Marketing Management, Millenium Edition - epiheirimatikotita.gr

As U.S. companies have watched Europeans make inroads in Latin America, theyhave pressured Washington to move more quickly on integrating Chile into NAFTAand toward Free Trade Area of the Americas. MERCOSUL doesn’t represent only a hugedomestic market of 220 million consumers; with its entire Pacific Coast beckoningtoward Asia, MERCOSUL also stands to become an important low-cost platform forworld export. Yet two groups in the United States—labor unions and environmentalists—areskeptical about the benefits of a Free Trade Area of the Americas. Unions feelthat NAFTA has already led to the exodus of manufacturing jobs to Mexico wherewage rates are much lower. Environmentalists point out that companies unwilling toplay by the strict rules of the U.S. Environmental Protection Agency relocate to Mexico,where pollution regulation has been lax. 10Eighteen Pacific Rim countries, including the NAFTA member states, Japan, andChina, have been discussing the possible creation of a pan-Pacific free trade area underthe auspices of the Asian Pacific Economic Cooperation forum (APEC). There arealso active attempts at regional economic integration in the Caribbean, Southeast Asia,and parts of Africa.Yet, however much nations and regions integrate their trading policies and standards,each nation still has unique features that must be understood. A nation’s readinessfor different products and services and its attractiveness as a market to foreignfirms depend on its economic, political–legal, and cultural environments.EVALUATING POTENTIAL MARKETSSuppose a company has assembled a list of potential markets to enter. How does itchoose among them? Many companies prefer to sell to neighboring countries becausethey understand these countries better, and they can control their costs better. It isnot surprising that the United States’ largest market is Canada, or that Swedish companiesfirst sold to their Scandinavian neighbors. As growing numbers of U.S. companiesexpand abroad, many are deciding the best place to start is next door, in Canada.■ Great American Backrub, Inc. Great American Backrub, Inc., a service businessthat offers backrubs for stressed-out clients, looked north because it figuredCanadians were as tense as Americans. It opened its first foreign locationin Toronto, Ontario. Ricardo Coia, president of the Clearwater, Florida–basedcompany, reasoned that by their mere proximity to America, Canadians “haveto try to resolve a lot of stress.” 11At other times, psychic proximity determines choices. Many U.S. firms prefer to sellin Canada, England, and Australia—rather than in larger markets such as Germanyand France—because they feel more comfortable with the language, laws, and culture.In general, a company prefers to enter countries (1) that rank high on market attractiveness,(2) that are low in market risk, and (3) in which the company possessesa competitive advantage. Here’s how Bechtel Corporation, the construction giant, goesabout evaluating overseas markets.■ Bechtel Corporation Before Bechtel ventures into new markets, the companystarts with a detailed strategic market analysis. It looks at its marketsover the next five to ten years and tries to determine where it should be infour or five years’ time. A management team looks at the big picture and doesa cost–benefit analysis that factors in the position of competitors, infrastructure,regulatory and trade barriers, and the tax situation (both corporate andindividual). Ideally, the new market would be a country with an untappedneed for its products or services; a quality, skilled labor pool capable of manufacturingthe product; and a welcoming environment (governmental andphysical).Are there countries that meet Bechtel’s requirements? Each has its pluses and minuses.For instance, although Singapore has an educated, English-speaking labor force,basks in political stability, and encourages foreign investment, it has a small population.chapter 12DesigningGlobal MarketOfferings 373