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Chapter 5 Analyses of National Markets. John S. Hill. Figure 5-1: National Markets Analysis topic outline. Analysis of National Markets. The Shaping of National Cultures Historic Factors Geographic Factors. Macro Analysis Political Factors Economic Factors International Position.

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Chapter 5 analyses of national markets
Chapter 5Analyses of National Markets

John S. Hill

Figure 5 1 national markets analysis topic outline
Figure 5-1: National Markets Analysis topic outline

Analysis of National Markets

  • The Shaping of National Cultures

  • Historic Factors

  • Geographic Factors

  • Macro Analysis

  • Political Factors

  • Economic Factors

  • International Position

Business & Market Analysis

Operating Conditions

Industry Analysis

Product-Market Fit

Chapter outline
Chapter Outline

  • Essential Background

  • Current Position Analysis

  • Commercial Analysis

  • Cultural Analysis

Essential background
Essential Background

  • Historic Influences on National Culture Development

  • Geographic Influences on National Culture Development

Essential background1
Essential Background

  • Historic Influences on National Culture Development

  • Political trends, power bases and sensitivities: powerful families; key leaders

  • Industrialization, Economic Change and Development: agriculture-industrial-service sector breakdowns as key indicators

  • Cultural development, Ethnic, cultural and linguistic differences: size of groups and extent of rivalries

  • External influences on country behaviors

Essential background2
Essential Background

  • External Influences on Country Behaviors

  • National participation and membership of global treaties and conventions: UN, IMF, WTO, World Bank, IMO, ICAO and so on

  • Participation in Regional Political Organizations: Organization of American States (OAS), Organization of African Unity (OAU).

  • Historic Events and National Rivalries: China and Taiwan; North versus Southern Ireland

Essential background3
Essential Background

  • Geographic Influences

  • Geographic Influences on National Development

  • Country location on world map: affects political, trade, commercial relationships

  • Climate: affects population concentrations, food supplies, work conditions, national mindsets (e.g. fatalism in developing nations)

  • Population concentrations: affects market demand and marketing approaches (e.g. ethnic groups)

  • Resources: agricultural food supplies, energy sources, mineral supplies

  • Topography: affects population, distribution

Essential background4
Essential Background

  • Geographic Influences

  • Geographic Influences on Infrastructure Development: necessary in foreign, especially developing markets

  • Utility and Energy Assessments: water, sewer, energy availabilities

  • Communication infrastructures: telephones, radio, TV, print media availabilities

  • Transportation infrastructures: extent of development of highways, waterways, rail, port, harbor and airport facilities

Current position analysis
Current Position Analysis

  • Current Political Situation

  • Current Economic Position

  • Current International Position

  • How Managers use Balance of Payments Data

Current position analysis1
Current Position Analysis

  • Current Political Situation

  • Political system: democracy v.s. authoritarian systems: extent of democracy (1 party democracies)

  • Parliamentary Assemblies: who has power; frequency of elections

  • Key political parties: and philosophies (right, left wing, special interests)

  • Political risk, elections, and the likelihood of political change

Current position analysis2
Current Position Analysis

  • Political Risk, Elections and the Likelihood of Political Change

  • Internal frictions: ethnic or religious groups and their influence on national politics

  • External influences: impact of globalization, westernization, privatization

  • Economic problems: inflation, unemployment, growth, trade (e.g. protectionism)

  • Political problems: government expenditure priorities; taxation levels, social welfare, corruption, business legislation

Current position analysis3
Current Position Analysis

  • Current Economic Position

  • Comparative economic analyses: country versus regional performance puts national economic performance into perspective

  • Country-specific economic analyses

  • General economic indicators: GDP size, GDP per capita; government income/expenditures; growth, inflation

  • Private-sector performance: public/private expenditures; agriculture-industry-services; key industries and sectors

  • International economic and trade policies: tariff levels, WTO, trade bloc membership

Current position analysis4
Current Position Analysis

  • Current International Position

  • Analyzing Country Balance of Payments

  • Current Account: merchandise trade balance, goods and services balance, income account, unrequited (one-time) transfers

  • Capital Account: capital account, direct investments, portfolio investments, monetary transactions

  • Financial Account=direct investments + portfolio investments + financial derivatives + other investments

  • Net Errors and Omissions

  • Reserves and related items show how B/P surpluses are used or how deficits are financed

Current position analysis5
Current Position Analysis

  • How Managers use Balance of Payments Data

  • Merchandise trade balance: Imports and exports: protectionist tendencies, currency adjustments

  • Services: laws requiring local carriers

  • Investments: restrictions for ‘capital flight’

  • Balance of payments effects on currency values: B/P surpluses (currency strengthening); B/P deficits (currency weakening)

  • Inflation rate effects on balance of payments and currency values: high inflation = likely currency devaluations

Commercial analysis
Commercial Analysis

  • Industry analysis

  • Demand Analysis

  • Supply Chain Analysis

  • Business Environment Analyses

Commercial analysis1
Commercial Analysis

  • Industry analysis

  • Market size, growth

  • Market structure: # firms; global, regional, national competitors; profitability; change; key success factors; industry characteristics

  • Demand Analysis: Customer and Marketing Considerations

  • Customer concentrations: where located

  • Customer segmentation issues: profiles, location

  • Marketing research services: availability

Commercial analysis2
Commercial Analysis

  • Supply Chain Analyses

  • Supplier considerations; location, quality

  • Manufacturing Investment and Site-Location Decisions

    • Investment permissions: fit with government plans

    • Investment incentives: for undeveloped regions

    • Infrastructure connections: roads, energy

    • Labor quality and availability: education system

    • Labor laws: wages, work hours, safety, benefits

    • Information technology/E-commerce issues

    • Cost chain considerations: wage rates, depreciation rates, taxes

Commercial analysis3
Commercial Analysis

  • Business Environment Analyses

  • Financial Aspects: Capital Markets, Taxation Policies, and Currency Issues

    • National capital markets: long, medium, short term capital sources (stock markets, banks)

    • Corporate taxation and taxes: rates, exemptions

    • Currency considerations: convertibility; stability; preferences for depreciating currencies for exports and investments

  • Legal Infrastructures

Commercial analysis4
Commercial Analysis

  • Business Environment Analyses

  • Legal Infrastructures

    • Industry ownership limitations: ‘off limits’ sectors; ownership restrictions

    • Monopoly and anti-trust laws: affects acquisitions

    • Intellectual property laws: procedures, effectiveness, enforcement

    • Consumer protection laws: warranties, advertising, deceptive practices

    • Environmental laws: recycling, pollution, chemical use

    • Local company organization: affects shareholder/owner responsibilities, liabilities, obligations

Cultural analysis
Cultural Analysis

  • General national backgrounds: climate, history, government, education, population, religion, language

  • Interpersonal relations: family unit, dating, appearance, visiting, greetings, eating habits, tipping, gender relations, body language, gestures

  • Lifestyles: eating habits, recreational sports, diet, refreshments (alcohol)

  • General attitudes: family, friends, punctuality, modesty, religiosity, surprises, materialism, social classes, ethnic identities, male-female relations

Key points
Key Points

  • Thorough examinations of national markets entail…

    • Reviewing background info on country history and geography

    • Assessing the current political, economic, and international situations

    • Evaluating its commercial environment and national culture

Key points1
Key Points

  • Historic background traces national political development and economic change.

  • Geographic factors affect national economic and infrastructure development.

  • Managers examine the current political, economic, and international situations.

Key points2
Key Points

  • National economic positions should be assessed in their regional context first, followed by examinations of economic indicators, private sectors, and memberships of international organizations.

  • Analyses of country balances of payments show how nations are performing in international trade.

Key points3
Key Points

  • Commercial analyses comprise examinations of national industry conditions.

  • Business environment analyses review general factors affecting operations in foreign markets.

  • Cultural analyses look at national backgrounds and behaviors.