Unit 2 Flashcards
What are 2 market screening aproaches and techniques?
(1)Environmental scanning:+Firm scans world for changes in environmental forces that might affect it
(2)Market screening:+Modified environmental screening. Firm identifies desirable markets by eliminating undesirable ones
What are the two levels of market screening?
(1)Country screening:+Uses countries as bases for market screening
(2)Segment screening:+Uses market segments. A within country screening
What are the 5 levels of country screening?
(1)Basic needs potential:+ influence by aspects of nature
+ some needs easy to assess others not
(2)Financial and economic forces:+Look at financial indicators(exchange and interest)
+Economic and socioeconomic factors
(3)Political and legal forces:
+Political barriers and regulations
+ legal international laws and domestic laws that are applicable
+ IP rights protection
(4)Cultural forces:+Analysis of culture
+Difficult to gather
(5)Competitive forces:+ numbers, size, market share, distribution channels
What must segment screening do?
+ groups consumers in similar needs or wants
+ segments must be:(1)Definable, (2)Large, (3)Accessible, (4)Actionable, (5)Capturable
What are 6 non-equity based modes of market entry?
(1)Exporting:+Selling beyond domestic market
(2)Licensing:+Grants access to patents and trade secrets for a fee
(3)Franchising:+Licensing with more controls and rules
(4)Contracted manufacturing:+Firms contract with another to produce products to a specification
(5)Turnkey Project:+ contractor agrees to make a plant, supply process technology, provide production inputs and after a trial run turn facility over to purchaser
(6)Management contract:+One firm provides management for another
What are 3 Equity based modes of entry?
(1)Strategic Alliance:+An agreement between two companies to undertake a mutually beneficial Project
(2)Joint venture:+A new corporate entity gets formed
+Effort among two or more entities to share a common interest to earn profit
(3)Wholly owned subsidiary:+Through green field or acquisition
Why do firms export
+To serve new Markets
+To satisfy a host government’s requirement that a local subsidiary have exports
+To remain price competitive in the home Market
+To test foreign markets and foreign competitors
+Upon customers request
+Achieve additional sales
+Retaliate against competiters moves
+Take advantage of current exchange
What are the disadvantages to exporting
High transportation costs
Trade barriers
Probably this local market agents
Intermediators and indirect exporting may change sources of supply and have paid commission
Little experience gained by exporter
Little control over activities carried out and foreign market
What are the advantages and disadvantages of turnkey projects
+A:+ earning economic returns from assets and knowhow
+D: +potentially creating a competitor
+ lack of long-term market presence
What are the benefits to a strategic Alliance
+ fast market entry and startup
+ access to new products technologies and markets
+ share, cost, resources, technology and risks
What are five advantages and four disadvantages of joint venture
A: +reduce risk of large investments
+ avoid dangerous competition
+ economies of scale
+ politically acceptable
+ aquire partners resources and experienced personel
D:+ profit must be shared
+ may not have equity based control
+ loss of know how
+ opposing goals
Discussed Greenfield investments and acquisitions further
** greenfield:**
+ reduced risk of merging corporate cultures
+ lack of suitable buy out
+ competitive advantage based on skills that are difficult to transfer
** acquisition:**
+ high rivalry
+ high entry barriers
+ timing of entry is important
What is the difference between market indicators and market factors ?
Indicators:
Economic data used to measure the relative market strength of countries or geographic areas
Factors:
Economic data that correlate highly with market demand for a product
