Which of the Europe's Beer Markets offers the highest unrealised Market Potential?

Table of Contents

TABLE OF CONTENTS.....................................................................................................2

  DECLARATION ON PLAGIARISM 6  

LIST OF TABLES ...............................................................................................................7

  EXECUTIVE SUMMARY 9  

1.  NA  

  PURPOSE AND OBJECTIVES OF THE PROJECT 10  

2.  NA  

  BACKGROUND AND  ISSUES...............................................................................10

2.1.  NA  

  BACKGROUND 10 NA  

2.2.  NA  

  ISSUES 10 NA  

2.2.1.  Market viability 10  

2.2.2.  Commercial viability 11  

2.2.3.  Technical feasibility 11  

3.  NA  

  LITERATURE REVIEW 12  

3.1.  NA  

  ENTRY STRATEGIES FOR INTERNATIONAL MARKETS BY FRANKLIN R ROOT 12  

3.2.  NA  

  GLOBAL MARKETING STRATEGY BY SUSAN P DOUGLAS AND C SAMUEL  

  CRAIG  13

3.3.  NA  

  GLOBAL MARKETING STRATEGY BY J P JEANNETT AND H D HENNESSEY 14  

3.4.  NA  

  MARKETING IN THE INTERNATIONAL ENVIRONMENT BY E CUNDIFF AND M T  

  HILGER  15

3.5.  NA  

  GLOBAL MARKETING MANAGEMENT BY W KEEGAN 16  

3.6.  NA  

  GLOBAL MARKETING BY SVEND HOLLENSEN 17  

3.7.  NA  

  INTERNATIONAL MARKETING BY L S WALSH 18  

4.  NA  

  THE QUESTIONS 20  

4.1.  NA  

  CONSUMER  20

4.2.  NA  

  COMPETITORS  20

4.3.  NA  

  MERCHANTS  21

4.4.  NA  

  INDUSTRY  21

4.5.  NA  

  LEGAL 21 NA  

4.6.  NA  

  POLITICAL 22 NA  

4.7.  NA  

  FINANCIAL  22

4.8.  NA  

  INFRASTRUCTURE  22

4.9.  NA  

  DISTRIBUTION 22 NA  

5.  NA  

  METHODOLOGY  23

5.1.  NA  

  THE INDEXES 24  

5.1.1.  The indexes for the screening 24  

5.1.1.1.  NA  

  Market viability 24  

5.1.1.2.  NA  

  Commercial Viabilities 24  

5.1.1.3.  NA  

  External Technical feasibilities 24  

5.1.2.  The sub indexes for the screening 24  

5.1.2.1.  NA  

  Sub index consumers: 24  

5.1.2.2.  NA  

  Sub index merchants: 25  

5.1.2.3.  NA  

  Sub index competitors: 25  

5.1.2.4.  NA  

  Sub index industry 25  

5.1.2.5.  NA  

  Sub index Political 26  

5.1.2.6.  NA  

  Sub index Legal 26  

2  NA  

5.1.2.7.  NA  

  Sub index Financial 26  

5.1.2.8.  NA  

  Sub index  Infrastructure..................................................................................26

5.1.2.9.  NA  

  Sub index Distribution 26  

5.2.  NA  

  THE CRITERIA 27  

5.2.1.  The criteria for the preliminary and secondary screenings 27  

5.2.1.1.  NA  

  Population size 27  

5.2.1.2.  NA  

  Market size 27  

5.2.1.3.  NA  

  Market growth 28  

5.2.1.4.  NA  

  GNI per capita 28  

5.2.1.5.  NA  

  GNI growth rate 28  

5.2.1.6.  NA  

  Alcohol consumption 29  

5.2.1.7.  NA  

  Political stability 29  

5.2.1.8.  NA  

  Corruption level 30  

5.2.2.  The Criteria for the third screening 31  

5.2.2.1.  NA  

  Criteria concerning consumers  index..............................................................31

  Market Size 31  

  Market growth 31  

  GNI PPP per capita 31  

  GNI PPP growth per capita 31  

  Alcohol consumption 31  

  Percentage of habitants employed in agriculture 31  

5.2.2.2.  NA  

  Criteria concerning merchants index 32  

  Proportion between beer sales in retail and gastronomy 32  

5.2.2.3.  NA  

  Criteria concerning competitors index 32  

  Market share of the market leader 32  

  Market share of the top three market leaders 32  

  Number of competitors 33  

  Market share of local breweries 33  

  Market share of foreign breweries 33  

  Market growth of foreign breweries 33  

5.2.2.4.  NA  

  Criteria concerning the industry  index...........................................................33

  Average price in the retail channel 33  

  Average price in the gastronomy channel 33  

5.2.2.5.  NA  

  Criteria concerning Political index 34  

  Political stability 34  

5.2.2.6.  NA  

  Criteria concerning Legal  index......................................................................34

  Taxes  34

  FDI  index 34

  Corruption  34

5.2.2.7.  NA  

  Criteria concerning Financial  index................................................................34

  Inflation  34

5.2.2.8.  NA  

  Criteria concerning  Infrastructure...................................................................35

  Motorway inhabitant 35  

  Railway inhabitant 35 NA  

  Harbour and airport inhabitant 35  

5.2.2.9.  NA  

  Criteria concerning distribution index 35  

  Number of retailers 35  

  Number of wholesalers 35  

  Number of gastronomies 35  

5.3.  NA  

  WEIGHTS  36

5.3.1.  Weights for the preliminary and secondary screening 36  

5.3.1.1.  NA  

  Market size and market growth the weight of 0 25 36  

5.3.1.2.  NA  

  GNI per capita in PPP basis the weight of 0 13 37  

5.3.1.3.  NA  

  GNI growth rate the weight of 0 12 37  

5.3.1.4.  NA  

  Alcohol consumption the weight of 0 10 37  

5.3.1.5.  NA  

  Political stability the weight of 0 1 37  

5.3.1.6.  NA  

  Corruption level 0 08 37  

5.3.2.  Weights for the third screening 38  

3  NA  

5.3.2.1.  NA  

  Market Viability the weight of  70%.............................................................38

5.3.2.2.  NA  

  Consumer index the weight of 35 38  

  Market size the weight of 25 39  

  Market Growth the weight of 25 39  

  GNI PPP per capita the weight of  13%........................................................................39

  GNI PPP per capita growth rate the weight of  12%.....................................................39

  Alcohol consumption the weight of  10%.....................................................................39

  of habitants employed in agriculture the weight of 15 39  

5.3.2.3.  NA  

  Competitor index the weight of 35 39  

  Market share of number 1 competitor the weight of  25%............................................39

  Market share of the top 3 competitors the weight of 25 40  

  Number of competitors the weight of  25%..................................................................40

  Market share of local breweries the weight of  5%.......................................................40

  Market share of foreign breweries the weight of 5 40  

  Market share growth rate of foreign breweries the weight of 15 40  

5.3.2.4.  NA  

  Merchant index the weight of 15 40  

5.3.2.5.  NA  

  Industry index the weight of 15 41  

  Average beer price by gastronomy the weight of 50 41  

  Average beer price by retailers the weight of 50 41  

5.3.2.6.  NA  

  The commercial viability the weight of 15 41  

5.3.2.7.  NA  

  The legal index the weight of 80 41  

  Taxes the weight of 80 41  

  Corruption the weight  10%..........................................................................................41

  FDI the weight of 10 42  

5.3.2.8.  NA  

  The political index the weight of 10 42  

5.3.2.9.  NA  

  The financial index the weight of 10 42  

5.3.2.10.  NA  

  The external technical feasibility the weight of 15 42  

5.3.2.11.  NA  

  The infrastructure index the weight of  20%.................................................42

  Airports per habitant the weight of  25%......................................................................42

  Ports per habitant the weight of  25%...........................................................................43

  Railway per habitant the weight of  25%......................................................................43

  Km highway per habitant the weight of 25 43  

5.3.2.12.  NA  

  The distribution index the weight of  80%....................................................43

  No of retailers the weight of 50 43  

  No of wholesalers the weight of 50 43  

5.4.  NA  

  HOW TO CLASS 44  

5.5.  NA  

  HOW TO GET THE DATA 44  

5.6.  NA  

  THE COUNTRIES 45  

5.7.  NA  

  PRELIMINARY SCREENING 46  

5.7.1.  Selecting 47 countries 46  

5.7.2.  Access to the relevant data 46  

5.7.3.  Countries distinction 46  

5.8.  NA  

  SECONDARY SCREENING 46  

5.8.1.  Describing and defining all criteria 46  

5.8.2.  Which criteria for the Secondary Screening 47  

5.8.3.  Why these Criteria for Secondary Screening 47  

5.8.4.  Results of the Secondary Screening 47  

5.9.  NA  

  THIRD SCREENING 47  

5.9.1.  Describing and defining the third screening process 47  

5.9.2.  Which criteria for the screening 48  

5.9.3.  Result of the screening process 49  

5.10.  NA  

  OVERVIEW OF THE SCREENING STEPS 50  

6.  NA  

  ENTRY MODE 51  

6.1.  NA  

  EXPORTING  51

6.2.  NA  

  LICENSING FRANCHISING  51

4  NA  

6.3. JOINT VENTURE .................................................................................................51 6.4. CREATION OF THE SUBSIDIARY ..........................................................................52

7. APPENDIX ...............................................................................................................53 7.1. APPENDIX I: ABOUT THE PRELIMINARY SCREENING ..........................................53 7.2. APPENDIX II: ABOUT THE SECONDARY SCREENING...........................................54 7.2.1. The countries and Criteria ...........................................................................54

7.2.1.1. Market Size.....................................................................................................55 7.2.1.2. Forecast of the beer consumption 2003 ..........................................................55 7.2.1.3. Market Growth ...............................................................................................56 7.2.1.4. GNI Growth Rate in % ...................................................................................56 7.2.2. The weighted points......................................................................................56

7.2.2.1. Market size .....................................................................................................57 7.2.2.2. Market Growth ...............................................................................................58 7.2.2.3. GNI per Capita................................................................................................60 7.2.2.4. GNI growth rate..............................................................................................63 7.2.2.5. Alcohol Consumption .....................................................................................65 7.2.2.6. Political Stability ...........................................................................................67 7.2.2.7. Corruption.......................................................................................................70 7.2.3. Evaluation of the countries...........................................................................72

7.3. APPENDIX III: ABOUT THE THIRD SCREENING ....................................................74 7.3.1. The calculation of the sub indexes and indexes............................................74

7.3.1.1. The result ........................................................................................................74 7.3.1.2. Overview of the calculation ............................................................................74 7.3.2. Calculation of the weighted points per criteria............................................76

7.3.2.1. Consumer Index..............................................................................................76 7.3.2.2. The merchant Index ........................................................................................78 7.3.2.3. Competitor index ............................................................................................78 7.3.2.4. The industry index ..........................................................................................80 7.3.2.5. The legal index ...............................................................................................80 7.3.2.6. The political index ..........................................................................................81 7.3.2.7. The financial index .........................................................................................82 7.3.2.8. The infrastructure index..................................................................................83 7.3.2.9. The distribution index.....................................................................................84 7.4. APPENDIX IV: THE DIARY .................................................................................85 7.4.1. Diary of the Proposal Phase ........................................................................85 7.4.2. Diary of the interim report phase.................................................................86 7.4.3. Diary of the final report phase .....................................................................89

8. REFERENCE LIST .................................................................................................92 8.1. REFERENCES FROM THE INTERNET .....................................................................92 8.2. REFERENCES FROM BOOKS.................................................................................93

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Declaration on plagiarism

1. I am aware that plagiarism is the unacknowledged use of another person’s

writing and is a form of cheating.

2. Where the writing of another person is reproduced word-for-word in this

exam or assignment, it is always in quotation marks. 3. I am aware that the failure to put other people’s writing in quotation marks

will result in a mark of zero for this exam/assignment, and that I will not be permitted to rewrite it.

4. Where I have used ideas or information from a particular source, but

expressed it in my own words, I have supplied a reference, complete with page number.

5. I am aware that it is also unacceptable to reproduce another person’s

writing nearly word-for-word, that is, to copy it with superficial modifications, even if I supply a reference. 6. I am aware that I will also receive a mark of zero if I violate Item 4 and/or 5 above. 7. For assignments, I have discussed this assignment with students whose

names I have listed below but this assignment, which I am submitting, is my own original work.

NAME FIRST NAME STUD. ID DATE SIGNATURE

Hasemann Endrik 09/06/04

Spors Andreas 09/06/04

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List of tables

Table 1: The criteria

Table 2: Weights Table 3: Weights indexes and sub indexes Table 4: Weights and criteria Table 5: Screening Table 6: Population below one million criteria Table 8: All Criteria Table 9: Beer Consumption Germany Table 10: Market Size and Weights Table 11: Evaluation Market Size Table 12: Market Growth and Weights Table 13: Evaluation Market Growth Table 14: GNI per Capita and Weight Table 15: Evaluation GNI per Capita Table 16: GNI Growth Rate and Weights Table 17: Evaluation GNI Growth Rate Table 18: Alcohol Consumption and Weights Table 19: Evaluation Alcohol Consumption Table 20: Political Stability and Weights Table 21: Evaluation Political Stability Table 22: Corruption and Weights Table 23: Evaluation Corruption Table 24: Evaluation of the countries Table 26: Results after third screening Table 27: The calculation process Table 28: Indexing Table 29: Screening result consumer index Table 30: Screening result market size Table 31: Screening result market growth Table 32: Screening result GNI PPP Table 33: Screening result GNI growth Table 34: Screening result alc. consumption Table 35: Screening result consumer Table 36: Screening result merchant index Table 37: Screening result proportion Table 38: Screening result competitor index Table 39: Screening result #1 competitor Table 40: Screening result number of competitor Table 41: Screening result market share local Table 42: Screening result market share foreign Table 43: Screening result market growth foreign Table 44: Screening result industry index Table 45: Screening result average Table 46: Screening result average price retail

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Table 47: Screening result legal index Table 48: Screening result corruption Table 49: Screening result FDI Table 50: Screening result taxes Table 51: Screening result political index Table 52: Screening result political stability Table 53: Screening result financial index Table 54: Screening result inflation Table 55: Screening result infrastructure Table 56: Screening result airports Table 57: Screening result harbours Table 58: Screening result motorway Table 59: Screening result railway Table 60: Screening result distribution index Table 61: Screening result no. of gastronomy Table 62: Screening result no. of wholesaler

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Executive summary

The overview of the whole process that enabled us to suggest the final candidate country for the future business expansion in Europe presents steps that our consulting team had to take in order to present the best possible option.

According to our consulting team, Germany presents the strongest advantages for OBUL and should be chosen as the ideal for the business operation and also the base for the further European expansion. Thanks to the highest size of population in Europe and its overall wealthy condition from the very beginning of our analysis Germany became one of the possible final candidates.

However, during the whole process of defining attractiveness of individual markets, several other countries also presented strong advantages for the future investment. The strongest advantages were shown by Spain and Italy which presented nearly the same result in the evaluating process than Germany did. In the final stage of the analysis Germany was selected form the group of four strongest European candidates. These were also Ireland, Italy and Spain. All of the candidate countries presented very strong and attractive beer markets in terms of beer and alcohol consumption as well as the GNI PPP income per capita. Moreover, the analysis of the infrastructure, legal and political environment also proved that these countries were the top four; amongst all of the candidate countries that were analyzed at the beginning of the selection process (42 countries took part in the first step of the selection, 27 in the second).

Germany proved to be the best possible choice for the future business expansion in Europe. The analysis showed that the German market was more attractive for OBUL in three main areas of operation: market viability, commercial viability and technical feasibility.

The analysis of the market viability as the most important area for a market entry showed, that the German beer market was very attractive in terms of its size and trends that appeared in it. Moreover, the overall financial situation of the customers was also considered to be strongly attractive.

In terms of the commercial viabilities, Germany also presented its strong position. Even though, the corporate tax was defined as a very high, the market size and its potential should compensate loses that company will have to face in terms of the taxation.

Finally, Germany’s infrastructure also confirmed to be well established and will definitely be able to cope with needs of OBUL.

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1. Purpose and Objectives of the project

The purpose of this project is to evaluate the market viability, commercial viability and the external technical feasibility of the Overseas Beer Union Ltd. (OBUL) to enter one of the 47 European countries with its new Beer “Scal”. The objective is to find out which of these countries OBUL should enter to get a new main pillar in the European market.

2. Background and issues

2.1. Background

Overseas Beer Union Ltd. was the result of a merger between the South African Company “Trinkmeister Brew”, founded in Cape Town, South Africa in 1905 by Klaus-Peter-Willhelm Trinkmeister and the Canadian company “Pijany Brew”, founded in Montreal, Canada in 1919 by Gregor Pijany, in 1970. Until the merger, both family owned companies signalized mediocrity. Since the merger, the company is reorganized as a public limited company, has its office in Montreal and become a big northern American and South African player in the beer industry. Because of the latest success, OBUL wants to expand its beer’s to the European market to confirm its leading position worldwide and to find a new main pillar outside America and South Africa.

2.2. Issues

To decide which country should be chosen, the following main issues should be discussed.

• market viability

• commercial viability

• technical feasibility

2.2.1. Market viability

This means the question: “Does the market offer sufficient opportunities that enable the market entry?”, and “what is the current competitor’s situation in the market?”

• Consumers

• Competitors

• Industry

10

2.2.2. Commercial viability

For OBUL and for each market entry the commercial environment is the most important. The commercial environment involves the basic issues that decide if a market is remunerative or not.

• Legal issues

• Political issues

• Financial issues

2.2.3. Technical feasibility

The project supposes indirectly that our company have the ability to enter a foreign market, so the question: “Does our company has the ability to execute internationally?” is answered with yes. Therefore we will just have a look at the external technical feasibility.

• External technical feasibility -Distribution issues -Infrastructure issues

11

3. Literature Review

3.1. Entry strategies for International markets by Franklin

R. Root

Franklin R. Root “Entry strategies for International markets”. The whole book is divided into nine main parts which take a closer look on particular aspects of the international market decision entry issues.

Content:

The author provides in this book a detailed plan of the market entry strategies for the potential entrants. For this report, the chapter which provides the necessary information for the final decision of the target market country is very useful. This particular chapter also takes a closer look on the process of selecting the ideal product for the future market. In this part of the book, the author emphasises on the future managers and describes preliminary screening of potential country markets as vital for the whole further research. According to the author, the possible mistakes in this stage of the selection process could possibly play the vital role for the project as a whole. The author makes all the potential managers from two basic and very common mistakes they could make in the first stadium of the project. The first is the situation in which the particular countries could be ignored by the researchers even though offering high potential. Secondly, managers could pay far too much attention to the countries with low potential. Situations like these could be avoided if a proper and detailed preliminary screening would be done. Moreover, the author also provides in this part of the book the additional information about the criteria that could be used to estimate the market size and industry potential.

Critique and comments:

Even though the book presents a big scope of information that is useful for the potential decision maker, some of the issues found in the book could be developed further. Not only for the purpose of this project, the chapter containing information about target country market selection could be expanded up to the size of the parts describing entry modes. In this case, the author concentrates mostly on the entry mode choice, and those parts are the widest and contain the deepest analysis of the decision made by the potential managers.

Moreover, the book also contains much information about potential risks in the host countries. Passable reason would be that in the time when this book was written and the ideas were created the international situation was different. It has passed ten years since the book was published and some of the information could no longer be as vital as ten years ago. For example: not so many Eastern European countries present the same political instability as they used to in the late eighties and the early nineties.

12

As mentioned before, some chapters, especially those related to the entry mode strategies, contain much more information than others. In our opinion, the author paid far too less attention into the target country market issues. As a very important and one of the first stages in the decision process, this particular issue should be described with bigger scope. The author suggests in the preliminary screening stage to collect data from only a few areas (like market size and industry potential) and as a result omit some important areas (like cultural differences, human factor).

3.2. Global marketing strategy by Susan P. Douglas and C.

Samuel Craig.

This book was written by professors from the Stern School of Business in New York and contains two chapters with information about possible strategies in the process of target country markets selection. It offers a number of examples from the real business operation that enables the readers to understand the discussed topics better.

Content:

This book describes some very important issues in the target country selection and divides the entering foreign market process into three steps. These are: initial international market entry, local market expansion and the global rationalization. In the first phase, initial international market entry managers face vital business decisions to be made. The authors describe this stage as a very important one because possible mistakes in it could be crucial for the company and could result in the withdrawal from the market and even “damage a firm’s reputation”.

The first phase also contains the number of moves that should be taken by the company. Firstly, using criteria describing “general business climate of the country and the specific product market of service” the country should be chosen. It suggests to us, that in our first country screening some macroeconomic data (like GNP, inflation, economic growth etc) and data from the beer industry (market size, growth rate) should be used. Secondly, the authors discuss the timing of the entry issues which is mostly related to the resources available for the company. Finally, the issue of the possible entry mode is also presented.

In the second phase of the internationalization process, the final target country market is being developed and the business operations are expanded. In this phase managers face the problem of the further market and the product line expansion. In this phase the initial entry strategy is modified and adopted to the market needs. In the last phase, the company adopts its global orientation inside of the particular host markets. The whole idea of globalization enables the company effective strategy for all the markets without loosing its local responsiveness. It means that in this stage the several market strategies are synchronized to make the company more effective and more competitive in the particular country markets.

The authors also pointed out that in many cases, in the target market selection process, similarities are very important between the domestic countries and

13

potential host countries. As an example, the book refers to all the American companies which for their first international market chose Canada as the most similar.

Critique and comments:

Even though the book provides a wide scope of information which could be used in the process of the target country market selection, the particular ideas were questioned by our team.

According to the authors, the strategy present on the local market plays the vital role in the international operation strategy creation. “Strategy is designed based on information relating to customer needs and interests,….,in the domestic countries. In our opinion this statement is incorrect as it omits the very important aspect of the cultural differences between domestic and host markets. As many cases already have shown, some of the companies paid too much attention into the strategy based on its domestic market. For example, the retailing giant Wal-Mart had to withdrawn from the Indonesian market because of lack in understanding the local customer needs. The Wal-Mart managers thought that its American strategy would be the best for every market without understanding importance of the cultural factor.

Moreover, the authors paid much attention to other aspects of the business presence in the international markets and as a result did not extend the part which describes the most important for our company issue, the steps in the target country selection process.

3.3. Global Marketing Strategy by J.P. Jeannett and H. D.

Hennessey

Jean-Pierre Jeannett and H. David Hennessey show in their book “Global Marketing Strategy” (fifth edition, 2001) the need for a company to act in the more global environment and describe strategies how to manage the process. The following review and critique is based on chapter 5 “Global Markets and Buyers”.

Content:

In the chapter “Global Marketers and Buyers” the authors describe four analytical steps to find a target market for a company. The authors based their country screening process on the fact that a company should analyse all countries worldwide, to not ignore countries with good potential and not to spend too much time in investigating the countries with poor potential.

The authors describe four filter processes to find the target market out of all the countries. The first filter is described as the macro level. This first stage of selection uses macro variables to discriminate between countries that represent basic opportunities and countries with little or no opportunity or with excessive

14

risk. Macro variables describe the total market in terms of economic, social, geographic, and political information such as, GDP, GNP, and political instability. 1 In the second stage of filtering, the view is still based on macro variables but on those, that indicate information about the specific product in the market like potential market size and acceptation of the product. With this step, the number of potential countries is reduced again.

In the third stage the author focuses on micro level considerations such as competitors, cost of entry, and profit potential.

The forth stage of the screening process is an evaluation on rank ordering of the potential target countries, based on objectives and strategies. 2 Furthermore, this chapter offers a number of criteria for the different screening filters.

Critique and comments:

The book offers a very good framework for selecting countries. The framework is divided into four different screening filters that start with more general filters to reduce the number of countries easily, and end with a very detailed view on the remaining countries. This makes it very easy to focus on the most important markets without the waste of time and financial investment.

In this chapter the authors also mention very good criteria for the filtering process countries. They also give the reader good information how to find important information about the different countries.

What is missing in this book is the evaluating process of the countries and the fact that the different criteria are unequal. In practise, the criteria for evaluating countries are differently important. We are missing a weight system for the criteria. The fact that the authors want the company to look at all countries around the world might not fit into the practise. Normally a company will have an idea which area of the world it is going to target.

3.4. Marketing in the International Environment by E.

Cundiff and M. T. Hilger

The purpose of the book is to show the world as a potential marketplace rather than the local or domestic economy. The book presents analytic tools to act in an international marketing environment. The following review and critique is based on chapter 2 “The Organisational and Financial Environments of International Marketing”.

1 JEANNETT, Jean-Pierre and HENNESSEY, H. David (2001); Global Marketing Strategies; page 171 2 JEANNETT, Jean-Pierre and HENNESSEY, H. David (2001); Global Marketing Strategies; page 172

15

Content:

The authors had developed a framework that shows the way to select one country as a target market. In the first step, they argue that a company has to analyse the purpose of their decision to enter a foreign market first. This step is called internal evaluation 3 . This step is divided into company objectives: This should help the company to find the right criteria, and company resources: This step is designed to find criteria that can eliminate countries that do not match the firm’s resources and the characteristics of a foreign market. The goal from the internal evaluation is to identify and develop criteria for the selection of foreign markets. The second step the Evaluation of Foreign Markets 4 is designed to evaluate the countries along the criteria from step 1. The purpose of this step is to identify the target market.

Critique and comments:

The framework starts with the logical beginning, the internal evaluation. Without the internal evaluation that includes the company objectives and recourses, no company is able to find a market that fits in its needs, because without that a company would not even know which its needs to a target market are. However, in general the framework is too superficial. Nor do the authors explain the criteria for evaluating a country; neither do they weight them to give the evaluation a clear focus. Unfortunately, they also do not separate the screening process into different steps. That means that the so called step “evaluation of foreign markets” will be very time intensive because every country has to be evaluated in all criteria that are standard for the evaluation process. Nevertheless, the authors do not tell the reader with which countries a company should start the evaluation process.

3.5. Global Marketing Management by W. Keegan

Content:

In the first part, Keegan gives an overview over the global marketing and marketing basics were explained. As in every chapter case studies are included. In the second part, the global marketing environment is illustrated in all relevant aspects: economic environmental, social and cultural environment, political, legal and regulatory environment. Management information systems and market search are shown.

Part three’s topics are strategies concerning expansion (segmentation, targeting and positioning), sourcing (ex- and importing), global market entry as well as strategic factors of competitive advantage.

3 Cundiff, Edward and Hilger, Marye Tharp (1988); Marketing In The International Environment; page 67 4 Cundiff, Edward and Hilger, Marye Tharp (1988); Marketing In The International Environment; page 67

16

In part IV Keegan discusses the four P’s, marketing basics were explained again. At the end Keegan describes organizational structures styles of leadership which are appropriate for global marketing.

Critique and comments:

Overall, the book is too general to help to develop a methodology. Marketing and management basics are explained. Chapter seven in the third part gives some inspirations for the country selection process but all approaches are too general so this publishing is not helpful for the purpose of our project.

3.6. Global Marketing by Svend Hollensen

In his book: ‘Global Marketing’ in part II chapter five, Svend Hollensen describes the process to decide which market to enter.

Content:

The international market selection is different for small and medium sized enterprises compared to large-scale enterprises.

Table 1-1: International market segmentation

The firm Environment

Step 1 Selection of the relevant segmentation criteria

Step 2 Development of appropriate segments

Screening of segments to narrow

Step 3 down the list of markets/countries Choice of target markets/countries

Micro segmentation:

Step 4 develop segments in each qualified Country or across countries

Market entry

How many markets?

When?

Sequence?

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Hollensen explains every step. Step 1 and 2 defines the criteria; in the third step he differentiates between preliminary screening of minimum requirements (screened primary with external screening criteria) and fine-grained screening (The firm’s competitive power and special competences in the different markets are relevant). In Step 4 he develops sub segments through the cluster analysis to avoid national stereotyping which occurs by segmenting by countries and by buyers.

After this, Hollensen describes market expansion strategies as well as global product/market portfolio.

Critique and comments:

Hollensens’ framework that is shown in his book is a good basic. The chapter about the process to decide which market to enter is useful to develop a methodology. But the shown framework in general is too basic. We found some interesting points in chapter seven for defining criteria and for evaluating the market.

3.7. International Marketing’ by L. S. Walsh

The handbooks ‘International Marketing’ by L. S. Walsh (1993) provide the paths of doing marketing internationally to guide the domestic marketer taking over international responsibilities for the first time.

Content:

The author develops a concept on to make decision in dealing with global market that embrace the concept of international marketing, marketing environment, and principals of international marketing followed by the overview marketing in selected countries. The UK is chosen as a benchmark on the market research paths to describe more details about market selection, market entry, marketing mix and marketing organization.

The framework of international market selection adopts “possible and probable country” for the screening result. The diagram shows the country selection model is equipped with a cluster of six major screening stages that most of stages concentrate on research assessment of product potential. None of specific industry is mentioned in this concept, even though on the some certain points the author is using hospital equipment as an example.

In the first stage, the author points out the economic strength, political and financial risks as broad category to select possible or potential countries. In the second stage, it is argued about product potential assessments which consist of ‘market accessibility’ (tariff is the main concern) and ‘market size on variable’ to determine the probable countries. Based on the second stage the author develops the filter to choose very probable countries by using the ‘market size and growth’,

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‘product acceptability’ and ‘technical standards’, ‘competition’ and ‘securing distribution’. The next stage is designed to get highly probable countries; the author refines the third stage by using omnibus survey. The following step is undergoing deep research on ‘detail reassessment of terms of reference’, and ‘desk and initial exploratory field’. As a result this step shows the most attractive market. The last stage is main field research abroad to examine the very real prospects countries by digging more deeply on sales levels, cost and profit.

In general, the frame work gives useful guidance of how to select potential countries in doing market internationally.

Critique and comments:

Looking on the market selection decision, the author points out that commercial viability is counted as the last filter by using ‘sales level cost’ and ‘profit’ instead of positioning on the second filter or after broad category as the first filter. It will eliminate numbers of very profitable countries.

The book describes how important the cultural and social environments, in the international market that the companies should perceive are. However, on the contrary the author does not mention anything about the market selection in detail.

The author also concentrates too much on the assessments of product potential that consists of market size and growth, market accessibility, competition without arguing which are the major issues in each of those assessments. Consequently it create confusion to the reader.

After establishing the criteria, Walsh points out straight away that the company should be on the final decision stage to enter one or more markets. Consequently the companies should compute indexes of market potential from weighted averages of each criterion to conclude the most potential countries

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