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1 Copyright © 2020 Pearson Education, Inc. Management Information Systems: Managing the Digital Firm, 16e (Laudon) Chapter 15 Managing Global Systems 1) Final assembly of Apple's iPhone occurs in which of the following locations? A) United States B) Japan C) South Korea D) China E) Germany Answer: D Difficulty: Easy AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business? 2) The major dimensions of international systems architecture include each of the following except: A) the global environment. B) corporate global strategy. C) technology platform. D) transborder data flows. E) management and business processes. Answer: D Difficulty: Challenging AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business? 3) Which of the following is not a general cultural factor driving global business? A) Global communication and transportation technologies B) Political stability C) Global knowledge base D) Rise of shared values E) Global social norms Answer: D Difficulty: Challenging AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business? Once you have carried out a preliminary analysis of your company, the next step towards internationalisation is to choose the market(s) you want to focus on. Selecting the right markets and learning how to reach out to them could determine the viability of your expansion strategy. These markets will shape your international development, business planning and growth potential. This article will address:
Strategies for selecting international marketsBefore you try to identify your target market, think of a number of suitable markets where your product could work – then think about how you could serve each one. No strategy is universally correct – it all depends on the type of business you are in and its marketing environment. Base your strategy on the resources available and the lifecycle phase your product has reached. A wide variety of factors will determine your choice of strategy. Market concentrationFocus on a few select markets. This strategy will help you consolidate your company’s presence in these markets, with the aim of securing constant sales growth. Advantages:
Factors favouring concentration:
Market diversificationIntroduce your product to as many markets as possible – perhaps with small shares in the majority of your markets. Advantages:
Factors favouring diversification:
The main criteria for selecting international marketsWe recommend conducting an initial global market selection process using the following criteria: Environment and market analysisPut together a short list of countries that present a good concentration or potential concentration of your target market. Analyse the variables for each country:
In this first stage of pre-selection, consider countries that interest you or have good market potential. Next, rank the countries in order of:
Analysis of the competitionTo analyse competition in your market:
Distribution channelsYour choice of distribution channel will determine how your company expands in the market. Track the supply chain of your product, from its origins to its final customer. Develop a clear idea of the intermediate operators and their prices. Analyse the existing sales structure in the country and how this could be adapted to your product or service. There are a number of possible distribution channels:
Demand analysisYou will need to analyse the current and potential demand of your product in its source market, as well as its profile and expected evolution. This information should confirm that your pre-selection process was successful and that your chosen markets are suitable for your product. You will learn how best to design your subsequent marketing strategy based on price, presentation, promotion, distribution and so on. We recommend that this initial analysis is backed-up by further research in the market itself or through intermediaries. This will help you assess whether your initial analysis was correct. Bodies with information for market selection analysisThe following entities will help you analyse potential markets:
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