Tackling the international market will require acute knowledge of the various types of foreign markets that are currently available. Companies must analyze international markets through organized methods that are uniquely designed based on said company’s objectives, allowing the company to decide which market to enter.
Choosing Your Market
When you are choosing a foreign market, consider the following:
- Does your business venture have any real potential for success?
- Is there a demand for your product?
It is important to determine if there is a demand for your product. Just because you don’t see the product or service being sold, it does not mean it is because no one has thought of the idea yet. Take for example, the oven. While ovens are conventional in almost every home in the United States, virtually none are found in China. Does this mean that you should immediately start producing and selling ovens to China? No. There is no demand for ovens in China because the Chinese do not have a history of baking. Culturally, Chinese households have steamed, stir-fried and cooked their food in ways that are culturally different from U.S. households. A big factor could also be that instead of bread, the Chinese prefer rice as their staple grain. This doesn’t mean that China doesn’t have any ovens, it just means that ovens in Chinese households are rare, and not in demand. Just remember, keep in mind demand when choosing an international market.
Highly Developed vs. Developing Markets
When choosing between a highly developed and a developing market, one would naturally assume that going with the developed market might be a safer choice. There are fewer risks involved and more guaranteed returns. However, keep in mind that developing markets offer the excitement of a higher potential return. At the same time, a developing market could also be harmful if the analysis is incorrect, and in turn, cost a company hundreds of thousands of dollars. While developing markets pose more risk, they may also be the game changer that you’re looking for to turn things around.
Analyzing international markets is an important step one must take before entering a foreign market. Doing so can aid your company’s success in a foreign market and ultimately allow you to expand your company. There are so many factors to consider when analyzing foreign markets, but the most important thing to remember is to gather as much information of a market before making any large decisions that could affect the future of your company. There are more ways to invest in the foreign market, in addition to the 12 Days of Christmas with Money Origami.