U.S. Small Business Administration
Very often, American firms fail to realize the importance of market research. Before you decide whether your entrance into the international marketplace is feasible and desirable, it is critical that you assess a market's potential and profitability. Following is an outline that you can use for making that assessment.
- Which countries (or regions) offer the best prospective markets according to the company's goals? Which offer the highest profits and largest business potential?
- What is the political government in each prospective market?
- System of government;
- Government stability and continuity of policies;
- Internal and external (foreign) opposition;
- Present and historical attitudes toward business and business relation with the United States; National economic and development priorities and goals.
- Demographic/Economic Conditions
- Population size, growth, distribution;
- Literacy rate and education level, availability of labor, indigenous management potential;
- National income, per capita income and distribution;
- Economic growth, gross national product (GNP), industrial sector growth;
- Role of foreign trade in the economy, percentage of GNP, balance of payments, debt service ratio on foreign loans;
- Currency situation, inflation rate, conversion and currency controls in the local economy and internationally, credit regulations;
- Government/business cooperation and priorities.
- Development Level and Infrastructure
- Natural resources;
- Industrial and technological development;
- Physical distribution and communication network;
- Similarities and differences with the U.S. market.
- Regulatory Market Entry Considerations
- Limitations on trade: tariff levels, quotas and other non-tariff barriers to trade such as restrictions on payments and import licenses;
- Documentation and import regulations of the importing country;
- U.S. documentation and export regulations;
- Foreign standards, accepted industrial practices, measuring systems and certification procedures.
- Legal Considerations
- Code of laws, civil or common law system;
- Investment and licensing laws;
- Taxation and capital repatriation laws;
- Employment laws;
- Patent, trademark, antitrust, advertising laws;
- Relevant treaties (signed and enforced) by foreign nations;
- Reality of the law vs. letter of the law.
- Government Assistance
- U.S. government assistance;
- Foreign government assistance and attitudes toward the specific technology being transferred;
- Bilateral relations, programs and treaties between the United States and the importing nation;
- Development incentives, tax "holidays" for foreign investors.
Competition
- Host country;
- Third country.
* Excerpted or reprinted with permission from Small Business Success, Volume 1, produced by Pacific Bell Directory in partnership with the U.S. Small Business Administration.