GLOBAL MANAGER’S BRIEFCASE Conducting Global e-Business

Generating sales in new geographic markets over the Internet is an increasingly popular method of expansion for large multinationals and entrepreneurs alike. Here are some issues managers should consider when entering new markets using the Internet.

Market Access

■ Infrastructure. Before investing heavily in e-business, investigate whether your potential customers have easy access to the Internet. Determine whether their government is developing advanced digital networks.

■ Content. Companies must be informed about the different policies of each country through which their information travels in order to avoid liability. Key topics are truth in advertising; fraud prevention; and violent, seditious, or graphic materials.

■ Standards. It’s not always entirely clear which country has the power to establish standards of operations for e-business. Standards might be set up as trade barriers to keep international companies out of a domestic market.

Legal Issues

■ Privacy. One strength of e-business is that consumer data can be collected easily and used to generate sales. But consumer groups in some countries view the collection of such data as an invasion of privacy. Consumers are particularly vehement if they are unaware this information is being collected and how it is being used.

■ Security. Companies must ensure their data communications are safe from unauthorized access or modification. Security technology, such as encryption, password controls, and firewalls, still needs support from a global infrastructure.

■ Intellectual property. International agreements govern and protect copyrights, databases, patents, and trademarks. Yet these issues will remain a global concern for e-business until a widely accepted legal framework is established for the Internet.

Financial Matters

■ Electronic payments. Online use of credit cards remains a security concern for many consumers. Global electronic payment systems such as stored-value, smart cards, and other systems are in various stages of development and will alleviate many security issues.

■ Tariffs and taxation. International policies regarding which party in an international e-business transaction owes taxes to which nation are not yet fully developed. Countries differ widely on how these matters should be treated.

Quick Study

1. What are the four steps in the screening process?

2. Identify the main factors to investigate when identifying the basic appeal of a market or site for operations.

3. What key forces should be examined when assessing a nation’s business environment?

4. How do transport costs and country image affect the location decision?

Step 3: Measure Market or Site Potential

Markets and sites passing the first two steps in the screening process undergo further analysis to arrive at a more manageable number of potential locations. Despite the presence of a basic need for a product and an adequately stable national business environment, potential customers might not be ready or able to buy a product for a variety of reasons. Despite the availability of resources, certain sites may be unable to supply a given company with the level of resources it needs. Let’s now explore the factors that further influence the potential suitability of markets and sites for operations.

Measuring Market Potential

As barriers to trade are reduced worldwide, companies are looking to increase sales in industrialized and emerging markets alike. But businesses can seldom create one marketing plan for every market in which they sell their products. Nations enjoy different levels of economic development that affect what kinds of goods are sold, the manner in which they are sold, and their inherent features. Likewise, different levels of economic development require varying approaches to researching market potential. But how do managers estimate potential demand for particular products? Let’s take a look at the factors managers consider when analyzing industrialized markets and then examine a special tool for analyzing emerging markets.

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