Export Project & Strategy

Session 1

Prof. Dr. Tilo Halaszovich

 Who am I?

Background
• RWTH Aachen (2006) – Business Studies & Economics
• Henkel AG & Co. KGaA (2006-2009) – International Market Research
• University of Bremen (2009 – 2017) – Assistant Professor
• University of the Free State, SA (2012 – today) – Visiting Professor
• Jacobs / Constructor University Bremen (2017 – 2023)
- Professor of Global Markets & Firms
- Director Entrepreneurship Center
- Study Program Chair International Business Administration
• Constructor University Bremen (2023 - …) – Adjunct Professor
• ICN Business School (2023 – …) - Associate Professor of
International Marketing

Main Research Interests

• Doing Business in Emerging Markets / Business in Africa
• Interactions of Local and Foreign Firms
• Sustainable Growth and Circular Value Chains
 Course Overview

Session Place Content

1: 09.11.23 Artem 134 Introduction
Introduction and key-concepts
2: 06.12.23 Artem 234 Opening the Case
Presentation of the case, group
formation, initial tasks
3: 07.12.23 Artem 234 Working on the Case
Group work
4: 14.12.23 Artem 134 Closing the Case
Presentations & Closing
 Introduction

Assume the you are consulting a company, that plans to begin

international operations.

What are the most important questions

that should be
asked and answered?
 Exporting – What do we talk about?

Exports

„Exports are goods and services that are produced in one

country and sold to buyers in another. Exports, along with
imports, make up international trade.” – investopia.com
 Where to go?

Assessing Market Opportunities Abroad

 The Five Tasks of Global Market Opportunity
Assessment (GMOA)

1. Analyze organizational readiness to internationalize

2. Assess the suitability of the firm’s products and

services for foreign markets

3. Screen countries to identify attractive target markets

4. Assess the industry market potential or the market

demand for the product(s) or service(s) in selected
target markets

5. Choose qualified business partners, such as

distributors or suppliers
 Task 1 - Organizational Readiness

• Analyze organizational readiness to internationalize

with an objective assessment of the firm’s preparedness
to engage in international business

• Examine company strengths and weaknesses for

international business by evaluating availability in the firm
of key factors, such as:
- appropriate financial and tangible resources
- relevant skills and competencies
- management’s commitment to internationalization

• Eliminate deficiencies that hinder company goals

 Questions to Address in Organizational Readiness
Analysis

• What does the firm hope to gain from international

business ─ increasing sales or profits, challenging
competitors, or pursuing a global strategy?

• Is international business expansion consistent with

other company goals, now or in the future?

• What demands will internationalization place on

company resources like finance, personnel, and
manufacturing capacity?

• What is the basis of the firm’s competitive

advantage?
 Task 2 - Product Suitability

• Assess suitability of the firm’s products and services

for foreign markets by conducting a systematic
assessment of company offerings for
international customers. Evaluate the fit between
the offerings and foreign customer needs.

• For each possible target market, identify the factors

that may hinder market potential. Determine how
the offering may need to be adapted for each market.
Specifically, assess the offering regarding such
factors as foreign customer characteristics, laws and
regulations, channel intermediary requirements, and
the nature of competitors.
 Products with the best foreign sales prospects:

• Sell well in the domestic market. For example,

Microsoft Xbox, Huawei mobile phones

• Cater to universal needs. Such as a cancer drug, an

energy efficient refrigerator

• Address a need not well served in foreign markets.

For example, mutual funds

• Address a new or emergent need abroad. The Zika

virus creates need for drugs and medical supplies in
Latin America
 Questions to Measure International Market Potential

• Who initiates purchasing?

• Who uses the product or service?

• Why do people buy the product or

service?

• Where do people purchase the

product or service?

• What economic, cultural, geographic, and other factors in

the target market may limit sales?
 Gaining Insights into Consumers‘ Habits - Globally

Assessing if consumers in another country share the same habits as your

local clients, isn‘t always easy!

Imagine you could really see what people abroad, from all kinds if income
levels are doing with products in your category.

Even though it’s not a silver bullet, this page might give you some unique
answers:

https://www.gapminder.org/dollar-street
 Task 3 - Country Screening

• Screen countries to identify target markets.

Reduce the number of countries that warrant
in-depth investigation as potential target markets
to a manageable few.

• Identify five or six countries that hold the best

potential by assessing each country regarding such
criteria as: size and growth rate, ‘market intensity’
(customers’ buying power), ‘consumption capacity’
(size and growth rate of the middle class), country’s
receptivity to imports, infrastructure for doing
business, economic freedom, and country risk
 Specific Considerations

• Cultural Similarity with Target Market may Matter.

Some firms target countries that are “psychically”
similar in terms of language and culture.

• Nature of Information Sought varies with product

and industry. For farming equipment, consider
countries with much agricultural land and farmers
with higher incomes. For semiconductors, target
countries that manufacture computers.

• Targeting a Region may Make Sense. For example,

the European Union, Latin America
 Screening Methodology for Potential Country
Markets
Two Steps

1. With Gradual Elimination, the firm starts with

numerous prospective target countries and narrows the
choices by examining increasingly specific information.
Initially, the researcher obtains macro-level indicators like
population, income, and economic growth before delving
into specific information.

2. With Indexing and Ranking, the firm assigns scores to

countries based on their overall market attractiveness. For
each country, the researcher identifies a set of market-
potential indicators and ranks each country on each
indicator. Weights are assigned to each variable to
establish its relative importance.
 Dimension Value x
Total = 100 Dimension Weight

∑ Indicator Values x
Indicator Weights

Total = 100
∑ Dimension Scores
Variables Used in the Emerging Markets Potential
Index
Market Potential Index for Emerging Markets
 Task 4 - Assess Industry Market Potential

An estimate of the likely sales

that can be generated by all firms in a
particular industry during a specific time period.

• It is different from company sales potential, which refers to the

share of industry sales the firm itself expects during a specific
period.

• Most companies forecast sales at least three years into the future
of both industry market potential and company sales potential.
 Task 4 - Assess Industry Market Potential

Assess industry market potential in each market by

examining such criteria as:

o Size and growth rate of the market and industry trends

o Tariff and nontariff trade barriers to market entry
o Standards and regulations that affect the industry
o Availability and sophistication of distribution
o Unique customer requirements and preferences
o Industry-specific market potential indicators
 Examples of Industry-Specific Indicators

• Cameras: Examine climate-related factors such as

the average number of sunny days in a typical year.

• Laboratory equipment:
Examine government
expenditures on health
care.

• Cooling equipment: Examine the

number of institutional buyers,
such as restaurants and hotels.
 Methods for Estimating Industry Market Potential

• Simple trend analysis examines aggregate

production for the industry as a whole.

• Monitoring key industryspecific

indicators involves examining unique
industry drivers of market demand.

• Monitoring key competitors

to estimate their sales levels
can provide an estimate of
market potential.
Source picture/report: https://cdn.ey.com/echannel/gl/en/issues/business-environment/2016megatrends/001-056_EY_Megatrends_report.pdf
A Sampling of Sites for Conducting International
Business Research
 Task 5 - Choose foreign business partners

• The firm decides on the type of foreign business

partner, clarifies ideal partner qualifications, and
then crafts an appropriate market entry strategy.

• Initially, the firm determines what value-adding

activities must be performed by foreign business
partners and then seeks the appropriate partners.

• The firm assesses and selects partners based on

criteria such as industry expertise, commitment to the
venture, access to distribution channels, financial
strength, quality of staff, and appropriate facilities.
 Types of Foreign Business Partners

• Exporters tend to collaborate with foreign market

intermediaries, such as distributors and agents.
• Licensing partners are independent businesses that
apply intellectual property to produce products in
their own country.
• Franchising partners are franchisees – independent
businesses abroad that acquire rights and skills from
the focal firm to conduct local operations.
• International collaborative ventures include joint
venture and strategic alliance partners.
• Other collaborations include global sourcing, contract
manufacturing, and supplier partnerships.
 Ideal Qualifications of Foreign Distributors

• Financially sound and resourceful

• Competent management

• Qualified technical and sales staff

• Willing and able to invest to grow the business

• Access to distribution channels and end-users

• Strong industry knowledge

• Known in the marketplace and well-

connected with local government

• Committed and loyal

 Some Quite Helpful Resources

https://www.trade.gov/learn-how-
export

https://trade.ec.europa.eu/access-to-
markets/en/content/guide-export-goods#step0
 Getting Some Practice

Country Screening Exercise

Form groups of 4 to 6 students (no more than 6, no less than 4!)

Objective: Identify countries offering opportunities

Team Task:
1. Select a real product, which is produced by a French company and where your group
believes it has potential for exporting activities (justify your selection!)
2. Create a shortlist of 3 countries, where you expect the highest potential (justify your
selection!)
3. Define a suitable Country Attractiveness Scorecard for your product
4. Use that scorecard, to collect data on the 3 countries and evaluate their potential
5. Prepare a short presentation with your findings (covering tasks 1 to 4 on this slide) and
present it to the class
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