TOPIC 3 HOW DOES A COMPANY DECIDE WHICH COUNTRIES TO TARGET? ASSESSMENT OF COUNTRY MARKETS

Will be able to evaluate why certain factors attract a business to a country Evaluation ~ GCE Grade A* Will be able to propose countries that are attractive to businesses Synthesis ~ GCE Grade A Will be able to analyse the factors that attract a business to a country Analysis ~ GCE Grade B Will be able to demonstrate understanding by using examples/cases Application ~ GCE Grade C Will be able to explain the attractiveness of some countries Comprehension ~ GCE Grade D Will be able to recall Porter’s 5 Forces Knowledge ~ GCE Grade E

Success Criteria

Assessment of country markets  Careful assessment of attractiveness of country’s market involves consideration of many different factors:  Spending Potential  Culture  Logistics  Competition

Spending Potential  Size of population and level of income determine the number of consumers who are potential customers  Inferior goods will not benefit from rising incomes as people might lose interest in them if their incomes rise  Structure of population is also important  High proportion of young people = attract children's/young people’s products  Ageing populations = high spending on products for senior citizens

Culture  Variations on culture have a large impact on how business is done and what is bought  E.g Indian consumers are accustomed to small shops and interaction with traders to check quality and barter prices  There are also variations in Marketing  Direct and simple statements in some countries  Subtle development of brand images in other countries  Regulations on advert content and target audiences

Logistics  Simple distance is not always a problem  Shipping is low-cost way for non-perishable goods to reach countries but is slower than air transport  Poor quality roads and transport systems can cause problems in some countries  Selling in a new country requires existence of suitable distribution and retailing systems

Competition  Levels of competition in potential markets will determine market attractiveness  If already intensely competitive, profit margins will be low and so the market is less attractive  Porter’s 5 forces provide a way to look at competitiveness

Porter’s 5 Forces Competitive rivalry in an industry Bargaining power of customers Threat of new entrants Threat of substitute products Bargaining power of suppliers

Why has beer been in the news???

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Homework task

Task  Use the “factors” sheet to help you produce posters outlining all the factors you think are relevant in influencing a company’s decision to enter that market.  You must use a recent example following research of current affairs in the world of business and economics

Potential Market Scenarios  Jack Daniel’s (US whisky company) wanting to sell its products in Ireland.  Starbucks wanting to set up coffee shops in China.  Motorola wanting to make and sell mobile phones in Nigeria.  A UK-based accountancy firm wanting to set up and provide accountancy services in New York, USA.  Microsoft outsourcing its software development to India.

 On your cards Topic 3: Assessment of country markets  Write down:  2 or more things you found easy to understand/ remember from the lesson  What did you find difficult to understand Exit pass

Will be able to evaluate why certain factors attract a business to a country Evaluation ~ GCE Grade A* Will be able to propose countries that are attractive to businesses Synthesis ~ GCE Grade A Will be able to analyse the factors that attract a business to a country Analysis ~ GCE Grade B Will be able to demonstrate understanding by using examples/cases Application ~ GCE Grade C Will be able to explain the attractiveness of some countries Comprehension ~ GCE Grade D Will be able to recall Porter’s 5 Forces Knowledge ~ GCE Grade E

Success Criteria