Market Entry

Topics: Inflation, Competition, Economics Pages: 5 (1362 words) Published: April 17, 2015
 Online Assignment Submission

Birmingham Business School

Student ID Number: 1341398, 1432800, 1457251, 1407286, 1505093, 1371690

Programme of Study: MSc International Business

Module: Country Manager

Assignment Title: Market Entry & Regional Development Plan

Date and Time of Submission: 04/03/2015

In the business simulation, our toothpaste company will decide which South American countries we are going to enter. In order to make the right decision and use good business strategies, our first step is to analyze the country background, different business ratios and compare them with each other from the spreadsheet. There are four criteria including demand, supply, competition and other. We put different weights on those factors based on the importance and calculate them altogether. Following are the elements we choose and the reasons why we pick and weight them.

Demand Criteria
Population, GDP/Capita, CPI, manufacturing sales and retail sales are the factors which affecting the market demand. Through by the population, GDP/Capita and CPI, we can understand the economic growth then find the prospective market to be entered first as Mexico. Population will affect market demand, because of large number of residents; there will be a large demand for goods in the area and vice versa. A large number of total populations will become a potential market even in the slow-growth population. If GDP/Capita is going high, it is possible that the demand is going high too. Moreover, we can determine the purchasing power consumers in the region by income/revenue. A higher real income is higher purchasing power. Mexico has become the thirdly highest country on GDP/Capita when compared to the others, which has $15,300. Besides, a good position on GDP/Capita, manufacturing sales and retail sales, which are, have 7 points for all of them rating. Manufacturing sales and retail sales are the most important factors to be considered while choosing the market, which have 10% importance weight in this part among the others. Using by manufacturing sales and retail sales, we can know the number of goods that can be purchased, the amount of the goods to be allocated and indicate the estimated of future demand for the goods.

Supply Criteria
Factors affecting the supply criteria play a very crucial role in determining the success of a product and therefore these factors must be carefully analyzed especially during the expansion of the product into a newer international market. As per the case analysis, Tariff rates and International Shipping Charges are the two most important supply factors to be considered while choosing the target market to be entered first. Since the production is located in the home market, Mexico is the most suitable market to enter first for expansion in the Latin American Region. The geographical closeness of Mexico to the home market will allow an easier and cheaper access of the product into the Mexican market. The International shipping charges from the home plant to Mexico is 0.020 per unit which is very cheap when compared to the other suitable target market such as Chile where this cost is 0.060 per unit. Also, Mexico has a zero percent Tariff duty on the goods imported from the U.S. market into the Mexican market, whereas, there is a 15% tariff duty on imports in other major markets such as Brazil and Argentina. With lower tariff rates and transportation charges, the cost of the imported product decreased to a huge extent and thus allows the product to achieve considerable amount of market share and increased profits to the sellers.

Competition Criteria
For the competition criteria, if a new company wants to enter a strange market, it has to know how fierce the market competition is and the sales of all manufactures in this county so that they can help manager to analyze whether it is suitable or not to set target market. As a result, we put competitive market share as...
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