Foreign market assessment is a type of environmental scanning that allows a company to select a small number of desirable markets on the grounds of wide variables. Firms must determine where to market/sell their commodities or services because they often have enough resources to take benefit of all opportunities. Not using the scanning techniques may build the tendency to overlook developing markets. For instance, European firms have generally neglected the fastest developing markets in Southeast Asia while extending their traditional markets in Northern America. Assessment of international markets consists of subjecting nations to a series of environmental reasoning with a view to choosing a handful of desirable markets for exports. In the initial stages of assessment, secondary data are to be used to set-up market size and level of business, as well as investment and other economic and financial data. If you own an Import Export Certificate, then this should be an easy task for you and if you don’t, read below.
Preliminary Screening (Basic Requirement and Potential)
The starting step in market assessment is the procedure of establishing whether there is a basic requirement for the firm’s products or services in international markets.Basic requirement potential is generally defined by environmental conditions such as atmosphere, topography, or common resources. In circumstances in which it is hard to determine promising need, companies can resort to international trade and investment information to establish whether the commodity and/or service has been earlier imported, its weight, its dollar value, and the exporting nations.
After setting-up basic requirement potential, it is crucial to determinewhether the need for the commodity or service has been met. Needs maybe met by domestic production or imports. If there are designed plans for domestic productionby competitors, imports may reduce or be subject to huge tariffs or other obstacles.Market opportunities still prevail for competitive companies if a growing demandfor the commodity cannot be satisfied by domestic production in so far as governments don’t apply business restrictions in favor of domestic producers orimports from specificnations. If the research signals that market opportunities prevail, it is pertinent to regard the market’s overall purchasing powerby examining nation-specific factors such as population, GDP- gross domesticproduct, per capital income, circulation of wealth, exports and imports.
While regarding these factors, you should note that (1) per capita income may not be a better measure of purchasing power unless the nation has a large average class and no deep regional differences, and (2) imports don’t always signals market potential. Availability of international currency, as well aschange in duties and business policies, should be controlled to make sure that theyare helpful to the growth of imports in the nation.
Preliminary screening is the first important stage of assessing the foreign potential market and hence you’d need an Import Export Certificate as the subject covers all the prospective matters of assessing the foreign market.
In section- 2 we will learn about other secondary factors to scan and screen for international market evaluation.
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