How to do foreign market feasibility studies cost effectively?

Yesterday I wrote a post introducing an alternative approach to internationalization. The idea behind the model was to develop an actionable practical model that could be used by anyone without detailed knowledge on international marketing. As you would recall I explained the first two areas of the model yesterday in the same post. I'm going to look at the third element 'Market Feasibility' in todays post. 

Market feasibility is a big stumbling block in internationalization process for many firms. Most often companies decide to hire external consultants due to their lack of knowledge of the foreign markets. Whilst this is a prudent approach, it is not the most cost effective method and many firms are put off by the costs involved. However, I believe a firm can do a decent market feasibility study for their potential foreign market with clever use of research agencies and internal marketers without the use of big consulting firms. Lets look at how they could go about doing this. 

The main principle behind any market feasibility study should be collecting the information that's needed rather than collecting all the information. Therefore, what's needed by one firm will greatly differ from that of another. I've summarised the typical information needs that exist within the market feasibility phase into the following. As you can see, I have borrowed well known concepts but brought them together into three different layers. The idea behind the layered model is to suggest that a firm should start their market feasibility from outer layer going into the market estimation last. This will allow a firm to abandon market feasibility for any potential foreign country should the broad indicators are not promising. 

I have clearly separated the macro environment from the rest for one simple reason. We cannot change the macro environment therefore I wouldn't recommend spending any money behind any detailed analysis. Instead what's needed for a small firm operating in a non-complex market will certainly be available in the public domain. Most of the countries nowadays have their department of statistics online offering detailed macro environmental information. 

The majority of cost will come from the operating environment analysis and market estimation analysis. The key to both these areas is select what's exactly needed for our firm as opposed to getting all the information. For an example, an online business that has no intention or resources to carry out a comprehensive TV advertising campaign could avoid collecting competitor marketing spends under the marketing environment heading. Yes, this would mean working with limited information. There is no point in knowing all the information if you cannot act on them. Therefore, my key suggestion is to take a long hard look at what's needed minimally before going about market feasibility. 

A good feasibility study will collate all the relevant information from the three areas identified, to form a coherent picture of the potential new market. Such a study should highlight the key concerns, opportunities, a firm’s potential in the new market and critical success factors allowing the senior management of the firm to make the decision to enter a potential foreign market or not.

I hope this gives you basic idea of how to carry out a market feasibility study on your own for any potential foreign market that your firm intends to operate. I will be more than happy to expand any of the ideas I've discussed here if any of you are interested. 

Simplifying the Internationalization Process for SMEs

As globalisation continues to rise, we are seeing increasing importance for the subject of internationalization. Everyday in business press we see news of various firms going international in pursuit of additional revenue and global dominance. For many firms internationalization is fast becoming a matter of necessity for survival as opposed to a luxury.

So the question of how one would go about internationalization is very apt for the times. Having widely read on the subject, it became apparent to me that majority of the existing frameworks for internationalization are very broad frameworks. At conceptual level and within the academic world these models make perfect sense. But does it help a marketing manager sitting in his office thinking about how to go about internationalizing his / her firm. I would very much doubt it.

Like many others, I've had a go at developing a model that could be used for daily use by the SMEs. Naturally, I have borrowed high level concepts in various models / frameworks and have tried to simplify the process into a decision model that could guide a marketer to go about internationalizing their firm. Click on the model for a bigger clearer picture. 

At the heart of this model is a firms dilemma of balancing the resources spent on upgrading their capabilities and international expansion. As it can be seen this is a heavy action biased model and able to guide a marketer through each key decision.

Obviously, the simplistic view raises many questions on what exactly each stage mean and what would you do at each stage. It is my hope that a series of mini models / toolkits will help the understanding of the model and also maintain its simplicity and action bias. I will cover off each of the stages in the model in a series of blog posts. I'm going to cover off Organisational aims and market screening in this post.

Many organisations fail in their attempt to become international players for lack of clarity within the organisation. It is my view that a firm can become a true international player only if there is conviction within the whole organisation. Key to this are organisational aims covered off in the forms of mission & vision statements, and long term objectives. As simple as these may sound, they serve a purpose in bringing the whole organisation behind the internationalization efforts if covered off properly. I know many people have become cynical of the mission statements as they are doing lip service in their organisations. But I can give you hundreds of examples where carefully crafter mission and vision statements engaging the employees and driving them towards one common goal. Including internationalization ambitions within the mission & vision statement also signals a senior management commitment making it easier to obtain necessary resources.

Now that we are clear we want to become an international player, how do we go about market screening. Having looked at various frameworks, I suggest the following simple process.

As it can be seen above model is a self explanatory process. However, what I would like to add to this is many of us don't necessarily want to go through a scientific process in screening potential markets. For an example, one of my clients simply used a criteria where they looked at foreign markets that has the biggest diaspora of their local nationals. I know many others who simply look at which markets have people we know and we deal with. Whatever, the route you wish to take the idea is to narrow down a list of countries that we want to explore further as potential markets for our company.

I will talk about the other areas of market feasibility, entry modes, etc., in future posts. Hope you will find this an interesting model to use in your day to day work to guide the internationalization process.