618 The Marketing Book
Ownership may imply but does not mean
control in practice. It usually means only that
large-scale investment in a sales subsidiary
and/or manufacturing plant has taken place,
and that there will be a payback period before
this investment is able to achieve a significant
return. More effective control may be achieved
by other means that do not involve equity or
ownership, but may be a form of leverage over
the foreign partner exercised via the flow of
funds, components, technology and know-how
by the Western partner. In longer-term agree-
ments, the search for a continuing form of lever-
aged control over a foreign partner is difficult.
Situational or environmental analysis
Complexity and uncertainty predominate in
the international arena, but the risks and the
attendant expectations of return are what in
turn make it so appealing. It is unwise to skimp
on research because it costs too much, is not
relevant to what is considered the mainstream
domestic market business, is not as accurate as
domestic market or because it is felt (but not
proved) that the company already knows how
to sell. Environmental scanning is wider in
scope than traditional market research. There is
a need for a comprehensive background report
alongside studies of market potential, as these
factors could affect market access and the
ongoing internal operations of foreign com-
panies in the host country. A simple but useful
mnemonic is SLEPT:
Social.
Legal.
Economic.
Political.
Technological.
This framework, using a series of questions, can
help orient the company towards the most
efficient use of its resources.
Where are you now?
Here are some checklist questions, to help with
positioning: New company or subsidiary following a
merger, take-over, joint venture or strategic
alliance?
New products incompatible with existing lines?
Rethinking marketing strategy to bring a closer
fit between product and prospect?
Is there a mismatch now between your
product and the target segment?
Has the target segment profile changed?
Has the distribution channel changed due to
either new entrants or new and improved
competitive offerings?
Is this a new product in terms of concept and
brand that you are trying to introduce to
international markets?
Are you looking abroad because of
competition at home or because your
domestic competitors are looking abroad also?
Have you compared growth potential at home
versus abroad?
What flexibility do you have to market your
product at home versus abroad?
How would you describe the current market
situation for this product in your home
market?
Does it differ when we look at foreign
markets?
Are there certain economic constraints
regarding production runs, or anything else,
which would affect either the quality that
needs to be manufactured or the quantity that
needs to be delivered to any one customer?
Are there any other problems confronting you
now or likely to confront you in the near
future which you can foresee?
Have you undertaken any regular monitoring
either of the home market or your target
foreign market to foretell the unforeseen?
Lastly, monitoring performance relative to the
marketplace should be an ongoing activity that
never ends, although the excuses certainly
should.