Sample Essay: INTERNATIONAL MARKET SELECTION (IMS)

 In today’s business world, entities are facing the risk of business failure due to lack of efforts to learn the potential market before deciding to invest. Thus, proper market screening is essential for business before making the decision to invest in a particular country (Vassileva and Nikolov, 2016, pp.291-310). One of the areas that need a proper assessment is the political risk of entering that country. In order to ensure proper analysis, marketers have invented some business models that will help assess the risk factors that are inherent in the country that they are putting a consideration to invest (Psychogyios and Koutsoukis, 2018, pp. 17-31). The Business Environmental Risk Index (BERI) is one of the tools that business are using to screen potential market. The model assesses the attractiveness of an international market by assessing the financial, political and economic factors in a scale of 0 to 4.

Using the BERI model to assess the South Africa market, where Center Parcs is considering diversifying its market, the following was realized:

Criteria Weights Multiplied with the rating on a scale of 0-4. Overall BERI Index
Political climate  2.5 4 10
Economic growth  2.5 4 10
Labor costs 3 4 12
Inflation rates 2 4 8
Licensing process 1.5 4 6
Balance of payments 2 4 8
Local management and partner 2.5 4 10
Enforceability of contracts 2 4 8
Professional services 1 4 4
Attitudes towards foreign investors 1.5 4 6
Total 20.5 20.5 *4=  82 82/100

 

From the BERA model, the scale ranges from 0-4. In this scale, zero represents the lowest while 4 is the highest value in the scale. 

If the overall score obtained is above 80, then the implication is that such an environment is favorable destination for investors.

For the South Africa market, the BERI index obtained is 82, which is above the recommendable value. The implication is that the market is attractive for international investors.  However, Center Parcs restaurant, marketing team need to do further research, to determine the market potential that the South Africa market represents. It also has to do further research to establish the local competitors strength and come up with strategies that will make them break into the market and gain a substantial market share (Johnson, 2016, pp.39-47). This will ensure low chances of making investment mistakes.

  A close analysis of the South Africa market shows that there is a huge untapped market that exists in the market.  A new entrance into the market can capitalize on such and attracts a substantial market share that can keep on increasing depending on the marketing strategy that the company uses (Håkansson Modin and Olofsson, 2017, pp.53-65). The main competitors in the market are the already established firms like La Colombe restaurant, Mosaic restaurant, among others. Center Parcs will adopt a cost leadership and differentiation strategies in its attempt to break into the South Africa market strategy. By offering high-quality services and attractive product packages at a cost that is relatively lower than that of its main competitors (Kharub et al., 2018, P3-7). Many customers are price-sensitive, and the possibility of obtaining high-quality services at a relatively low costs presents an opportunity for the restaurant to attract new clients and gain a substantial market share ( Holtbrügge and Baron,2013, pp.237-252). With the marketing team that the restaurant commands, then there is a real chance of succeeding in the South Africa Market.

Ultimately, for international businesses that would want to be successful, it is imperative that marketers do a proper market screening. This will ensure that they identify the potential risks that are involved in any particular international market and be in a position to make an informed decision on whether to invest in the market or not. An analysis of the South Africa market, where Centre Parcs restaurant is considering to make investments, the market appears to have great potential. Thus, based on the screening conducted, the management of the restaurant can go on and invest in the South Africa market.

 

References

Håkansson Modin, M. and Olofsson, G., 2017. The International Market Selection Process of Multinational Enterprises Expanding to Transition Economy Markets, pp.53-65.

Holtbrügge, D. and Baron, A., 2013. Market entry strategies in emerging markets: An institutional study in the BRIC countries. Thunderbird International Business Review55(3), pp.237-252.

Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education, pp.39-47.

Kharub, M., Mor, R.S. and Sharma, R., 2018. The relationship between cost leadership, competitive strategy and firm performance. Journal of Manufacturing Technology Management. P3-7

Psychogyios, I. and Koutsoukis, N.S., 2018. Political risk frameworks: a literature review. The Political Economy of Development in Southeastern Europe (pp. 17-31). Springer, Cham.

Vassileva, B. and Nikolov, M., 2016. Market entry strategies to emerging markets: A conceptual model of turnkey project development. Serbian Journal of Management11(2), pp.291- 310.

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