When a company is faced with the task of selecting new international markets, it must work through a basic selection process to determine which markets are most suitable. Market screening can be broken down into four basic steps: (1) identify the market’s basic appeal, (2) analyze the market’s business environment, (3) measure the market’s potential, and (4) finalize the selection. The first three steps in the process can all be done remotely. They are focused on gathering data and organizing it. Since much of this data is readily available for free or with a small fee, no travel is necessary. The finalization process really requires company decision-makers to travel to the proposed market and meet with government and business leaders (Wild, Wild, & Han, 2008).
Company X sells wheelchairs, walkers, and other so-called “mobility” products. The nature of the Company X product line appeals to customers over the age of 65. These products are especially appealing to potential customers with active health insurance. Therefore, when searching for international markets, it is important for Company X to focus on markets that have a satisfactory level of elderly population and a deep health insurance penetration. Additionally, since Company X is inexperienced in international sales, it would be advantageous to select markets that do no present a high language or cultural barrier. Finally, with Company X’s inexperience in mind, a phased international deployment will help the company build the skills necessary to compete globally.
The obvious place to begin researching international sales is Canada. Since it shares a border with the United States, exporting should prove much less difficult from a logistics point of view. Canada’s population over the age of 65 is nearly 5 million people. Although this number is much smaller than the number of elderly consumers in the United States, it represents a larger percentage of the Canadian population (14.9% versus 12.7%). Finally, the Canadian economy is similar in many respects to the US. The unemployment rate is slight higher, but distribution of income among households is very similar. Canada still has large rural areas, and these rural areas might account for the minor differences between Canadian and US household incomes (Central Intelligence Agency, 2008a).
Culturally and linguistically, Canada does not differ greatly from the United States. The primary language is English and both countries share similar colonial backgrounds. Additionally, the two countries share nearly 9000 kilometers of unfortified borders allowing the free exchange of culture between the two (CIA, 2008a). Of any country in the world, Canada shares the most similarities with the US. Entering this international market should require little effort beyond dealing with a slightly different government bureaucracy.
The next interesting market for Company X is the United Kingdom. Like Canada, the UK shares much in common with the US. Approximately 16% of the population is over the age of 65. This works out to nearly 10 million potential mobility customers. Additionally, the average life expectance is approximately 79 years. Finally, the UK economy is very similar to that of the US, with unemployment rates just above 5% and a distribution of family income that is much more equitable than in the US (CIA, 2008c).
The UK makes an interesting market for a company seeking to get started in the international marketplace because it has much in common with the US in terms of language and culture, but it presents many logistical problems related to overseas sales. Thus, the fledgling international distributer can focus on the logistics of marketing and delivering a product over an ocean without being bogged down in the idiosyncrasies involved in learning another culture or language.
The final market for Company X to consider is Switzerland. Like the other choices, Switzerland has a lot in common with the US. Approximately 16% of its population is over the age of 65 and the average life expectancy is a whopping 81 years. The unemployment rate is extremely low and the distribution of income is above average (CIA, 2008b). Other than similar economic backgrounds, the US and Switzerland are very different.
There are many cultural and lingual barriers to overcome when doing business in Switzerland. The country recognizes four official languages: German, French, Italian, and Romansch. Only 1% of the population speaks English. Additionally, the Swiss legal system is based on civil law rather than the common law basis found in the US, Canada, and the UK. This is good news for companies used to operating in the US. Civil law requires less interpretation than common law, so legal matters should be less expensive and time consuming. Finally, Switzerland is much smaller than any of the previously mentioned countries. Although 16% of the population is over 65, this only amounts to 1.2 million potential customers. Additionally, the physical size of the country is quite small, amount to less than twice the size of New Jersey (CIA, 2008b).
However, Switzerland offers an excellent chance for Company X to learn how to sell in a truly international market without taking the risks involved in dealing with a large market. Building on the logistics lessons learned while doing business in the UK, Company X can focus on dealing with languages and cultures that are different from the US. The relatively small size of the Swiss market means Company X can focus on a smaller geographic region that still has demographics similar to those in the US. The lessons learned in Switzerland will be highly relevant when moving into larger, more aggressive market places like China and India.
Although Company X might be interested in moving into all three markets simultaneously, it currently does not have the in-house experience to support this kind of operation. Each of the recommended countries provides a foundation the company can use to move into the next phase of international sales. By laying the groundwork one country at a time, Company X lowers the risks of each successive country. In the end, Company X will have developed the experience necessary to guarantee success in any international market.
Central Intelligence Agency. (2008a). Canada. The World Factbook. Retrieved January 13, 2009.
Central Intelligence Agency. (2008b). Switzerland. The World Factbook. Retrieved January 13, 2009.
Central Intelligence Agency. (2008c). United Kingdom. The World Factbook. Retrieved January 13, 2009.
Wild, J. J., Wild, K. L., & Han, J. C. (2008). International business: The challenges of globalization. (4th ed.). Upper Saddle River, NJ: Pearson.