STEP 1 : Select the best countries for your product. Since the number of world markets to be considered by a company is very large, it is neither possible nor advisable to research them all. Thus, your firm's time and money are spent most efficiently by using a sequential screening process. The first step in this sequential screening process for the company is to select the more attractive countries for your product. Preliminary screening involves defining the physical, political, economic and cultural environment. Rate the following market factors in each category. (1) Select 2 countries you think have the best market potential for your product; (2) Review the market factors for each country; (3) Research data/information for each country; (4) Rate each factor on a scale of 1-5 with 5 being the best; and (5) Select a target market country based on your ratings MARKET FACTOR ASSESSMENT Country A Country B Demographic/Physical Environment: Population size, growth, density Urban and rural distribution Climate and weather variations Shipping distance Product-significant demographics Physical distribution and communication network Natural resources Political Environment: System of government Political stability and continuity Ideological orientation Government involvement in business Attitudes toward foreign business (trade restrictions, tariffs, non-tariff barriers, bilateral trade agreements) National economic and developmental priorities Economic Environment: Overall level of development Economic growth: GNP, industrial sector Role of foreign trade in the economy Currency Inflation rate, availability, controls, stability of exchange rate Balance of payments Per capita income and distribution Disposable income and expenditure patterns Social/Cultural Environment: Literacy rate, educational level Existence of middle class Similarities and differences in relation to home market Language and other cultural considerations Market Access, Limitations on trade: high tariff levels, quotas Documentation and import regulations Local standards, practices, and other non-tariff barriers Patents and trademark protection Preferential treaties Legal considerations for investment, Taxation, repatriation, employment, code of laws Product Potential: Customer needs and desires Local production, imports, consumption Exposure to and acceptance of product Availability of linking products Industry-specific key indicators of demand Attitudes toward products of foreign origin Competitive offerings Local Distribution and Production: Availability of intermediaries Regional and local transportation facilities Availability of manpower Conditions for local manufacture Indicators of population, income levels and consumption patterns should be considered. In addition, statistics on local production trends, along with imports and exports of the product category, are helpful Ibr assessing industry market potential. Often, an industry will have a few key indicators or measures that will help them determine the industry strength and demand within an international market. A manufacturer of medical equipment, for example, may use the number of hospital beds; the number of surgeries and public expenditures for health care as indicators to assess the potential for its products. What are the projected growth rates for the two countries over the next 3-5 years? STEP 2 Determine Projected Sales Levels What is your present domestic market percentage? What are the projected sales for similar products in your chosen international markets for the coming year? What sales volume will you project for your products in these international markets for the coming year? What is the projected growth in these international markets over the next five years? STEP 3: Identify Customers Within Your Chosen Markets What companies, agents or distributors have purchased similar products? What companies, agents or distributors have made recent requests for information on similar products'? What companies, agents or distributors would most likely be prospective customers for your export products'? STEP 4: Determine Method Of Entry How do other domestic firms sell in the markets you have chosen? Will you sell direct to the customer? Who will represent your firm? Who will service the customers needs? STEP 5: Building A Distributor or Agent Relationship Will you appoint an agent or distributor to handle your export market? What facilities does the agent or distributor need to service the market'? What type of client should your agent or distributor be familiar with in order to sell your product? What territory should the agent or distributor cover? What financial strength should the agent or distributor have? What other competitive or non-competitive lines are acceptable or not acceptable for the agent or distributor to carry? How many sales representatives does the agent or distributor need and how often will they cover the territory? Will you use an export management company to do your marketing and distribution for you?