Assessing international

markets
 Market size
 Population structure
 Population density
 Economic development
 Income and wealth(total GDP& GDP/capita)
 Business environment
 Storage & transport facilities
 Local competition
 Disposable income & consumer spending pattern
 Geographic proximity
 Selecting an entry strategy
 Long term involvement/ opportunistic sales
 Business`s financial and other resources
 Physical and technical characteristics of the product
 Availability of mkg. And general business services
 Ease of communication with intermediaries
 Local constraints on for. Ownership
 Degree of market penetration
 Firm`s expertise in selling abroad
 Size of margins taken by intermediaries
 Tariff and non tariff barriers
 Availability of trained and competent personnel
 Political stability and risk factors
 Competitive intensity
 Intellectual property protection
 How quickly the firm wishes to commence
operations
Factors to be considered while
drawing up a contract
 The parties to the agreement
 The products and territories to be covered
 Whether the contract is exclusive
 The duration of the contract
 Responsibility of mkg.activities
 Probationary period
 Targets or minimum sales required to retain
agreement
 Confidentiality agreements
 Restriction on competition between agents
of the same company
 The jurisdiction under which disputes will
be settled
 Advantages and
disadvantages of using agents
 Operations are subject to
direct control by the client
 Agents are usually familiar
with the local market
 Agents will have
appropriate contacts for
after sales services
 Agents may act for other
firms thus creating
synergies
 No long term commitment
 Agents require considerable
support from client company
 Agents may not be familiar
with the client firm
 Unless sales happen quickly
agents may concentrate more
effort on other clients
 Agents act for more than one
firm,so may have conflict of
interests
 Less commitment
Advantages & disadvantages
of using distributors
 Credit risk reduced
 Distributor assumes full
responsibility of sales
 Less supervision needed
than with agents
 Local image of the product
 Distributors cover
warehousing costs
 Close relationships,market
information is readily
available
 Distributors may go out of
business
 Control is less than with
agents and directly
appointed sales people
 More stake in business ,so
more of a say in how things
are done
 Distorted brand values
 Warehousing may be
cheaper if arranged in bulk
for several distributors
Licensing appropriate in case
where
 Capital is scarce
 Constraints on trade in the form of trade barriers
 Cost of transporting is prohibitive
 Home grown product image will boost sales
 Licensee will have to purchase input components
or materials from the licensor
 Licensor is exporting to more markets than it can
conveniently handle
Advantages and drawbacks of
licensing
 No capital investments for
the licensor
 Can be undertaken by
small firms
 Immediate access to local
expertise
 No tariff or transport costs
 Materials or components
may be sold to licensee
 Licensor gets initial lump
sum payments
 May be difficult to verify
sales figures
 Lower revenue to the
licensor
 Licensee may ser up
competition in future
 Quality levels may not be
maintained
 Complex contractual
agreements may be
necessary
 Risk of failure shared with
licensee
 Allows entry to markets
otherwise closed to
exporters
 Spreading of R & D costs
 No export know-how
required
 Incremental income with
less of investment for
licensor
 Licensee may not fully
exploit local market
 Licensees firm may
become insolvent and
cease production
 Licensee may become less
competent
 Inconsistent product
quality
 Damage to products image