International business 7e czinkota moffett ch10

To explore the differences between domestic and international research.. To examine the need for international management information systems... The four primary reasons for the differ

Chapter 10

Building the Knowledge Base

Learning Objectives

To gain an understanding of the need for

research.

To explore the differences between

domestic and international research.

To learn where to find and how to use sources

of secondary information.

To gain insight into the gathering of primary data.

To examine the need for international

management information systems.

International and Domestic Research

The tools and techniques

International and Domestic

Research (cont.) The four primary reasons for the differences

between international and domestic research

Foreign currencies and changes in their value

Different modes of transportation

International documentation

Differing modes of operating internationally

New Environmental Factors

Many of the domestic assumptions on which the firm and its activities were

founded may not hold true

internationally.

Management needs to:

Learn the culture of the host country

Understand its political systems and level of

The Number of Factors

Involved

When a firm enters a new international

market, the number of changing

dimensions increases.

Coordination of the interaction among the dimensions is crucial to the international success of the firm for two reasons:

In order to exercise some central control over

international operations, a firm must be able to

compare results and activities across countries.

The firm must be able to learn from its international operations and must find new ways to apply the new lessons learned to different markets.

Broader Definition of

Competition

The international market

exposes the firm to much

greater variety of competition

than that found in the home

market.

Firms must:

Determine the breadth of the competition,

Track competitive activities,

Evaluate their actual and potential impact

on company operations on an ongoing

basis.

The four reasons why managers are reluctant

to engage in international research are:

Their lack of sensitivity to differences in culture,

consumer tastes, and market demands.

Limited appreciation for different environments abroad Lack of familiarity with national and international data sources.

Firms build international business activities gradually, frequently based on unsolicited orders

The Importance of International Research

Firms must learn where the opportunities are, what customers want, why they want it, and how they satisfy their needs and wants.

Research allows management to identify and develop international strategies

Firms must identify, evaluate, and compare

potential foreign business opportunities and

the subsequent target market selection.

Research is necessary for the development of a business plan

Determining Research

Objectives

As a starting point,

research objectives must

be determined for a firm.

These objectives will

depend on the views of

management, the

corporate mission of the

firm, the firm’s level of

internationalization, and

its competitive situation.

Going

International-Exporting

A frequent objective of international

research is that of foreign market

opportunity analysis The aim is to utilize a broad-brush approach.

Steps to this approach include:

A cursory analysis of general variables of a country.

A preliminary evaluation of each individual country Selection of appropriate markets for in-depth

evaluation.

Finally, a competitive assessment must be made.

Process of Researching Foreign

Market Potentials

Stage Three

Company Sales and Promotion Analysis

Key Question to be answered:

How attractive is the potential demand for our products and services?

Stage One

Preliminary Screening for Attractive Country Markets

Key Question to be answered:

Which foreign markets warrant detailed information?

Stage Two

Assessment of Industry Market Potential

Key Question to be answered:

What is the aggregate demand in each of the selected markets?

Going

International-Importing

When importing, the major focus shifts

from supplying to sourcing

Management must identify markets that

produce suppliers or materials desired.

The importer needs to know:

The reliability of a foreign supplier,

The consistency of its product or service quality,

The length of delivery time,

Government rules and restrictions of the exporting country

Secondary Data

Secondary data is information that already has been collected by some other organization.

This data should be evaluated regarding the

quality of the source, how recent the data is, and the relevance to the task at hand.

Because secondary data were originally

collected to serve another purpose, they can often only be used as proxy information.

Precautions should be taken due to increasing sensitivity to data privacy Firms must inform their customers of privacy policies.

Sources of Secondary Data

Governments

International Institutions

Service Trade Associations

Directories Other Firms

Conducting Primary Research

Primary data are obtained

by a firm to fill specific

information needs.

The researcher must decide

whether research is to be

conducted in the consumer

or the industrial product

area.

Determining the Research

Technique

Selection of the research technique

depends on a variety of factors:

The objectivity of the data sought must be

determined Unstructured data will require more open-ended questions and more time than

Research Techniques

Interviews

Technology

The International Information System

An information system is the systematic and continuous gathering, analysis, and reporting

of data for decision-making purposes

To be useful, the information system must be:

Export Complaint Systems

An export complaint system allows

customers to contact the original

supplier of a product in order to inquire about products, make suggestions, or to present complaints

A firm must be able to aggregate and

analyze complaints and to make use of them internally.

Increasingly, the Internet enables

customers to provide feedback on their experiences with a firm.

The Mechanisms of Export

Complaint Systems

Environmental Scanning

Environmental Scanning

Environmental scanning activities

provide continuous information on:

Political, social, and economic affairs

internationally

Changes of attitudes of public institutions and private citizens

Possible upcoming alterations

Two significant methods of

environmental scanning are obtaining factual input and content analysis.

Delphi Studies

Delphi studies are a means for

aggregating the judgements of a

number of experts who cannot

come together physically.

The Delphi technique is particularly

valuable because it uses mail, fax,

or electronic communication to

bridge large distances and therefore

makes experts accessible at a

reasonable cost.

Scenario Building

Scenario building involves the identification of crucial variables and the degree of variation The possibility of joint occurrences must be

recognized.

For scenarios to be useful, managers must

analyze and respond to them by formulating contingency plans.

Through the anticipation of possible problems, managers hone their response capability and

in turn shorten response times to actual

problems.