INTERNATIONAL BUSINESS RESEARCH

Source: Czinkota, M., Ronkainen, I., and Moffett, M. (1999).
International Business. Fort Worth: The Dryden Press.


The single most important cause for failure in international business is insufficient preparation and information


I - INTRODUCTION

The failure of managers to comprehend cultural disparities, the failure to remember that customers differ from country to country, and the lack of investigation into whether or not a market exists prior to market entry has made international business a risk activity

Differences between domestic and international research:

a) new parameters (duties, foreign currencies, international documentation)

b) new environmental factors (legal issues, cultural issues, political issues, technological level of the society)

c) The number of factors involved

d) Broader definition of competition (much greater variety of competition)


II - RECOGNIZING THE NEED FOR INTERNATIONAL RESEARCH

Lack of sensitivity to differences in culture, consumer tastes, and market demands
Limited appreciation for the environment (Labour rules, distribution systems, the availability of media, or advertising regulations)
Lack of familiarity with national and international data sources and inability to use international data once obtained

Research allows management to identify and develop international strategies (identification, evaluation, and comparison of potential foreign business opportunities and subsequent target-market selection)

Research is necessary for the development of a business plan that identifies all the requirements necessary for market entry, market penetration, and expansion

Research provides the feedback needed to fine-tune various business activities

Research can provide management with intelligence to help anticipate events, take appropriate action, and adequately prepare for global changes.


III - DETERMINING RESEARCH OBJECTIVES

Objectives will vary depending on the views of management,the corporate mission of the firm, the firm's level of internationalization, and its competitive situation.

Going International - Exporting; Cursory of general variables of a country, including total and per capita GNP, population figures. These details will enable the researcher to determine whether corporate objectives might be met in the market.

Next Step, the researcher will require information on each individual country for a preliminary evaluation.

Third, selection of appropriate market for in-depth evaluation

Fourth, a competitive assessment needs to be made, matching markets to corporate strengths, and providing an analysis of the best potential for specific offerings


IV - CONDUCTING SECONDARY RESEARCH

Typically the information requirements will cover both macro information about countries and trade as well as micro information specific to the firmÆs activities

Most critical International Information for U.S. firms:

a) Macro data: tariff Information, U.S. export/import data, nontariff measures, foreign export/import data; and data on government trade policy


b) Micro Data: Local Laws and Regulations, Size of the
market, local standards and specifications, distribution
system, and competitive activity.

c) Sources of Secondary Data:

US Government: Department of Commerce
International Agencies: United Nations-UNCTAD, World Bank, IMF
Service Organizations: Banks, Accounting Firms, foreign Research firms, freight forwarders
Trade Associations: American Chamber of Commerce
Directories and Newsletters
Databases: on-line interactive delivery, read-only memory

Secondary data should be evaluated regarding the quality of their source, their recency, and their relevance to the task at hand.


V - CONDUCTING PRIMARY RESEARCH

Typically primary research intends to answer such clear-cut questions as:

What is our sales potential, how skilled is the labour force, what will happen to demand if we raise the price by 10%? What effect will a new type of packaging have on our sales?

Determining the Research Technique: Selection of the research technique depends on a variety of factors:

Objectivity of data, unstructured data, data collected in real world or controlled environment, historical facts or information on future developments

Interviews

Surveys must pay attention to cultural differences

Focus Group (Collective Interviews)

Observation

Environment Scanning: necessity for tracking developments in the environment. Environmental scanning activities provide continuous information on political, social, and economic affairs internationally; on changes of attitudes of public institutions; and private citizens; and on possible upcomings.

Typically, environmental scanning is designed primarily to aid the strategic-planning process rather than the tactical activities of the corporation


Delphi Studies: A means for aggregating the information of a group of experts. Typically, Delphi Studies are carried out with groups of about 30 well-chosen participants who possess expertise in an area of concern such as future developments of the international trade environment.




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