Evaluating Potential Markets
How does a company choose among potential markets to enter? One key factor is their physical proximity. Many companies prefer to sell to neighboring countries because they understand these countries better and can control their entry costs more effectively. It’s not surprising that the two largest U.S. export markets are Canada and Mexico or that Swedish companies first sold to their Scandinavian neighbors.
At other times, cultural proximity determines choices. Given more familiar language, laws, and culture, many U.S. firms prefer to sell in Canada, England, and Australia rather than in larger markets such as Germany and France. Companies should be careful, however, when choosing markets according to cultural proximity. ...
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