Content
- How to Conduct Market Analysis for International Business
- Key Considerations in Using Information Systems to Make International Business Decisions
- The Pest Concept
- Information Gaps
- Market Analysis and Segmentation
- Key Components of the International Market Information System
The advantage of effective information in making business decisions is not appreciated by every international company but it has a far-reaching effect on the understanding of new international markets. The effective use of information can have the following positive outcomes in managing an international business:
1. Reducing uncertainty in choice of target market. You cannot predict the future but you can achieve a deeper understanding of the complexities of the business environment. The learning process for your company will start to take place when you are operating in your target marketplace. The market information system provides you with a set of bearings to work with when you are considering how to enter a new market.
2. Managing risky new investments. As you learn about the process of information gathering you will learn a great deal about your weaknesses and strengths as an organization. The process of information-gathering is long, painstaking and difficult. Your company will need to provide a well-researched foundation of data before you will be able to consider the strategic options open to your management team.
3. Achieving a balance between cost and value. The market entry strategy of a company is a difficult and complex task and requires a wide range of information to be collected before accurate decisions can be considered. Each customer contact, employee, distribution system and stakeholder is a source of information. The role of the information specialist is to collect information from whatever source is appropriate and then to start to generate market entry strategies for the management team to consider. The balance between cost and value has to be achieved and the cost of information-gathering can only be assessed by examining the success of the market entry strategies.
4. Cost-effective acquisition of information. Ascribing a price to information is quite difficult, but you can set a price for undertaking market research or establishing listening posts of various types in the target market. The price of information will be difficult to set but the management and marketing teams within the company must be able to answer three questions at any time:
- How strong is demand for our products or services?
- What are our competitors thinking?
- Is customer reaction to our company positive or negative?
5. Managing the information-collection process. The process of collecting and establishing a market information system is not easy and will require continuous monitoring of information from the competition, market and customer. The immediate desire to enter a new marketplace has to be tempered with an understanding of the nature of the market and how it is likely to develop in the short and Jong term. There are some examples of companies entering a market unannounced, with very little knowledge of the market and only the perceived opportunity to guide them.
6. Developing an appropriate classification, storage and retrieval system. The classification of information is of crucial importance because it will underpin the use of the system by a range of international managers throughout the company. The market entry strategy will not be developed in isolation; it will form an intrinsic part of the corporate and marketing strategy of the company. Therefore, the classification systems used to search the information have to be understood by the relevant departments or functions concerned with corporate strategy.
7. Ensuring competence in analysis. The analysis of the information is central to the success of your information system. The information system has to be viewed as an important focal point for the strategic planning that takes place in the business. Above all, the system has to be an integral part of decision-making and should not be seen as something quite complex and non-accessible to managers on a global basis. The key aim of the information system is to make it user-friendly to managers and employees throughout the business.
Let’s look at the experience of one international business manager when asked by a UK company engaged in manufacturing high-quality steels for the European and American markets how he would assess potential new markets for their products. The international business manager replied that he would start by undertaking detailed desk research in London, and once he was convinced of the appeal of the potential market he would go and visit the market, taking a great deal of time to understand how the market functioned and discussing the market opportunities with competitor companies and potential customers.
This answer was taken as being a little flippant and over-simplistic by the senior management team who had put the question to the manager. The senior management team were expecting more structure and detail to accompany the answer. It may have been a sketchy answer to the question but in essence this is the approach that has been followed by successful companies in researching and entering international markets.
Continue at: The Pest Concept
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