International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module 12
1 Instructor’s Manual – Module 12 | Geringer, McNett, Minor, Ball © 2016 by McGraw-Hill Education.
Module 12:
International Markets: Assessment and Entry Modes
Use this Instructor Guide to incorporate the unique content of this product and facilitate your
Face-to-Face, Online, and Hybrid classes. This guide has been designed to be interactive and links
have been created within each title in the Table of Contents to guide you to each section. You
can also link back to the main page by clicking at the button at the bottom of each page.
Here is the Table of Contents highlighting what you’ll be able to find to support you in teaching
this module:
YOUR CONTENT
Summary
Learning Objectives
Key Terms & Key Terms with Definitions
Content Outline
PREPAR ATION FOR CLASS
SmartBook
ENGAG EMENT & APPLICATION (F ACE TO F ACE & ONLINE & HYBRID )
Boxed text discussion questions with suggested answer
IB IN PRACTICE: Cultural Issues Engulf BP
GLOBAL DEBATE: Clotaire Rapaille: Charlatan or Code Breaker Extraordinaire in
International Marketing Research?
GET THAT JOB! FROM BACKPACK TO BRIEFCASE Ronny Cheng-Ruggeberg: Risk It!
Critical Thinking Questions
Global Edge Research Task
MiniCase: Who Will Staff Up the China Operations?
Bonus Activities (additional resources not in the text)
Video Suggestions
Team Exercises
Supplemental Activities
Controversial Issues
Teaching Suggestions
Tools & Tricks
ASSESSEMENT OF LE ARNING
Connect Content Matrix
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module 12
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YOUR CONTENT
SUMMARY
This chapter introduces a screening process to assist in the analysis and assessment of foreign markets
based on environmental forces. This process consists of an examination of the forces in succession and
the elimination of countries or markets at each step. There is a smaller number of prospects to consider
at each of the succeeding stages. It is important that there are fewer countries to consider at each stage
because the difficulty of obtaining information increases at each stage. We cover both country screening
and segment screening. Often the commitment resources is so great that managements will require
primary research in the market. Obtaining these data is more difficult than it is in the home country
because of cultural problems and technical difficulties. Examples of the cultural problems are low level of
literacy, language, barriers and distrust of strangers.
LEARNING OBJECTIVES
LO 12-1 Review the steps of market screening and techniques for environmental analysis.
LO 12-2 Discuss the value of trade missions and trade fairs.
LO 12-3 Describe some of the problems market researchers encounter in foreign
markets.
LO 12-4 Explain international market-entry methods.
KEY TERMS AND DEFINITIONS
cluster analysis (p. 312)
Statistical technique that divides objects into groups based on
similarity
contracted manufacturing (p. 322)
An arrangement in which one firm contracts with another to
produce products to its specifications
country screening (p. 310)
A screening that uses countries as the basis for market selection
environmental scanning(p. 309)
A procedure in which the firm scans the world for changes in the
environmental forces that might affect it
franchising (p. 322)
A form of licensing in which one firm contracts with another to
operate a business under an established name according to specific
rules
joint venture (p. 323)
A cooperative effort among two or more organizations that share a
common interest in a business undertaking
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module 12
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licensing (p. 321)
A contractual arrangement in which one firm grants access to its
patents, trade secrets, or technology to another for a fee
management contract (p. 322)
An arrangement by which one firm provides management to
another firm
market factors (p. 312)
Economic data that correlate highly with market demand for a
product
market indicators (p. 312)
Economic data used to measure relative market strength of
countries or geographic areas
market screening (p. 309)
A modified version of environmental scanning in which the firm
identifies desirable markets by eliminating the less desirable ones
segment screening (p. 310)
A screening that uses market segments, a within-country analysis of
groups of consumers, as the basis for market selection
social desirability bias (p. 319)
The respondent’s desire to please that leads to answers designed to
please the interviewer rather than reflect the respondent’s true
beliefs or feelings
strategic alliance (p. 323)
Collaboration with competitors, customers, and/or suppliers that
may take nonequity or equity form
turnkey project (p. 321)
An export of technology, management expertise, and possibly
capital equipment where a contractor agrees to design and erect a
plant, supply the process technology, provide the production
inputs, train the operating personnel, and, after a trial run, turn the
facility over to the purchaser
trade fair (p. 318)
A large exhibition at which companies promote the sale of their
products
trade mission (p. 318)
A market visit by business people and/or government officials (state
or federal) in search of business opportunities
trend analysis (p. 312)
Statistical technique used to estimate future values by successive
observations of a variable at regular time intervals that suggest
patterns
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Instructor Guide to Module 12
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CONTENT OUTLINE
The following section provides the flow of information using the LEARNING OBJECTIVES as a guide, KEY
TERMS learners will need to take away from the course and a notation of when to use POWERPOINT
SLIDES with LECTURE NOTES to drive home teaching points.
LO 12-1
Key Terms:
• market screening
• environmental scanning
• country screening
• segment screening
• market indicators
• market factors
• trend analysis
Lecture Outline and Notes:
I. Market screening (See figure 12.1)
A. Application of environmental scanning, but narrower
B. Conducted at the country or segment level to eliminate potential markets
II. First Screen: basic needs potential
C. Influenced by climate, geography, natural resources
D. Some needs easy to assess (industrial goods); others more difficult, esp. when desires (chocolate)
E. Data include imports, local production
III. Second screening: financial and economic forces
A. Trends in inflation, currency exchange, interest rates, credit availability, paying habits, rates of return
on similar investments
B. Four techniques useful
1. market indicators-measures relative market strength
2. market factors-data that correlate highly with demand for product
3. trend analysis-statistical technique to measure future values
International Business
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4. cluster analysis-statistical technique that divides objects into groups based on similarity
IV. Third screening: political and legal forces
A. Barriers to entry- import/export barriers, limits on foreign ownership, limits on repatriation of
earnings
B. Stable government policies (different from government stability)
V. Fourth screening: cultural forces—difficult because culture is subjective and interpretive
VI. Fifth screening: competitive forces
A. Review of competitors
B. May need to review by subcultures (Brazilian markets in Japan)
VII. VI. Final selection of new markets
A. Personal visit a good idea
B. Collection of data may be necessary (consumer products)
VIII. Segment screening—across nationalities based on age, income, psychographics. Segments
must be
A. definable—so they can be measured
B. large—worth the effort (3D printer manufacturing changes this)
C. accessible
D. actionable—able to implement the 4 Ps
E. capturable—we need to be able to compete
F.
1. 1. Hall: Lifetime in a culture or extensive training program, including study of culture and
language.
2. 2. Factual knowledge of culture, culture frameworks, language, experience. Experience is
critical.
3. 3. Realize that there are other cultures. This sounds simple, but is not.
LO 12-2
Discuss the value of trade missions and trade fairs.
• Trade mission—market visit in search of opportunities
• Trade fair—exhibition to promote sales
Key Terms:
• trade mission
• trade fair
I. Trade mission
A. To seek out market opportunities
B. Often with government or Chamber of Commerce support
II. Trade fair
A. Exhibits at which companies promote their goods. (Frankfurt Book Fair, Paris Air Show, Hanover
CeBIT show)
B. Often organized by governments
C. Source of marketing leads plus competitive intelligence
International Business
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Instructor Guide to Module 12
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LO 12-3
Describe some of the problems market researchers encounter in
foreign markets.
• Home country research methods used
• May encounter cultural problems
o language-related issues
o low literacy rates
o who should be interviewed?
o social desirability bias
• Increasing availability of online research data bases
and big data
Key Terms:
• social desirability bias
•
I. Home country research methods used, may need to be adapted to local conditions
II. Cultural problems may be present
D. Language-related issues: translation and back-translation, many languages in one country
E. Low levels of literacy—limits mail surveys
F. Who should be interviewed—may be difficult to determine decision-maker
G. Respondent may try to please researcher—social desirability bias
III. Availability of online data bases and big data increasing
LO 12-4
Explain international market entry methods.
• Nonequity-based modes of entry
o Exporting
o Turnkey project
o Licensing
o Franchising
o Management contract
o Contracted manufacturing
• Equity-based modes of entry
o Wholly owned subsidiary
o Joint venture
Key Terms:
• turnkey project
• licensing
• franchising
• management contract
• contracted
manufacturing
• joint venture
• strategic alliance
I. Nonequity-based modes of entry
A. Exporting—little investment and low level of risk
B. Turnkey project—contractor designs and erects plant, supplies process technology and production
inputs, staffs and trains. When up and running, turned over to purchaser.
1. May involve licensing with royalty payments
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module 12
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2. May lead to IP issues
C. Licensing—used in technology, fashion. Some firms resist due to IP issues
D. Franchising—licensing with more control, a specific set of rules (fast food, hotels, UPS, real estate)
E. Management contract –use in hotel, airline sectors
F. Contracted manufacturing—firm contracts to produce goods to specification
II. Equity-based modes of entry
A. Wholly owned subsidiary
B. Joint venture—cooperative effort to share business undertaking, drawing on expertise. (Alliance
may be a kind of JV, or may be nonequity.)
International Business
Geringer, McNett, Minor, Ball
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PREPARATION FOR CLASS