01.10.

2021

Second lecture

Agenda for today

• Finishing the reasons for the international

expansion
• Methods of market selection
• Legal environment

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 01.10.2021

Why do companies go
international?

• Home market is saturated- companies have to search for new

business opportunities
• Imports
• Outsourcing/ Offshoring
• Economies of scale
• Political and trade barriers
• Direct presence in foreign markets
• Cooperation with foreign companies (supplier, private labels)
• Lowering the costs
• Extending the product life- cycle

International life cycle of the

product
• The same product could be at a different
stage on different markets
Sales

Launch Growth Maturity Decline Time

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Market selection

• Two methods:
– Multi- stage selection process
– Scoring model

A Multi-Stage Selection
Process
Approx. 150
countries

Markets which drop out

due to restrictions („must“
criteria)

Markets which are filtered out

based on a first set of
selection criteria

Markets which are filtered out

based on a second set of
selection criteria
Potential foreign
target markets

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A Scoring Model for

International Market Selection
1 2 3 4 5 6
SELECTION
MARKET TARIFFS NON-TARIFF PRODUCT COMPETITIVE SHIPPING RANK
CRITERIA INTENSITY SUM-
POTENTIAL BARRIERS FIT COSTS
MATED
SCORE
WEIGHTS W = 15 W=5 W = 17 W = 25 W = 22 W = 16
MAX
COUNTRIES E WxE E WxE E WxE E WxE E WxE B WxE 400 P.

DENMARK 2 30 2 10 1,5 25 3,5 87 0,5 11 3,5 56 219 4

SWEDEN 3,5 52 4 20 3,5 59 25 62 2 44 3 48 285 2

NORWAY 2 30 3 15 2 34 3,5 87 1 22 2,5 40 228 3

FINLAND 4 60 4 20 3,5 59 3 75 4 88 1,5 29 326 1

PORTUGAL 0 0 3 15 1 17 0,5 12 2 44 2 32 120 5

GERMANY

AUSTRIA

SPAIN
•
•
•
W = Weights of selection criteria
E = Estimates (0 = very bad conditions; 1 = bad conditions; 2 = acceptable conditions; 3 = favoUrable conditions: 4 = very favourable conditions)
WxE = weighted estimate

International environment
and its impact on business-
PEST analysis

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PEST analysis

• PEST analysis?
• PESTE analysis?
• PESTEL or PESTLE analysis?

Legal environment
• Legal system
• Control of ownership
• Ownership of properties
• Enforcement of law
• Transfer of profits
• Starting up new business
• Taxes and fiscal policy
• International treaties
– Protection of investment, double- taxation

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