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MGT520 - International Business - Lecture Handout 42

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INTERNATIONAL MARKETING

MARKET SIZE ANALYSIS:

Once companies decide to enter markets, they must then analyze data to determine their market potential in each country and their marketing mix to reach the potential.

Total Market Potential:

To determine potential demand, managers first estimate the possible sales of the category of products for all companies and then estimate its own company’s market-share potential. In order to do so, they estimate per capita consumption and move it along a trend line as per capita GNP increases.

Gap Analysis:

Once a company is operating in a country and estimates that country’s market potential, it must calculate how well it is doing there. Gap analysis is a method for estimating a company’s potential sales by identifying market segments it is not servicing adequately.

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MGT520 - International Business - Lecture Handout 40

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REGIONAL AND ECONOIC INTEGRATION

The Euro

Prior to the implementation of the Euro (the single European currency), member countries moved to converge their economies by

  • Reducing inflation so that each country’s inflation would be no more than 1.5 percentage points above the average of the three lowest inflation rates in Europe
  • Reducing long-term interest rates so that each country’s rate would be no more than two percentage points above the average of the three lowest.
  • Reducing the government’s budget deficit to no more than 3.5% of GDP
  • Reducing the stock of public debt so that it would not exceed 60% of GDP.

Eleven countries adopted the Euro as of January 1999. The Euro will show up as an actual bank note (replacing individual currencies) in 2002. It is already widely used for a variety of no cash transactions.

Implications of the EU:

Although Europe is moving closer together through the Euro and the Single Market program, it is still not as homogenous as the U.S. market. Differences in languages, cultures, and governments still splinter Europe, and the eventual addition of new countries will create even more divisions in the market. Companies need to develop a pan-European strategy without sacrificing different national strategies.

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