discuss issues related to the development of new geographic and customer markets,
including key success factors for new market development;

key success factors for new market development;

Key success factors in entering a new geographic market


  1. Be able to leverage Location-specific advantages of overseas markets (leverage on culture difference etc)

  2. Company has strategic competences to counteract foreign market unfamiliarity. (the ability to adapt)

  3. Adequate organisational capabilities so it can leverage strategic strength internally.(the ability to perform using the strategic strength)

Using IT to support new market development

new customer markets

new geographical markets

BPP slide!!!!!!!

Customer markets can be defined as aggregates of consumer groups with similar needs.

Grouping customers by distribution channel is a very common

Strategic reason for organisation expanding into new geographic market

With the globalisation of commerce, market development commonly takes the form of expanding
into new geographic markets, typically in other countries. The reason for geographic expansion may
be to find new markets for selling products. The reason may also be to find an alternative place to
manufacture products.

Strategic reason for organisation expanding into new geographic market

  1. Market-related factors— there is limited growth in the current market

  2. Resource-related factors – the current market is no longer have the resources required 

  3. Efficiency-seeking factors— input of production can be sourced at lower cost in other markets

  4. Quality of the business environment—environment—governments are offering incentives for locating in specific areas or political and legal landscape is more stable
    BERM

Risks

Risk in expanding into a new geographic market:

  1. Consumers in different markets may have varying preferences

  2. Legal permits and registration, hiring employees, finding and certifying suppliers, and setting up distribution channels all require detailed knowledge of the marketplace

In gauging the potential of new markets overseas, the following factors are also relevant to consider
:
• Obsolescence and leapfrogging of products.
• Prices
• Substitutions

Objectives of market entry:

  1. Develop new markets;

  2. Secure access to critical resources, cost efficiencies or new knowledge; and

  3. Establish a base for regional co-ordination.
    BRN

The process of internationalising will significantly impact organisational goals, ambitions, processes, communication and business relationships (Guercini & Runfola 2010).


The strategic thinking of a multinational organisation will orientate it towards particular objectives, which can influence many aspects of the commercial approach of the organisation, as well as its structure, culture and employment practices. But strategy itself is heavily influenced by the culture of the organisation’s home country and the cultures encountered in different countries and regions.


The two main stages where IT can be useful in new market development are:


market selection stage and
physical implementation.


When it comes to actually implementing this type of strategy, several practical issues need to be resolved. Legal permits and registration, hiring employees, finding and certifying suppliers, and setting up distribution channels all require detailed knowledge of the marketplace. IT can help identify, source and control these issues in a systematic and efficient manner (e.g. with online project management tools and language conversion tools), while allowing knowledge that is learned in one situation to be easily transferred and used throughout the organisation (e.g. through wikis and other collaboration tools).

IT allows for faster collection and review of relevant data from a wider variety of sources. Countries are constantly releasing useful statistical data that is combined with research from global bodies which provide comparison and ranking services (e.g. World Bank, World Economic Forum).

The final stage of internationalisation is when all of the production, marketing and servicing functions


are integrated overseas. Normally, corporate operations would only be deemed ‘global’ when all this activity was fully integrated in a range of overseas countries, with sales and marketing occurring in many countries.

The ability of an organisation to internationalise depends on its ability to appreciate the environmental differences, understand the risks and implications, and then counter or adapt to them successfully.

It should be noted that not all host countries have totally different environments from the home country of a prospective business. Sometimes organisations do not have to adapt too much—for instance, in cases where the strategy is to deliberately target similar markets as a learning exercise for internationalisation.

In their research, de Wit and Meyer (2010) suggest that a number of requirements must be met before the process of internationalization begins:
• Leverage of location-specific advantages.
• Strategic capabilities or competencies.
• Potential for organizational success or growth.
PLS

Whatever the economic, technological and competitive factors pushing organisations towards further internationalisation of their activities, their success will depend on the effectiveness of their international business strategies. For Alfred Chandler (1990), the evolution of the global organisation is the final stage in the transformation of industries in search of economies of scale, economies of scope and national differences in the availability and cost of productive resources.