There are many factors that encourage a company to go international markets including increasing sales, increasing the brand equity, obtain more benefits, in other words, a company goes international to have more money and a bigger profit. There are some externalfactors that encourage a company to go international, for example when a market is becoming mature and the company cannot have a bigger market share or when a market is too saturated that the company has very few options of becoming bigger in the market, so they’ll have to look for other markets in other countries in order to get more profits so that the company can survive or implement a new strategyin its home market, a company cannot depend on a single market. Other important factor that encourage a company to go international is the economies of scale that it has, because it lets the company produce more and at the same time it is reducing its costs, so it will be profitable for a company to produce more and sale in other market than maintaining the production and selling in the homemarket.
2. There are various Microeconomic and Macroeconomic factors which have a direct impact on the decisions a company makes to establish a foreign market position in a specific market. What are those factors and how do they influence the decision making process?
Microeconomic factors are those regarding to the company, factors that the company can manage and in certain way change. Somemicroeconomic factors that have an impact on a company’s decision to establish in a foreign market are cost of the raw material, the cost of the product in the new market and the price consumers will perceive, the distributor or intermediaries the company will use to enter the market, also consumers are in a certain way microeconomic factor because they are the demand in the market and the company hasto face this demand.
On the other hand, macroeconomic factors are external factor that the company cannot manage but affect the company. For example the currency exchange, the purchasing power parity, the taxes, duties and fees, the consumers because of the culture that the country has, the type of market, if it is an oligopoly, a monopoly if it is made up of only national companies and at thesame time the competitor strategies, depending on the way the company is going to enter the country there are other factors to have in mind, for example environmental regulations in the case a plant will be constructed, the labor force and their salary. There are other macroeconomic factors that affect the decision but they are not identify directly with a company, for example the political risk acountry has, the inflation rates, the interest rates, the gross domestic product per capita. The barriers of entry have a big impact in decision making because no matter if the market is the perfect one, if the government has established a policy in which companies that does not have a certification of the quality of the product they cannot sale it in the country, the company has to look for anothercountry or obtain that certification and both entails costs. An important macroeconomic factor is the trade agreements a country has because it will reduce our transportation, shipping, duties and fees cost letting the company give a lower price to consumers.
3. The company has a certain Product Line. Explain what marketing strategy the Company can use to achieve market penetration withrespect to users and non-users both in a local market and a regional market. Briefly discuss this from a short term and a long term marketing strategy.
According to the Product-Market Growth Matrix created by Igor Ansoff if the company has a product line, it has two options depending on the market. If it is a market in which the company already is established, it must have market penetration in order...