The most important factor in an attractive business climate is access to a growing market. For example, no product is known and purchased by as many people throughout the world as Coca-Cola. Yet even Coke, which is available in over 200 countries, still has tremendous potential for further global growth. Coca-Cola gets 76 Percent of its sales outside of North America. And emerging markets, where it has seen its fastest growth, now account for half of Coke’s sales worldwide.
Two factors help companies determine the growth potential of foreign markets: purchasing power and foreign competitors. Purchasing power is measured by comparing the relative cost of a standard set of goods and services in different countries. Earlier in the chapter we noted that a Coke averages $1.38 in Tokyo. Because a 12-ounce Coke costs less than $1 in the United States, the average American would have more purchasing power than the average Japanese. Purchasing power is strong in countries like Mexico, India, and China, which have low average levels of income. This is because basic living expenses such as food, shelter, and transportation are very inexpensive in those countries, so consumers still have money to spend after paying for necessities.
Consequently, countries with high and growing levels of purchasing power are good choices for companies looking for attractive global markets. Coke has found that the per capita consumption of Coca-Cola, or the number of Cokes a person drinks per year, rises directly with purchasing power. For example, in China, Brazil, and Spain, where the average person earns, respectively, $7,600, $8,600, and $27,000 annually, the number of Coca-Cola soft drinks consumed per year increases, respectively, from 18 to 156 to 305. The more purchasing people have, the more likely they are to purchase (among other things) soft drinks.
The second part of assessing the growth potential of global markets involves analyzing the degree of global competition, which is determined by the number and quality of companies that already compete in a foreign market. INITEL has been in China for 20 years not only because of the size of the potential market (China has 1.3 billion people and 95 percent of Chinese homes still don’t have a computer)
But also because there was almost no competition. But now the China is the third-largest computer chip market is the word. Intel faces significant competition Intel’s 20-year head start, however, has given it a dominating 75 percent share or the Chinese market
The most important factor in an attractive business climate is access to a growing market. For example, no product is known and purchased by as many people throughout the world as Coca-Cola. Yet even Coke, which is available in over 200 countries, still has tremendous potential for further global growth. Coca-Cola gets 76 Percent of its sales outside of North America. And emerging markets, where it has seen its fastest growth, now account for half of Coke’s sales worldwide. Two factors help companies determine the growth potential of foreign markets: purchasing power and foreign competitors. Purchasing power is measured by comparing the relative cost of a standard set of goods and services in different countries. Earlier in the chapter we noted that a Coke averages $1.38 in Tokyo. Because a 12-ounce Coke costs less than $1 in the United States, the average American would have more purchasing power than the average Japanese. Purchasing power is strong in countries like Mexico, India, and China, which have low average levels of income. This is because basic living expenses such as food, shelter, and transportation are very inexpensive in those countries, so consumers still have money to spend after paying for necessities. Consequently, countries with high and growing levels of purchasing power are good choices for companies looking for attractive global markets. Coke has found that the per capita consumption of Coca-Cola, or the number of Cokes a person drinks per year, rises directly with purchasing power. For example, in China, Brazil, and Spain, where the average person earns, respectively, $7,600, $8,600, and $27,000 annually, the number of Coca-Cola soft drinks consumed per year increases, respectively, from 18 to 156 to 305. The more purchasing people have, the more likely they are to purchase (among other things) soft drinks. The second part of assessing the growth potential of global markets involves analyzing the degree of global competition, which is determined by the number and quality of companies that already compete in a foreign market. INITEL has been in China for 20 years not only because of the size of the potential market (China has 1.3 billion people and 95 percent of Chinese homes still don’t have a computer) But also because there was almost no competition. But now the China is the third-largest computer chip market is the word. Intel faces significant competition Intel’s 20-year head start, however, has given it a dominating 75 percent share or the Chinese market
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