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Market Indicators for Entry Decision-Making

Companies refer to several market potential indicators in making market entry decisions. Michigan State University’s School of Business has developed eight indicators to help companies to make such decisions when considering entry into emerging markets. Emerging markets are quite critical as they form majority of the world’s population and account for more than half of the world’s output. Additionally, while the rest of the world’s economies are registering dwindling economic performance, emerging markets such as Brazil, China, India, and Singapore are havens of growth. The eight indicators are market size, market growth rate, market intensity, market consumption rate, commercial infrastructure, economic freedom, country risk, and market receptivity.

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While it is crucial to have high scores in all these indicators, it is virtually impossible to include all of them in decision-making. Hence, a company should evaluate a country based on the product features, performance levels, and future trends. For a company that plans to market laptop computers in the countries listed, I would advise particular consideration of the following indicators. First, market receptivity is crucial. A company that blindly enters a market without looking into the culture of technology adoption may leave almost immediately because it will form the basis for some of the indicators listed (market growth rate, market consumption rate and ultimately the size of the market).

Second, the company should critically analyze the commercial infrastructure of the country. Technology changes fast. With this in mind, it is important to have the necessary infrastructure to provide the market with the relevant products. Third, economic freedom will determine the future performance of the product. It is crucial to nurture a competitive market where certain products are not discriminated against. Lastly, Country Risk is as important as economic freedom. In fact, the two are closely interrelated. The presence of economic freedom reduces a country’s risk of doing business. However, Country Risk is an amalgamation of many factors such as political stability and constitutional freedoms. The two countries that score highly on these factors are Malaysia and Hong Kong. The company should enter these markets considering that other countries such as Singapore have already existing and stable markets for laptops. Additionally, countries such as India and China may have favorable scores but the infrastructure for growth is infringed my government interference. The rest of the countries score poorly on these significant factors.

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