Abstract
Assessing the global market opportunities is an important aspect of marketing research that enables a firm to understand the forces in the foreign market. This research seeks to conduct an investigation that will reveal opportunities in the global market, how to tap the opportunities, and the challenges a firm may face in this process.
Introduction
Background
In the current competitive business environment, many firms have realised that the best way of expanding the market share is to go global. Technology has reduced the world into a global village where geographical barrier no longer exists. It is common to find a firm having its manufacturing plants in China, headquarters in the United States, and a market in the entire world. A good example is Apple Inc. Many other firms have also follow the same business model because of enhanced communication and transport systems brought about by advanced technologies. Given that the geographical barrier has been eliminated in the modern market, it is a fact that other foreign business players find their way into the local markets as they try to expand their operations.
This makes it necessary for a firm to go global as a way of compensating for the loss of market share to the new market entrants. However, Crawford (2015) says that going global is one of the most challenging business processes that business executives have to deal with on a regular basis. A wrong move when going global may not just result into a failure to enter a given market, but also a serious financial loss.
This makes it necessary conduct a comprehensive assessment of the global market opportunities in order to determine the viability of going global. In such assessment, point of interest will be to determine the potential of a given global market, challenges that a firm may face and how to counter them, and the best strategy that can be used to make the entry. In this study, the researcher will focus on assessment of global market opportunities.
Significance of the study
Target is one of the leading retail stores by global standards (Crawford, 2015). It is the second largest retail outlet in the United States. According to the recent rankings in the Fortune 500 firms in 2013, Target was in position 36. This is an impressive performance. The firm has been in operation since 1902, making it one of the oldest retail stores not just in the United States but in the world at large.
The management of this firm realised that it needed more room for expansion, and Canada became the best choice to start its globalisation process. By March 2013, the firm had opened over 127 stores in various parts of Canada. This was huge investment. However, in 2015, the firm pulled out of this market after making billion of dollars losses in this market. As Crawford (2015) puts it, Target’s move to enter Canadian market was a total failure that had serious implication on its financial health.
The case about Target Corporation clearly demonstrates the significance of this study. It reveals a number of facts when it comes to the issue of globalisation. One important factor that comes out of the case is that conducting a global market assessment is critical before making a move to enter a given market. The marketing unit of this firm failed to understand the Canadian market before the firm made the decision to enter it.
The firm lacked knowledge on fundamental issues such as pricing, location, the market trends, and changing tastes and preferences in the foreign market. It is also clear that when it comes to assessment of global market opportunities, no firm may be considered special given their experience in the industry and financial capacity. Target had the experience in operating in this industry for over 110 years by the time it was entering the Canadian market. It also had a huge financial muscle. However, this did not cushion it when it made the mistake of failing to conduct a thorough assessment of the market opportunities in the new market. This study is, therefore, very important because it explains the steps that any firm should consider when planning going global.
Statement of the problem
In the current business environment, many firms are finding it necessary to expand their operations to the global market. However, it is important to note that the global market does not offer magic when it comes to achieving success. In fact, Carson (2001) says that a firm is likely to face more challenges in the foreign markets than in the local markets. However, this does not mean that firms should avoid going global. Globalisation has become very relevant today than it was some years ago.
For these reasons, firms must find ways of making successful entries into the global market. The approach should be less costly and very relevant in the context of the foreign market. The foreign market should have the capacity to offer the expected opportunities. It is only when this has been determined that a firm can consider making an entry into the foreign market. This requires a detailed assessment of the global market opportunities to avoid cases of failed market entries. Such failures may not just injure the finances of a firm, but also taint its image.
Purpose of the study
The purpose of this study is to assess global market opportunities. According to Aaker (2010), the emergence of advanced telecommunication and transport technologies has redefined the approach that business entities take when it comes to expanding their market share. The global market offers a huge potential for firms seeking to expand their operations beyond their borders. However, it is necessary to understand these market opportunities before making the decision to go global. Some firms may prefer having a specific market characteristics that is ideal for a given business entity. This makes it necessary to have a comprehensive understanding of the global market to know what it offers. This study seeks to identify these opportunities and how a firm can tap them.
Research question and hypotheses
When conducting a study, research questions play a very important role (Denzin & Lincoln, 2011). They define the kind of data a researcher will be looking for in the field. Research questions help to define the data which is specifically needed to address various parts of the study. This way, a researcher will not waste time collecting the data that is irrelevant to the research topic. In this study, the following is the main research question in this study.
- What are some of the major global market opportunities that a firm should be keen to identify?
- How can a firm identify these opportunities before making the decision to go global?
- What are the consequences of going global before understanding the market opportunities?
These three questions will form the basis of the research. The following research hypotheses will be determined through analysis of primary data.
- H1o. Global market opportunities cannot be understood by conducting a comprehensive assessment of a given market.
- H1a. Global market opportunities can only be understood by conducting a comprehensive assessment of a given market.
- H2o. Failure to conduct a detailed assessment of the global market before going global may not have serious consequences to the image and finances of a firm.
- H2a. Failure to conduct a detailed assessment of the global market before going global may have serious consequences to the image and finances of a firm.
Review of the Literature
The issue of assessment of global market opportunities has attracted attention of many scholars, especially those in the field of marketing. According to Wiid and Diggines (2009), assessment of global market opportunities is very important to any business entity. The economic world keeps on changing due to various factors. Bradley (2015) says that when examining the global market opportunities, there are specific factors that should be put into consideration. The first factor is the purchasing power of the customers in a given market. What every business entity is interested with is the ability of the target customers to buy a given product. In many countries around the world, wealth is held by the minority.
It is possible to find cases where over 90 percent of a country’s wealth is held by 10 percent of a country’s population. This means that the ten percent owning the country have more than they need to spend. On the other hand, the 90 percent of the population are left without the capacity to buy even the basic needs. Such markets cannot offer attractive opportunities to a business entity. As Aaker (2010) notes, attractive markets are those that have the wealth distributed to the masses.
This increases the number of people who have the power to purchase a given product. This explains why many United States firms have not considered the Russian market very lucrative. In other cases, it is possible to find that much of a country’s wealth is held by the state such as in China. This means that despite the attractive GDP of the country, the purchasing power of individual citizens is not very attractive. The purchasing power should be with the masses.
When assessing global market opportunities, Sudan (2014) says that political stability is a very important factor. No business can survive in a lawless country where there is no peace. As an independent entity with the ability to sue and be sued, any business requires an environment where people respect the law. When this is not the case, then such a market ceases to be attractive. For instance, Egypt was once the most attractive market for any business entity that was planning to move to Africa. However, following the revolution that forced the former President Hosni Mubarak out of power, the country has known no peace.
Sporadic attacks and lootings have become common in a country that had the best security in the region (Wiid & Diggines, 2009). Despite the attractiveness of this market in terms of purchasing power of the customer, it remains unattractive. An investor will not be sure of his investment. Such uncertainties and high risk situations are some of the issues that Bradley (2015) says any firm should try to avoid. When making an entry into a new market, a firm should ensure that there are proper structures that will guide its operations.
According to Carson (2001), when conducting an assessment of the foreign market, another issue that should be taken into consideration is the level of competition. Competition is very important in improving the quality of products a firm delivers to the customers and the strategies it uses in the market. Competition helps in enhancing innovation within a given firm as they try finding ways of outsmarting their competitors.
However, unhealthy competition can be dangerous. When the competitors start using price wars, then such markets should be avoided because such wars are not sustainable. A firm may consider postponing an entry into such markets until such a time when there is healthy and sustainable competition. As Cavusgil (2009) notes, a new firm may not sustain a competition that involves price wars, especially if the competing firms are dominant in the market.
When assessing global market opportunities, Aaker (2010) says that one should be keen to capture issues regarding culture and how they influence the purchasing patterns of the customers. Some cultural practices may promote consumption of given products and discourage consumption of others. Having this knowledge may help a firm to determine the potential of a market. For instance, a successful firm in New York selling pork products will avoid the entire Middle East and North African market if it conducts a comprehensive assessment of market opportunities in these regions. The region may be politically stable, with attractive GDP and no competition at all for a pork firm. However, the problem is that the majority do not consume pork.
In fact, setting up a pork shop in a city such as Riyadh will be considered despising the Islamic religion (Zikmund & Babin, 2013). This should be avoided for the obvious reasons of not making sales and for the need to protect the image of the firm.
Understanding the culture of a given international market will also help a firm to know colours and words to avoid because of their meanings in the local context. What a red colour means to the Chinese is very different from what it means to the Brazilians. The colour should be chosen based on the local meanings in the host country. Cavusgil (2009) says that some English words may mean very different things when left the way they are or when directly translated. Some may even be abusive.
For instance, when a reputable university such as Kumamoto University wants to make an entry into the East African market, it may be forced to change that name because its meaning in the local Swahili context in the region is abusive (Sudan, 2014). Similarly, for a Korean firm that is moving its operations to the United States, it must understand the local culture in this country and how the local perceive different colours and words.
Tastes and preferences is another important factor when conducting an assessment of global market opportunities. According to Carson (2001), tastes and preferences of consumers of a given market always define the opportunities that a business entity can exploit. For instance, there is a global phenomenon where young adults prefer using iPhones in both developed and developing countries. This means that Apple has a massive market opportunity in the global market because the current trends in tastes and preferences favour its products.
Research Methods
When conducting a research, it is important to select the appropriate research methods that will help in collecting and analysing data from the field (Denzin & Lincoln, 2011). In this study, the researcher will use both primary and secondary sources of data. Secondary sources of data will help in providing the basis upon which this study will be based. It will give this study a theoretical perspective. By understanding what others have found out in this area of knowledge, the researcher will be able to identify the existing gaps that should be addressed when conducting this study. The researcher will also use primary data that will be collected from the respondents. Primary data will help in confirming the existing concepts and theories or reject them.
Participants and sampling techniques
In this study, the researcher was interested in getting primary data from two groups of people. The first group of participants is business executives that are involved in various globalisation activities. The researcher will prefer having an interview session with top executives of major players in various industries. The executives will be taken from firms that have been very successful in their global strategies such as Apple Inc, and those that registered failure such as Target Corporation.
This will enable the researcher to collect information from both perspectives in order to understand what may constitute a success or failure when going global. The second group of participants will be scholars in the field of global market research. These are experts that will help in giving a moderated opinion on the issue under investigation. To collect data from these two groups, stratified sampling technique will be used (Creswell, 2009).
Data collection procedures
Secondary data sources will be taken from books, peer-reviewed journals, and other reliable online sources. Primary data will be taken from 40 participants in the two groups identified above. Data will be collected with the help of a questionnaire. Researcher developed a questionnaire based on the above questions and other supportive questions in order to get insights into the issues under investigation. The questionnaires will be administered by the researcher during the interview process. To the respondents who will not be available for the interview, the researcher will mail the questionnaires to them. They will respond to the questions and send the questionnaires back to the researcher via the same process.
Data analysis
Analysis of the collected data will be done qualitatively. The research involves assessment of global market opportunities. In order to respond to this topic adequately, there is need to have descriptive analysis where the respondents are allowed to explain their points based on their knowledge and experiences other than being forced to give a yes or no answers. Qualitative methods use open-ended questionnaires that allow the respondents to give their personal views on an issue using their own words.
Conclusion
The global market offers a number of opportunities to firms that are looking for avenues to expand their operations. However, before committing resources and making an entry into a foreign market, it is necessary to assess the specific market opportunities offered by the new market. It is through such assessment that a firm will know the potential of the market, tastes and preferences of the target segments of the market, and the best market entry approach that can be used. The assessment also provides information on the markets to avoid based on a number of factors.
References
Aaker, D. A. (2010). Marketing research. Hoboken: Wiley.
Bradley, N. (2015). Marketing research: Tools & techniques. Oxford: Oxford University Press.
Carson, D. (2001). Qualitative marketing research. London: SAGE.
Cavusgil, S. T. (2009). Conducting market research for international business. New York: Business Expert Press.
Crawford, I. M. (2015). Marketing research and information systems. Rome: Food and Agriculture Organisation of the United Nations.
Creswell, J. (2009). Research design: qualitative, quantitative, and mixed methods approaches. Thousand Oaks: Sage.
Denzin, N. & Lincoln, Y. (2011). The SAGE Handbook of Qualitative Research. New York: Sage Publication Inc.
Sudan, R. (2014). The global opportunity in IT-based services: Assessing and enhancing country competitiveness. Washington: World Bank.
Wiid, J., & Diggines, C. (2009). Marketing research. Cape Town: Juta.
Zikmund, W. G., & Babin, B. J. (2013). Essentials of marketing research. Melbourne: South-Western Cengage Learning.