Over the past century the business environment has undergone relatively gradual changes. Today, it has become apparent that change is the only constant.
The business environment is fast becoming a global competitive landscape due to technological innovation and lower barriers to market entry. Such changes influence an organization’s need for information and resources and can affect an organization’s ability to make decisions. A deficiency in any of these two elements results in what is termed “environmental uncertainty.”
Globalization and the explosion of information technology have altered the business environment (i.e. business models, market entry strategies, etc.). All aspects ranging from operations to marketing to organizational structure, strategy and decision-making have been affected. Even finding a pool of potential customers is no longer terribly difficult. This brings a greater amount of competition between businesses to win and retain these consumers while at the same time trying to remain profitable.
In an effort to earn greater returns some firms expand beyond their domestic boundaries and into the international arena by translating operations to foreign markets. Simply expanding operations however does not lead the firm to profitability since it requires extensive research and analysis to determine key strategic moves. Research will provide answers to basic questions dealing with which markets to enter, when, to what degree, and how. These provide information on country attractiveness, market potential, market size, purchasing power, and other factors that will affect on the costs, risks, and benefits of doing business in the target country. Aside from the socio-politico-economy data of the target country, management needs information on economies of scale, capital requirements, current market situation, competitors, distribution channels, and other trade barriers. Timing must also be considered before entering the target country since first-mover advantages/disadvantages, pioneering, or late entrant may drastically reduce or increase costs. Companies will certainly not want to enter markets where they will face an ‘uphill battle’ and tremendous financial losses in business development. Finally, the scale of entry will determine the commitment to the target country and with it, the type of exposure and risk the firm will face.
As can be seen, companies expanding beyond domestic borders need information and resources to make the right decisions or they will waste time and money. CIMA will assist your organization identify (Market research), validate, and quantify potential markets to determine which market makes financial sense for your company and thus minimizing the effects of uncertainty and maximizing stakeholder value.
