Export Business Essay

5011 words - 21 pages

International section

International business development – what are the considerations?
Robert G. Watters
Introduction There are now many companies in various business sectors which can be classed as global operators. Coca-Cola, McDonald’s, Avis, IBM, Sony and Ford are ideal examples of worldwide brands. There are also many other companies which have decided to expand their marketing operations by going into new markets abroad because they are confident they can compete, although they could not be truly classed as global operators. Marks & Spencer with their move into France and Aldi’s move into the UK are examples.

Global operators

The financial services sector has no worldwide ...view middle of the document...

Insurance industry focus

This article attempts to examine the considerations to be taken into account in a UK financial services company going transnational through a manager’s checklist. It also looks at the issues in standardization or adaptation which might arise in going into international markets. The great majority of examples to back up the examination come from the European market but there is also information on the major world markets. The focus is very much on the insurance industry in terms of data but the rationale holds good for other parts of the financial services sector. The considerations also seem to transcend the inherent differences between consumer-focussed and business-to-business operations.
The checklist The checklist includes the following key points:
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identifying markets; customer segmentation; distribution channels;
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JOURNAL OF BUSINESS & INDUSTRIAL MARKETING VOL. 10 NO. 3 1995 pp. 61-73 © MCB UNIVERSITY PRESS. 0885 8624

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economic issues; legislation and regulation; marketing mix; language; past experience; standardization and adaptation; market structure and opportunities; competitive advantage; financial considerations; political environment; taxation; technology; management control; methods of entry.

The approach suggested is to take each of these considerations and gather the necessary information to allow a decision on the possible impact on going transnational. The order will need to be iterative as the effect of one factor, such as an adverse political environment, could close down an option and lead to the revisiting of identifying markets.
Which markets are dominant? Identifying markets A recent report from Euromonitor (1990) suggests that as a first step an organization would look to identify the major world markets. For insurance worldwide this is set out in Table I. It will come as no surprise to see the USA and Canada account for 50% of the world market. However, the real opportunities may be available in the areas of large population yet low insurance penetration such as Asia and China. The opportunities in Asia have already been spotted by many companies including AMP Society and Prudential.

In addition to looking at which markets are dominant, information on size and future growth would be sought. Companies would also have to look at a breakdown of these large geographical markets by country and Figure 1 sets out the position in Europe.
The competitive situation Market structures and opportunities Next would come the requirement to look at the competitive situation in each market. Information will be required on the structure and competitive

Nonlife USA and Canada EC Rest of Europe Japan Australia/New Zealand Other Total Source: European Commission 56.9 23.4 3.3 9.1 1.7 5.6 100.0

Life 42.6 20.7 4.0 27.2 1.0 4.5 100.0

Total 50.4 22.2 3.6 17.3 1.4 5.1 100.0

Table I. Shares of world trade in insurance 1985 (%)
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