This report will analyze three main target markets (EU, Japan, Korea) for our company in the world field. I will give the advantages and disadvantages in the following details.

Introduction to the report

David Ricardo (1772-1823), in his theory of comparative costs, he suggested that countries will specialise and trade in goods and services in which they have a comparative advantage. (David Ricardo, 1817)

In this case, the developing of US computer market speaks volumes for the comparative costs theory of David Ricardo. US have a comparative advantage on the computer industry. These kinds of technologies US lead the whole world.

Now, the US computer market entry into a maturing phase. So we using our comparative advantage condition let our products developing in other countries. This report will analyze three main target markets (EU, Japan, Korea) for our company in the world field. I will give the advantages and disadvantages in the following details.

Evaluation of three main target markets

Basic economy environment and demographic of three markets

America is an advanced country of science and technology. This point can be seed very obvious in their computer, hardware and software field. Developing and updating in this area is very fast in the U.S.

I think the most important markets in the whole world of our company are European Union, Japan and South Korea. The E.U. is biggest market in this case; I just set a few examples (some countries belong to the E.U.) here to explain why it is important.

First let we look at the population and basic economy of these countries

Table 1

As we know, France, Germany and UK are the biggest countries in the E.U. so; I choose these three countries to show why I think E.U is the most important market for our company. In this table, I put U.S.A in the first line that is easy to compare with other countries. First, we can see the populations of these countries; the population of Japan is nearly half of American. The total population of UK, France and Germany is two in three of American, also the total population of there three countries is about half number of the total population in EU, this means from the population, EU is a really a big market for an American company. The population of Korea is not very high, but we should consider this country is not a big one. However, we can see the percentage of people’s age from 15 to 64; Korea is the highest one, and this number of other countries nearly same, do not have much fluctuate. The population numbers and the percentage of people’s age area show that how many computers the countries need, and how large about our potential market.

Moreover, the basic economy is the factor of these markets, the Gross domestic product shows that the country’s economic strength in the world, the Gross national income and the Gross national income pre capital show the level of the people’s live. According to the table, we can understand that Japan is the highest number on the GNI per capital, after Japan is America, France, Germany and UK is almost same, the last one is Korea. And the number’s gap between America and EU countries is not very big. This situation means that if American people have economy capability to buy computers, EU countries’ people and Japanese also can buy it!

The import of goods and services shows that whether the people of different countries like to buy things or services from other countries. We can find, Japan is not have large number in this item, the import just is 10 per cent of their total GDP, it means export goods to Japan have a risk despite it has the highest number of GDP. Opposite, although Korea’s GDP is not very high, it is a good market to get the export goods.

All of above information is to show some basic factors about our three target markets, some grass roots of the economy and populations about these three target markets. Now, I will give some education information about our target markets. For the EU market, I also use UK, France and Germany to explain.

Table 2

This is a preview of the whole essay

Table 2

The education shows that whether the people can command the knowledge about the computer, computer software and computer hardware. This is an important point in this case, if the people do not have the ability to use computer, how can let them to buy it? So we should understand our target audiences’ education’s level. From the table, we can see, education years in these countries nearly same, but percentage of higher education is different, Japan and Korea are higher than EU countries, especially in Japan. The education attitude of every government is almost same, from the government expenditure; we see every government pay more attention to their countries’ education. That is an advantage for our company’s target markets. The last item of this table is Scientist & Engineer in per million populations in these countries, Japan has the highest number on this, and it means in our target markets, there are more needs in the Japan.

These two tables have showed some general factors of our three main target markets, it include populations, basic economy, and education information. According to these data, we find these three markets have good basic environments, from the economy, we understand the politics of these markets are clam. From the macroscopical environment, I think these three markets are suitable for investment.

Now, let we analyze these three main markets in details.

E.U. Market

E.U. is the biggest country union in this world, it include 25 countries. The developing of the EU can not be ignored. In the 2002, the import of the EU from America is 176 billion Euros Beginning. This is a really strong number for American export.

I have showed some basic economy and demographic of the EU countries, let we see some most relevant information about our products, it shows as following:

Table 3

Table 3 shows that some markets, such as Switzerland and Sweden, are very well developed, while others, such as Portugal, Greece, Italy and Spain, lag behind. While the wealth of the country is a crucial factor, there are others, such as the pattern of employment and the age distribution of the population.

The UK, with its heavy dependence on services industries and strong position in financial services, has a large need for computing power.

Between the EU countries, the development of them is almost same; the most populations centralize in the UK, France, Germany, Italy and Spain. Because of the EU market is a large one, and the situation of these countries which in the EU do not have so many difference, and because of the limited words, I decide to analyze one country to explain the important status of EU market, I choose the UK for my example here.

I have mentioned the UK basic economy and demographic above. Now, let we look at their computer industry.

Table 4

From this table, we can see the services of UK computer; hardware and personnel computer markets have more value. That means there a big demand in these markets, and people likely to spend more on these kinds of markets. We see the personnel computer has a great value.

Table 5

Table 6

Table 5 and 6 shows the people who live in the UK have got how many PCs and they spend how much money on it. We can see in the UK, the people spent quite a lot of many on the computers and nearly half of the population of UK have their own computers in their home. Because of the developing of EU countries are very similar, so, according to the situations of the UK personnel computer market and hardware, software markets, we estimate the EU computer market has definite potential of development.

SWOT analysis of EU market

Strengths

The market size of EU is similar with American.
The economy scope also similar with American.
The total population of EU is much higher than American.
From the culture view, there is nearly no or just a little bit culture gap between EU and U.S.
The EU has a relative stabilization of their polity environment, and EU and U.S both is member of WTO. So there are no troubles with the tariff wall between the EU countries and the U.S.
USA computer companies held 70% of the EU personal computer market. This means, EU market is a familiar market for US Company, and it can help us save a lot of research time and money.

Weakness

Some of EU countries do not speak English, so, in our products, we should have some translator tools, improve this kind of technology should spend more, and it will increase our products’ cost.
Lots of local brands developing fast in EU countries. That means when people buy the products, they may first consider their own brand, which is a very big problem.
The exchange rate has been being a problem for our export products to the EU market. Because of the appreciation of a currency in EU market, it will let their import price reduces. So that will become a serious problem of our products.

Opportunities

Some repots said the EU market tended to follow the USA market by about 2 or 3 years. This data means our computer technology develop faster than EU market, so, when U.S computer market round into the maturing phase and gradually slowing down, EU market is developing at the moment, this market is not in the maturing phase, it needs more products.

Threats

There are many competitors in this market, especially the local brands.
Because in the EU market, there are lots of US computer companies, so we also compete with US companies.

Japan Market

I have mentioned Japanese basic economy and demographic situation before. Now, let we look at their computer market.

Table 7

Table 8

Table 9

Japan is the second-largest IT market in the world after the US and has some of the world’s computer companies. Japan’s population reached around 126.8 million in 2000 and is growing.

We can see the computer hardware market showed very strong growth in 2003, the market value reached ￡36,515 million by 2003. And the software market value of global market is 8.6% that was a high number. In 2000, the number of PCs per 100 people was 15 that really is not a very large number, which means the Japan market has not been rounded into the maturing market. So, this is a good chance for our company and our products.

SWOT analysis of Japan market

Strengths

Japan has a very strong economy environment. Their GDP and income level is the second one in the world. So, in this market, there will have a strong purchasing power.
Japan market has a big potential, computer demand in the Japan also very high.
Japan is also a member of WTO, when we have trade with each other, there will be no strong tariff wall.

Weakness

There is an obvious culture gap between Japan and US. First, the language become a big problem, if we want to export our products to the Japan, we also should develop the translator system. That will increase our cost.
It is far away from Japan to US, it means if when we open a business in Japan, the transportation will cost a lot and if we do some negotiations with our Japanese copartners, that will take a long time to see each other and some times the decision will be made delay.
The local brands are very strong in Japan,

Opportunities

The technology is developing fast in Japan ostensibly, but actually lead technology of US one-up on Japanese. This situation shows very clearly in the television industry. US invented the first television with the simulation system, then, Japan introduces this technology and uses their excellent machining technique to get the big market share in the world. Some Japanese companies become very powerful, such as Sony, Panasonic, and Toshiba and so on. However, when Japan is delighting with their huge successful, US invented another new technique--digital analogy system. This technique let the television become much clearly than the era of simulation. US have entered into the era of digital electron communication. This example tell us in some points, our computer technology lead Japanese. So we have a big chance to sale our advanced computer technique.

Threats

Competitors are so strong in Japan, and they have a high technics of their production.
In the US, franchisees were required to pay cash before merchandise would be shipped to them. An attempt was made to follow this policy in Japan. Retailers in Japan, however, are used to receiving credit from wholesalers – often for 30 to 90 days or even longer. A cash-in-advance policy proved to be impossible in Japan, so the company eventually went to a 10-day-open credit policy. (Jean-Claude Usunier, 1993, p.326) This also is a different between US culture and Japan culture. If we have business with Japanese retailers, this payment way we should consider clearly.

Korea market

I have mentioned Korean basic economy and demographic situation in the beginning. In this part, we analyze their computer market in detail.

Table 10

(http://www.worldbank.org/cgi-bin/sendoff.cgi?page=%2Fdata%2Fcountrydata%2Fict%2Fkor_ict.pdf)

According to this table, we can see the quantity of PCs per 1000 people increase every year that is a good situation for our products.

SWOT analysis of Korea market

Strengths

From table 1, we can understand, Korea market has a big advantage which is the highest percentage of import goods and services of GDP in our three main target markets. This means that foreign products have a big position in the Korea.
Computer market steady increase in Korea in recently years. This situation gives our company a big chance to develop our products in Korea.
After Asia economic crisis in 2001, the exchange rate of Korean Won keep steady, there is no obvious fluctuates in Korean exchange rate. That means the basic economy environment of Korea is really good and steady. Have an investment in this kind of country can reduce your risk.

Weakness

We also will meet the culture gap in this market, one is the language. We also have to develop a translator in our products’ system.
Korea is also far away from US, this situation will give our company some problems same as in Japan. Such as transportation fee will spend a lot, negotiations will be not convenience.
We should understand their culture, habitude and religion. For example, do not mention the problem between South Korea and North Korea, the ravage of second war and so on. All of these will hurt Korea people. It will give the bad impress of our company in Korea.

Opportunities

There is a big computer market in Korea.

Threats

The most intimidatory competitor in Korea is Samsung Company, this company also be a proud for Korean.
Software industry in Korea is very strong, especially in PC game area.

Conclusions

All above information is my analysis of the three main target markets for our company future developing. I have put the basic economic environment and demographic situation in the beginning, and I put the detail of computer markets analysis of these three markets and SWOT analysis of these three target markets after the basic environment introduces.

After I analyze these markets, I think all of them have advantages and disadvantages, the two key points of their advantages are all these three markets have big potential non-development markets, this means there are big markets our company can entry. Another one is in some areas, our products’ technology higher than these markets. The disadvantages for our company is that in Japan and Korea markets we have big culture gap and because of the long way from US to that markets, it will increase our products’ costs.

Recommendations

According to my analyses, I think our company should pay more attention in the EU market, then is the Japan market, last is the Korea market. Because the EU market is the most familiar market for the US companies, and we know the economy and the culture in EU clearly, that will be reduced the investment risk, also this market is the biggest one in our three main target markets. So, I think the EU market is the most suitable market for investment for our company. Why I think the Korea market is last one? Because Korea if far away from USA, that make a very big culture gap, and Korea is a growing country, before we entry this market, we should do a lot of researches and evaluation.

Because of the geography factor, I think when we entry into the EU market, we can use our products directly. For the Japan market, I think we should better sale our technologies to them, because Japan have so their excellent machining technique. So, they better than us on produce products. However, we have the advance technology.

For the Korea market, I suggest we would better choose a local participator. Because of we are not familiar with that market, and we can reduce the cost if we do this.

All above information is I give for the three markets choice and some suggestion for these three main target markets. I wish our company will be very successful in these three markets.

References

David Ricardo. (1821), The Principles of Political Economy and Taxation, third edition, London: John Murray, Albemarle-Street.

Carol, S. Carson, Director, (2003), International Financial Statistics Yearbook 2003, IMF statistics Department, Vo1, LVI, Prepared.

Organization for Economic Co-operation and Development: Education at a Glance, OECD indicators, 2001, Head of Publications Service 2002, p.44, p.67.

United Nations Development Programme, 2002, Human Development Report, p.149-189, Oxford University Press.

Jacob Howard, 2001, Computer Hardware Market Report 2001, Fourth Edition, p.6, p.7, p.13, p.58, p.67.

Jacob Howard, 2001, Computer Software Market Report 2001, Fourth Edition, p.51.

Dominic Fenn, 2003, Computer Hardware Market Report 2003, Fifth Edition, p.60.

Jean-Claude Usunier, 1993, International Marketing a cultural approach, Prentice Hall International (UK) Limited, Campus 400, Maylands Avenue Hemel Hempstead Hertfordshire.

The World Bank Group, Population dynamics Table, available:

The World Bank Group, Size of the Economy Table, available:

United Nations Development Programme, Human Development Report 2003, Human Development Indicators, The structure of trade, available:

ICT at a glance (Korea, Rep.), available:

Total words: 3275

Total words (not including contents of references): 2767