GLOBAL BUSINESS ENVIRONMENT

Global Business Environment

Global Business Environment

Section A

Factors Determining Market Attractiveness

It is an irrefutable fact that emerging markets provide new opportunities for the sale of goods, the expansion of production, and the continued growth and development of the company. For this reason, targeting new markets is now one of the strategic objectives for entrepreneurs who have the capital to make investments (Savona et al., 2011). For any company regardless of its country of origin, searching for new potential markets is a particular problem. The most daunting task of all is the process of entering new markets while minimizing risks (Savona et al., 2011). It is for this reason that companies typically enter only those markets that seem attractive and profitable in the long run.

In order to determine the attractiveness of a certain market environment, businesses employ a wide range of market analysis tools. The primary aim of these tools is to determine the positive factors that may help businesses in achieving their strategic objectives, such as market penetrations, market expansion, and revenue growth etc. (Savona et al., 2011). On the other side, however, the tools also identify the dangers and threats that are prevalent in the market such as bans and restrictions, the level of competition, and so on. It is imperative that business planners take such matters into consideration when they are making critical decisions regarding the entry into a market (Obstfeld et al., 2012).

With a simple PESTLE analysis, a business can easily identify the attractiveness of a certain market environment (Obstfeld et al., 2012). With this tool, the business receives a detailed description of the elements of the environment, which are key data to decide on the degree of attractiveness of the market and the prospects of success in entering this market. Thus, the characteristics that are highlighted for each market are a reflection of the general situation in the target market (Dolezalek, 2012). The main proposals can be summarized in the form of the following generalized parameters that are key in identifying the attractiveness of a market:

Potential market demand for the final product (Whether or not it exceeds the current demand)

Market demand for final product (Whether it is set to rise further)

Potential for expansion of the production facilities of shoppers

Existence of legal barriers that limit market penetration

High capacity of the market (provides a constant outflow of capital goods; needs to be replaced)

Whether the product meets the needs ...