Cavusgil’s GMOA framework is based on the need for the managers to acquire a substantive understanding of international markets in order to achieve satisfactory performance using the limited resources of an organization. According to Cavusgil et al (2008), the fundamental challenge facing the firms entering international markets centres on solving managerial problems in these markets (p.5). The complexities of operating business abroad compel firms to perform internal market research in order to acquire competitive intelligence.
Indeed, research is the basis of making market decisions and is regarded as the most essential ingredient in gaining competitive advantage. Market research is the methodical design, collection, analysis and reporting of conclusions relevant to business decisions while competitive intelligence is the collection and analysis of information about the firm’s competitors as well as recommending on actionable business decisions (Cavusgil et al, 2008, p.15). Therefore, making appropriate decisions determines the success of a firm in entering and operating in international markets. Through Cavusgil’s GMOA framework business organizations can be able to define and pursue opportunities arising in international markets.
The first step in Cavusgil’s GMOA framework is about analyzing organizational readiness to enter the international market (Cavusgil et al, 2008). At this step, the company examines itself to determine the extent to which it has the incentive, resources, and competency required to undertake overseas business successfully. The company will also research on the opportunities and threats it might encounter in the target market. For instance, the firm investigates on the specific benefits sought by the consumers and the nature of competing brands as well as the risks involved in the market.
The second task involves the assessment of the suitability of products and services for international markets (Cavusgil et al, 2008, p.). The activity is aimed at understanding the extent to which the products and services to be offered are appropriate for the target market. During this stage, the firm managers ascertain the purchase initiator, actual user of the product, the reason for buying, and the place buyers expect to find it. The company may also identify the geographic, economic and cultural factors that can limit the sales of the products. It is also important to determine the extent to which the product is consumed in the market. During this task for instance, the managers can attend an industry trade show in order to understand the usage and popularity of the product.
The third task is about screening countries in order to identify the target markets. The main objective of this task is to reduce the number of countries that require in-depth investigation as probable target markets. This may involve an examination of trade statistics that disclose export and imports of the products by each target country in order to determine the largest markets and those with the best growth profiles (Cavusgil et al, 2008). At this juncture, the managers can use a gradual elimination approach or indexing and ranking method.
The fourth activity is about assessing industry market potential (Cavusgil et al, 2008). The main objective of this task is to estimate the size of sales for the relevant industry within the target countries as well as investigate and evaluate any potential entry barriers. During this stage, the market researcher estimates the expected levels of sales for the particular industry. This will represent an estimate of the prospective sales for all companies in the relevant industry for a certain period of time.
The fifth activity is about selecting foreign business partners. The objective here is to decide on the kind of overseas business partner; clarify ideal qualifications of a partner; and plan the entry mode. This is achieved when a firm consults different sources and conducts field research. For instance, the company may conduct onsite visits and gather research from independent resources or conduct trade shows. Asking potential partners to develop formal business plans can also enable the firm to measure the commitment, resources and capabilities of the partners.
The sixth activity is about estimating company sales potential. The objective here is to estimate the share of the industry sales that the firm can most likely achieve for a specified period of time in all target markets. The several methods that the managers can use to estimate the company sales include: conducting trade audits, obtaining estimates from local partners, surveying end users, engaging in test marketing, using analogy, using proxy indicators and assessing competitors (Cavusgil et al, 2008).
The potential benefits of using Cavusgil’s GMOA framework include forecasting, planning and acquisition of competitive intelligence. The framework leads to a set of assumptions on the business position in foreign markets that is crucial to managerial decision-making. It also helps managers to develop sound business plans as they become aware of the opportunities, challenges and risks in the foreign market. The framework enables the managers to understand the competitors’ product offerings which enhance the development of strategic responses for individual firms.
However, the tasks involved in Cavusgil’s GMOA framework are quite challenging, and time-consuming and might discourage firms to enter international markets. Some tasks require special analytical skills from the managers in order to achieve results. They also compel the firm to obtain vast amounts of information which is quite expensive. In addition, the failure to achieve expected results in one task due to external factors might mislead the managers in decision-making and probably miss the most appropriate target market.