Factors that determine the feasibility of expanding into a foreign market. Flashcards
Define Feasibility
a study that identifies the **potential success **of a product in a market ,which is used to identify the viability n value of entering a market
why would business undertake feasiblity ?
to determine the market potential and to decide whether or not to enter an international market.
define Viability
the ability for something to work successfully
when determining ,businesses must ask, will it provide………
1.a level of sales that will result in profit
2.sustainable profit over the medium long run
what features if a market do business analyse?
1.Total market size
2.Level competition and number of competitors
3.Capital requirements to launch and sustain the business$
4.experience/expertise of staff and partner
Feasibility Analysis includes assessing……
1.total market size (external factor)
2.competitors in the target market (external factor)
3.capital requirements to launch and sustain the business (internal factor)
4.Considering the experience and expertise of staff and partners (internal factor)
The 4 Factors that determine the feasibilty of expanding into a foreing market:
Important to memorise
1.Level of demand by consumers
2.Consumption patterns
3.Competitive activity
Define Conusmer Demand
The ability and wilingness of a consumer to pay a particular price for a particular product
consumer deamand is very much restricted by what?
Purchasing Power
Purchasing Power refers to?
Your personal ability as a consumer to spend on the goods and services that you need and want.
why is understanding the level of demand by consumers **Before ** entering foreing market ?
It is critical to ensure that the product and its price is appropriate and well suited to the market
How do we determine the demand in a market.
1.Estimate (Business will estimate the demand for a given product/service within a market)
2.Forecast(Business will also forecast demand over time &consider economic characteristics that impact demand
3.Key Macroeconomics Characteristics
why is understanding Consumer Demand essential for a business entering a new market.
It gives them opportunity to access the amount of feasibility in that particular market.
Consumption Patterns
The spending habits of households on product and services
Consumption patterns are inlfuenced by what ?
social norms
product type
how they are purchase
examples of Consumption “PATTERNS” include?
Fashion trends
Health and lifestyle patterns
Technology integration and functionality
Political or social views
Consumption Patterns Represent opportunities for businesses
Globalised consumption patterns helped to normalise and standardise certain patterns that predictably rollout across markets.
Changing consumption patterns also represents an opportunity for a competitor to step in and claim some market share.
Consumption Patterns in Developing Nations
Developing nations can experience a change in consumption patterns. A country that grows in wealth and may create a large new middle class of people with higher wages. This represents an opportunity for businesses to expand into this market
Consumtpiton patterns in Countries
1.China -increasing luxury spending
* as income rise ,Chinese conusmers now spend more on travel,IT products,Housing ,medical insurance ,entertainment and education
2.western Countries
* Rise in demand for processed ,packedd foods for value and convenince
* Rise in healthy products
* seasonal patterns like holidays/culutural events
Social Media and Consumption Patterns
social medai is a productive tool for information about changes in consumption patterns.
Businesses should monitor social media trends to follow conversations about brands and consumer preferences to predict the types of products that are regerded as desirable
How should buisness utilise Consumption patterns to determine feasibility?
Important in your exam and test discussion
A business can opt to take advantage of a familiar consumption pattern,or move into a market,where consumption patterns have changed .Business must be aware of chaning perceptions and political views
why is competitor analysis important for assesing the feasibility of a global venure?
Assesing Strength of the competitors in the target market helps businesses to determine the potential effeciveness and likely success of their product.
Competitive Activity
The** number of competitors and relative strength of competition** that exist between businesses in a market.
Competitors to be considered
1) Exporters
2) Local businesses
3) Online sellers
Collecting data :
To determine the level of competition in a Newmarket, businesses may use primary data, secondary data, or anecdotal data.
Primary Data
**Collected for the specific purpose of the business commissioning, the research. **
- based on research and observation
- may involve extensive time spent in the target country
- includes exploring competitor websites, outlets, patents and pricin
secondary data
Collected for another purpose, or buy another entity, and has been reused by business.
available in published form and includes government publications, trade shows, media reports, advertising, competitor annual reports and product brochures.
Cheaper and easier to access
May not perfectly suit businesses needs
Anecdotal data:
**Collected at random by the business, through discussions with suppliers, customers and past employees of competitors. **
May form an unreliable picture of the market
Easy to collect, difficult to analyse
Why is competitive activity essential to determine market feasibility?
It provides businesses with an idea of the competitor marketplace ,in which they would be operating .
Business may choose to employ a firm to conduct market research on their behalf.
