Master of International Management

Dirk Boehe
dirk.boehe@um6p.ma
Managing International Trade

abs.um6p.ma
Managing International Trade – An Overview
I. Trade Theories

III. Foreign Exchange, Managing

II. Export Market Selection
Trade Risk, &Trade International & International Marketing
Financing Trade

IV. Managing The Global

Value Chain

2
 II. 1. Exports versus FDI
Export Market
Selection & 2. Export Market Selection
Interntional
Marketing
3. Global Marketing Research
for Export Markets

3
Chabros
International: a
World of Wood
Ivey Case # W10001
Assignment questions

(1) What should Chabros do to overcome the financial crisis? Why?

(2) If you decided to follow the new market development strategy, into which markets would
you expand?
(3) If you decided to follow the market penetration strategy, into which markets would you
expand?
Problem Statement – TOSCA

Trouble - What makes this problem real?

Owner - Whose problem is this?

Success criteria - What will success look like?

Constraints - What are the limits on the solution space?

Actors - Who has a say in the way we solve this problem?

è Use the TOSCA Worksheet

What is Chabro’s Dilemma or Trade-off?

High
Reconcile
opposing
choices?

……. Co
ns
t
…… rain
.. ts

Low

Low High

…..
Should Chabros divest or expand? How?

How can we analyse these market choices?

Build an issue tree!

Source: Garrette B, Phelps C, Sibony O. Cracked It!: How to Solve Big Problems and Sell Solutions like Top Strategy Consultants. Cham :
Springer International Publishing : Imprint: Palgrave Macmillan, 2018. 8
 like Top Strategy Consultants. Cham: Springer International Publishing: Imprint: Palgrave Macmillan.
Source: Garrette B, Phelps C, Sibony O. 2018. Cracked It!: How to Solve Big Problems and Sell Solutions
Mutually Exclusive and Collectively Exhaustive (MECE)

(1) “Collectively Exhaustive means that we have identified all possible conditions to
provide logical support for the hypothesis”
à Are the conditions – if supported – sufficient together to recommend that your hypothesis
should be accepted?
à Are they sufficient to answer your issue tree questions?
Check:
§ Ask this question: Does an “Others” category exist?
§ Example: UG Students, PG students – Are these two categories collectively exhaustive?
§ Suppose all conditions hold and still argue against the hypothesis.
(2) Mutually exclusive means that the conditions must not overlap.
§ Example: UG Students, PG students, MBA students – are these three categories mutually
exclusive?

9
 like Top Strategy Consultants. Cham: Springer International Publishing: Imprint: Palgrave Macmillan.
Source: Garrette B, Phelps C, Sibony O. 2018. Cracked It!: How to Solve Big Problems and Sell Solutions
Mutually Exclusive and Collectively Exhaustive (MECE)

Cartesian Rules:

1. Accept nothing for true without questioning it thoroughly. (“critical thinking”)

2. Divide each issue into parts until you find adequate solutions to each
elementary issue. (disaggregation of problems)
3. Conduct analyses by starting with the simplest issues and ascending step by
step to reach more complex issues, while keeping a sense of order and
priority, especially when considering disconnected issues.
4. Make sure nothing is omitted.

Source:
Garrette B, Phelps C, Sibony O. Cracked It!: How to Solve Big Problems and Sell Solutions like Top Strategy Consultants. Cham : Springer International Publishing : Imprint: Palgrave Macmillan, 2018. 10
LIBRARY LINK
Chabros Case Study – strategic alternatives
Source: Boehe, D., & Jiménez, A. (2018). Does the sequencing of related and unrelated export diversification matter? Evidence
from Colombian exporters. International Business Review, 27(6), 1141-1149.
diversification and
geographic export
interrelationship
Research on the

between export

diversification
product
Export Market Selection
 International Marketing Process

Export Performance
Market International Marketing Standardization
Choice Positioning Mix vs. Adaptation

Export
Export Marketing Plan
Performance
Market opportunities, evidence for demand, export market entry strategy Metrics

Source: Kotabe, M., and Helsen, K. (2014). Global Segmentation and Positioning. Global Marketing Management (6th ed., pp. 205-230). Hoboken NJ, John Wiley and Sons Inc.
[ISBN: 978-1-184664 83, 693p.]
International Market Selection

Related fields
• International Opportunity Analysis
• Country Risk Analysis
• Environmental Scanning
• Location Choice
• International Market Segmentation

à A dispersed field, still lacking a unified method of international market choice

Problem

Is there an international market for my export product?

If there is an export market, how large is that market?
 Source: Hollensen, S. (2017). Global marketing research. Global Marketing (7th ed., pp. 185-217). Harlow United Kingdom, Pearson Education Limited.
Three Techniques to estimate actual market size

1) Chain Method
2) Lead-Lag
3) Estimation by Analogy

à The 3 techniques use secondary data

These techniques demonstrate why it is a bad idea to simply rely on GDP or GDP p.c. when
deciding on target countries!
1) Chain Method

• From a base population to a specific and realistic subpopulation

• Use ratios (percentages) to reduce the base population
• Relevant data are available here:
• World Bank Indicators
• Government Statistics
• Market Research Report
• Euromonitor (subscription-based)
• …
1) Chain Method (example)

Suppose a Moroccan dairy firm intends to export premium butter to Angola.

Calculate the total market demand.

• USD 1 per 200g

• USD 20 per kg / year / household
• However, butter needs to be stored in a fridge, and only 50% of all households have access to electricity…
• Moreover, Angolan’s live in households with an average size of 5 people.
• Only the 30% of Angolan households better off can afford a fridge to store butter

• Market Size = 35 million x 1/5 households = 7 million households

• 7 million households x 50% (electricity access) = 3.5 million households.
• 3.5 million households x 30% better off = 1.05 million households

• Market Size p.a.: USD 20 x 1.05 million households = USD 21 million

1) Chain method to determine (example)
Total Population = 35 million

Household size = 5 persons

7 million household
Market Size = 35 million x 1/5 x 50% x 30% x USD 20
Electricity access = 50% = USD 21 million
3.5 million households

Affordability = 30%
1.05 million households

Consumption = USD 20 per year and household

Market Size = USD 21 million
2) Total Market Demand: Analogy

(i) Find a similar country with data on the product’s sales

(ii) Similarity between countries based on which variables?
(e.g., population, household size, access to electricity, GDP, etc.)
(iii) Estimate market demand in your target country based on the
difference between the two countries

Example: We are interested in the market size for butter consumption in Cabo Verde.
• Look for countries with a similar GDP p.c. PPP
• Cabo Verde GDP pc (PPP) = 7740 ~= Morocco GDP pc (PPP) = 8143
• We know the market size for Morocco from publicly available statistics: 71000 t / year
• We know the population size of Cabo Verde = 0.5 million and Morocco = 37million
• Hence, we can compute the market size for butter in Cabo Verde as follows:
37million : 71000 t = 0.5million : x t
x ˜= (71000 t x 0.5million) / 37million
x ˜= 960 t per year (p.a.)
 Source: Hollensen, S. (2017). Global marketing research. Global Marketing (7th ed., pp. 185-217). Harlow United Kingdom, Pearson Education Limited.
3) Lead - Lag analysis (example)

• Longitudinal data
required (time series)
• Here,
USA precedes Italy by
roughly two years
• Hence, we can
forecast adoption rate
of a product (service,
technology) for Italy
• Identify the variables
that affect future
demand, then
• predict it…
Export Market Segmentation
 International Market Segmentation

2-stage international segmentation

1st stage: aggregate segmentation based on country characteristics

è clusters based on country-level segmentation

2nd stage: disaggregate international consumer segmentation

è clusters based on consumer-level segmentation
Example – country-level segmentation

Source: Kotabe & Helsen (2011)

How? Cluster Analysis

1. Calculate the distance between

two countries
2. Group countries with
the shortest distance
from each other into the same
clusters (groups)
3. Describe the country clusters
4. Assign names to the country
clusters
DIY:
https://www.gnu.org/software/pspp/
http://www.clusteranalysis4marketing.com/free-download/
Let’s do a cluster analysis for
international market segmentation
1. Download data relevant for your industry
(e.g., use data from the market size exercise, Euromonitor, World Bank, etc.)
2. Download software for market segmentation:
http://www.clusteranalysis4marketing.com/free-download/
https://www.gnu.org/software/pspp/
3. Import or copy & paste data for each country from your Excel spreadsheets into the
market segmentation software.
4. Run a k-means cluster analysis (with PSPP) or a cluster analysis with your excel tool
5. Describe & Interpret your clusters (segments)
6. Assign names to your clusters
7. Present your results
Market segmentation – some more hints
(1) Preselect a meaningful group of at least 15 countries
(2) To exploit the power of cluster analysis, use more than two segmentation variables
(3) When using variables with different scales, e.g., US$, geographic distance, percentages,
weights, indices, etc. you have to standardize them to make them comparable.
If your input variables have different scales, then you need to standardize them.
In Excel, use the standardize function, as well as the average, stdev functions.
(4) Make sure that the correlation between your variables is lower than 0.7.
In Excel: correl function or the corresponding Excel “Data Analysis” plugin.
(5) Insert your data in cluster analysis template
(6) Interpret the analysis (see instructions on the tool)
A simple example
100,00 My map
90,00
Segment 4; 35%
P 80,00
o
70,00
p
U
u 60,00
r Segment 3; 13% Segment 1; 30%
l
b 50,00
a
a
t 40,00
n
i
30,00 Segment 2; 22%
o
n 20,00

10,00

-
- 20,00 40,00 60,00 80,00 100,00 120,00
Electricity %
Desirable properties of market segments

ü Identifiable: the segments should be easy to define and to measure. This criterion is easily
met for “objective” country traits such as socioeconomic variables. However, the size of
segments based on values or lifestyle indicators is typically much harder to gauge.
ü Sizable: the segment should be large enough to be worth going after. Note that flexible
manufacturing technologies enable companies to relax this criterion. In fact, many segments
that might be considered too small in a single-country context become attractive once they
are lumped together across borders.
ü Accessible: the segments should also be easy to reach through promotional and
distributional efforts. Differences in the distribution quality and media infrastructure imply that
a given segment could be hard to reach income countries and easy to target in others.
ü Stable: if target markets change their composition or behavior over time, marketing efforts
devised for these targets are less likely to succeed.
ü Responsive: for market segmentation to be meaningful, it is important that the segments
respond differently from each other to differentiated marketing mixes.
ü Actionable: segments are actionable if the marketing mix is necessary to address their needs
of consistent with the goals and the core competencies of the company.

Source: Kotabe, M., & Helsen, K. (2011). Global Marketing Management (5th ed.): Wiley.
 LEARN, DARE & CARE

Exercise:

Forta Furniture: International Expansion

(Harvard Case 5-918-548)

Focus on this assignment question:

What should Marita Petrescu do? Which brand is better suited for
which market, and should the entry be private label or branded?

How?

• Complete the Spreadsheet (Exhibit 1).

• What do your results imply? Why? What are your answers to
above-mentioned assignment questions?

Deadline: submit by e-mail by

13/11/2023 – 12pm.