involves selection of the country to enter cannot and should not be made until personal visits are made to the country and direct experience acquired managers
- Final selection
- Four stages for evaluating candidates for foreign market entry
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Country Identification
Preliminary screening
In-depth screening
Final selection - A direct measure of market size can be computed from local production, minus exports, plus imports
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market size
in depth screening criteria - Growth estimates can be obtained by getting the market size measures for different years and computing the growth rates
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market growth
in depth screening criteria - local production - EX + Im
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Market Size
in depth screening criteria - Level of competition can be measured by the number of competitors in the market and the relative size distribution of market shares
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Competitive Intensity
in depth screening criteria - Tariffs, taxes, duties, and transportation costs can be ascertained from official government publications
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trade barriers
in depth screening criteria - Assesses what is likely to be obtained given the probable situation and contemplated strategies
- sales forecast
- The focus is on the derivation of sales forecasts at two levels
- Industry sales and market share
- Forecasted Industry Sales x Forecasted Market Share
- forecast sales
- what is likely to be obtained given the probable situation and contemplated strategies
- sales forecast
- what could potentially be achieved under “ideal†conditions
- Market Potential
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lack of data means forecasting becomes more subjective
is what stage - early stage
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with data available, quantitative forecasts are feasible
is what stage - later stage
- Three forecasting techniques used in the early stages of the PLC
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“Build-up†Method
Forecasting by Analogy
Judgmental Methods - Generally attempt to introduce a certain amount of rigor and reliability into otherwise quite arbitrary guesses
- Judgmental Methods
- Based on the premise that sales of the product in one “lagging†country will show similarities to sales in another “leading†country
- Forecasting by Analogy
- Derived from market sales estimated on the basis of separate estimates from individuals knowledgeable about certain market segments
- Build-up⬝ Method
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Judgmental Forecasting
4 types -
The Jury Technique
Expert Pooling
Panel Consensus - Attempts to pool the available information from more than one source
- Panel Consensus
- Members of the group are asked to submit their separate forecasts with the forecasts being pooled and results again evaluated
- The Jury Technique
- Consultation with experts on the country contemplated will always be a cornerstone in sales forecasting where new entry is concerned
- Expert Pooling
- Consists of a series of “rounds†of numerical forecasts from a preselected number of experts
- Delphi Method
- The primary requirements for statistical extrapolation of foreign sales are
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That data are available
That past events will continue into the future - data observed over some periods in the past is extended into the future
- Time Series Extrapolation
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Model designed to answer the question:
When will customers adopt a new product or technology? - The Bass Diffusion Model
- Required prior knowledge to develop a_________forecast
- regression
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First, the relevant ___________ of interest needs to be determined – e.g. sales per customer or total sales?
for regression forecast - dependent variable
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Second, the forecaster must try to identify _________________ the dependent variable selected
for regession forecast - what factors will affect
- How many people in the target market
- The Size Component
- The number of customers times the sales per customer gives the total. forecasted sales
- Market Sales
- Drawing on informal in-house knowledge and on selected contacts in the market country, a list of competitors is compiled
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Identifying Competitors
forecasting market share