The changing global scenario has resulted in the growth of a global business culture where multinational companies are looking to invest in upcoming emerging markets throughout the world. But in such a scenario it becomes important to study potential markets and screen sites so as to zero-in on the most profitable business culture internationally. The following paper aims to study the various steps involved in screening a site to reach to a conclusion. Apart from that, the paper also studies few of the emerging market trends that promises to deliver good business in the future and can be beneficial to multinational enterprises in terms of profitable investments.
Introduction
Thanks to technological advances and globalization, the world is coming closer and has resulted in the national markets to open up globally. In such a condition, it becomes difficult for managers to identify the potential profitable markets for investment. Consequently managers follow a step-by-step method to scrutinize and screen potential markets.
Steps for market and site screening
Identifying the basic appeal of the location
The first step involves estimating the requirement of the product in the particular market and reviewing the availability of resources. It is important to analyze whether there is a high or marginal demand for the company’s product in market of the particular nation. Also care should be taken regarding the nation’s attitude and customs towards the product. With respect to resources it is imperative to assess whether raw materials, labor and finance are easily available in the market. If not, the site should not be probed further.
Evaluating the business environment of the site
Different countries follow different set of rules, laws, customs and economies. In such a scenario managers need to delve deeper into these important aspects. The cultural and political scenario must be taken into consideration for site-screening.
Determining the market potential
Even if there is a demand for the product and the local environment is also ideal, the local economies must be screened to further eliminate sites. The economic development, emerging market trends and industrialization are important factors that need to be analyzed.
Choosing the site
The last site involves visiting sites, studying market trends and potential risks and analyzing competitor markets. This helps to make the right decision.
Primary and Secondary sources of data
In order to conduct business in the international markets, companies need to gather relevant data. Such market research helps to provide information regarding various features such as the economy, culture, business environment, and political scenario, logistics etc. Market research maybe primary or secondary in nature. Primary market research involves first hand research by the company and hence the data acquired is always accurate and precise. The data collected through this mode is also specific to the requirement of the company. The only drawback of such kind of market research is the fact that it is very time consuming as well as a costly method. Some of the primary research methods include questionnaires or survey, group or personal interviews, sample testing and observation.
In contrast to primary research, secondary research uses info information researched by other sources. The gathered data used is not specific to the company but is related to the product/service. This method is relatively cheap and less time consuming in contrast to primary research method. The major drawback of secondary research is that since it is not firsthand information, it may not be specific and may also be biased. Also, not being collected firsthand, the accuracy of the data cannot be validated. The usual methods of secondary market research include magazines, websites, specialized textbooks, journals and data reports of other companies.
Emerging Markets
Innovation is the need of the changing market trends, as new and innovative products are touted as the next big thing that will further advance the economies of the world. Globalization and ready availability of resources has given rise to some astounding inventions that are set to take the markets by storm.
Solar heating and cooling: The rising need to save energy along with the rising cost of electricity supply has led to the innovative use of solar energy for heating and cooling purposes of both residential as well as commercial spaces. The biggest advantage of solar energy is its free availability. Utilizing this free source, companies are spear heading in to the construction of solar units that can trap and utilize thermal energy to heat water, heat or cool a space either commercial, residential or industrial units. This technology does away with the need of electricity. This emerging technology is gaining much popularity amongst consumers and hence global markets are looking to invest in this technology. Also, governments are supporting and encouraging this technology by drafting favourable policies. According to data, the Utility Solar Business Models (USBM) has grown from 22 to 65 programs in 2010. This is a positive trend where global companies are looking to invest and consequently result in profits.
Hydrogen Vehicles: The vehicles had garnered much attention in 2003, but were then overshadowed by bio fuels, batteries and electric cars. But recently hydrogen vehicles are staging a comeback. The idea had major drawbacks and had taken a backseat, but recently nine major car manufacturing companies such as Ford, Honda, Kia etc. jointly issued a statement stating to revive fuel-cell vehicles by 2015. Consequently energy companies in Berlin issued an agreement in setting up of a hydrogen infrastructure in order to promote hydrogen vehicle research and application. This clearly proves emerging market for hydrogen vehicles as top-notch companies are looking to invest in this technology.
Concentrated solar power (CSP): This technology uses huge mirrors and lenses in order to concentrate large art of thermal energy into a small area. When this concentrated light is converted into heat using heat engine or steam turbine, electricity is produced. The CSP technology is widely commercialized as more and more companies are opting to adopt this technology for their electrical needs. The growth of CSP is expected to rise continuously in the coming years. According to statistics, CSP will be accountable for nearly 25% of energy needs throughout the globe. This is a huge leap and there is a productive scope for companies to invest in this technology. This emerging new market is catching the fancy of many companies looking to invest in solar energy market. Spain has shown much interest in this field as it is accountable for almost half of the total 740 MW of CSP generating capacity. Spain is further expected to install other 1,789MW operational by the year 2013. Thus companies are looking up to this new evolving market for future prospects.
Sources:
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