Paliwood (International Marketing 1993) suggests that before a business makes the final decision to start trading in an overseas country it should consider six factors:
The diagam below summarises 6 things that need to be considered prior to entering international markets
How quickly does the business wish to enter the selected market (country). Due to country specific laws, rules and regulations it will take longer to (obtain the necessary permits and permissions and) set up in some countries compared to others.
The business should carry out a full assessment of the likely costs of entering the selected market. Otherwise the business could end up losing money and affecting its current business set up.
How easy is it to enter/leave the chosen market? As discussed above some countries may have rules and regulations that make it difficult to enter that market. Conversely if the decision to trade in an overseas country is unsuccessful the business need to be able to leave quickly and limit business losses.
What are the political risks of entering the overseas market? Political relations between the country that the business is based in and the one the business would like to enter, may affect what the business can do in the selected market. For example the country you wish to enter may have international trading sanctions against it.
What are the competitive risks of entering the market? How competitive is the market? If the market is already very competitive this will make it difficult to obtain a profitable market share.
What deadline has the business set for securing a profitable return from entering the market? If there are pressures to break even and return a profit within a certain period the business needs to carefully consider their decision to trade globally, as international trade is unpredictable.
What does the organisation wish to achieve in the long term by operating in the foreign market? Does the long term plan involve establishing a presence in one market and then moving onto others? A long term plan will help the business establish its strategy and ensure that it grows at a sustainable pace.
