Looking to Do Business in Developing Countries? Then Check Out Market Analysis Factors

Editor’s note: “International Business Corner” is a weekly column written by Joan Keston that will be providing information for people involved in or considering international operations. Keston is an international business consultant. Over the next several months she will be writing about important issues that international businesses face as they compete in the 21st century global business environment. This article addresses some factors in the market analysis regarding developing countries.

RALEIGH - According to Goldman Sachs in a report published in October, 2003 (“Dreaming With the BRIC’s: The Path to 2050), as we proceed towards 2050 strategic choices for firms doing business internationally become more complex, and being in the right emerging market becomes an increasingly important strategic choice.

Although we have already seen major changes in global business and the effects domestically, significant measurable impact will begin to be felt by 2009.

The landscape of leading economies will be quite different from today, including several developing countries in place of the current list of leaders.

How Do We Determine Where To Do Business?

Most, if not all, global strategic analyses will include developing countries as necessary market targets or sources for goods and services. Although many of the factors included in this writing are applicable to more advanced economies, they encompass somewhat different characteristics when pertaining to developing economies.

• Regional Penetration

A market study or analysis will help you determine which country should be targeted as the entry market for a particular region in regards to market considerations for your products or services.

• Infrastructure

Does the country have the infrastructure necessary for your business to achieve its goals and objectives? Infrastructure includes the ports, airports, roads and other means of internal transportation, telecommunications.

• Corruption Index

Transparency International, the global coalition against corruption, issues surveys and indices on world corruption by country. The corruption level in a particular country may affect your choice of where and how to do business.

• Management Team

The local management team is essential to achieve your maximum entry into a foreign market. You must be able to assemble a team with the necessary management and financial sophistication to understand your corporate culture, including your legal and accounting requirements, and the foreign business culture. Integration of both cultures is important. They must also have the necessary political and industry contacts, be able to manage and energize the sales and marketing team, be dedicated to your company, etc.

• Country Risk Analysis

A number of services evaluate the overall risk of doing business in a country, including an analysis of the political, economic and commercial risk. This information may be valuable in deciding where to do business.

Although several of these concepts may appear to be theoretical, they have very serious and direct implications for the products and services a company may wish to commercialize in a given country. They will also directly affect the analysis and decision of doing business in a particular country, or the choice of country through which a company may enter a global region.

The developing countries have tremendous social and economic obstacles to overcome in order to achieve their full potential in the global economy, and some are more advanced than others on the development spectrum. Regardless of specific outcomes, the global economy and global considerations have already changed most aspects of our existence, and will continue to do so.

Joan Keston has experience with mature as well as entrepreneurial companies, domestically and internationally, and with an executive managerial and legal background. She has a deep understanding of the business culture and issues involved in doing business in developing countries as well as Europe. She is the Managing Principal at Keston & Associates, Ltd., an international business consulting firm located in Raleigh, NC, and a Partner at Paladin and Associates, Inc. Her firm assists companies establish business operations throughout the world.