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Foreign Market Assessment Essay

Companies often choose to expand to new foreign markets, as a way of increasing income and profits. In order to successfully expand to foreign markets, companies must develop a proper assessment plan. The key is finding the best country to invest in and understanding the cultural and social factors that may affect the development of the company in the country. Companies must also understand the laws and regulations which they must follow to set up in the country, and how these laws will reflect on the company’s income. All these factors must be included in market assessment plan to ensure that the market entry is smooth and easy. With a market assessment plan, finding potential areas for businesses is easy.


The most important factor in choosing foreign markets is to analyze whether the company will be able to access clients, are the people in the area interested and able to afford the services that are provided by the company. In the financial and insurance company markets choices may be limited because of high premiums and the presence of other established companies in the foreign market. Executives and business owners often make the mistake of assuming that because their product and services

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are doing well in other countries, they will perform in the same way when introduced to other countries. In doing so, the companies fail to assess the markets and develop a proper market entry plan. The demand for the product maybe high, but without proper assessment for the introduction and marketing plans, it may fail to succeed.

Assessment of foreign markets requires extensive research on the continent the country is located the physical location of the country and the people of the country. Assessment plans should definitely include five year forecast plans, key assumption, government policies and the economic environment of the country. The market assessment plan should also include an analysis of leading financial and insurance providers. The market assessment helps the company stakeholders; shareholders, business owners, executives and analysts to manage the risks in the new market and evaluate the business opportunities.

Conceptual Framework for International Foreign Markets

Market analysis: this is an investigation and research of potential markets. Executives of the company need to employ business analysts trained to perform market analysis. There is need to understand if there is a market in the first place and how the company can tap into the market. Sometimes Market analysis may require the company to run a pilot program. There are some few factors that can be considered in order to properly analyze a market.

First aspect is the market size; before understanding the nature of a market, the company needs to discover if there is a market existing for their products. Does the size of the market equal the risk of introduction to the new market? The data regarding the size of the market can be found in the government records, trade groups, industrial associations and customer surveys.

Second it’s the identification of the rate of growth of the financial and insurance industry in the country. A simple analysis on the rate of growth can be done through population studies, growth of sales and benchmarking. Understanding the market growth rate allows the company to understand the growth prospects of the company in the future. Studying the rate of growth can help identify the future of the insurance products and services by estimating the acceptance rate of the company products. Profitability in the market: consumers may be willing to buy insurance and invest in financial advice but be unable to afford the services. The company needs to understand what the limit of the consumer’s buying power. In addition companies need to analyze the other products and services that are used as substitutes and may affect the costs applied to the company products and services.  Finally a complete market analysis must include the costs of set up in the local industry market. Sometimes the regulations of the local industry associations may seriously affect the income of the company and in the same way provide challenges for the company’s entry to the market.

Preparation of market plans: Pursuing foreign markets necessitates the introduction of a marketing plan. The company is going against established brand names and their products. The company must establish proper strategies and an inclusive plan on marketing the company and its products. Though companies may be tempted to introduce products in the same way they have done in established companies, consumer tastes and nature change with each area. In order to gain high incomes and profits, the company needs to aggressively market themselves, and tap into the consumer needs.

A marketing plan must include promotion approaches for the company and its products. The marketing plan should device ways in which the company can equalize its competition and establish itself in the local market becoming recognized by consumers for their service provision.

Target markets: identifying a country which the company wants to move to does not necessarily mean that a market is waiting. Companies must take time to identify a specific section of the population to whom they can sell their product. A target market breaks down a population to small segments that can be targeted for specific products. Madurra (2006 8) For example an insurance company moving to a country where women find it hard to access proper medical and health care services, can formulate a product that provides access to gynecologists and other women health specialties. Such products can be sold to young women and couples requiring general health care and specific maternal care.

Hitt, Ireland and Hoskisson (2008, 95) Products that are successful for specific targets in other countries may not be as successful in others. Understanding the client needs and finding ways to meet the needs makes a company much more successful, than even local companies. Target market plans include finding a loop hole not filled by competitors and ignored by the local industry and finding a way to fill it.

Understanding distribution patterns: each country and region has different distribution channels for products. There may be need to sometimes go through a larger association, or the insurers may be allowed to access the consumers directly. To market a product properly companies must understand how they will distribute their products and how they can make the products and services more accessible to the consumers.

Distribution channels can increase the cost of products and services and reduce profits and income of the company. Additionally distribution channels can make it hard for consumers to access the products easily. Also companies can find it hard to adhere to the regulations that govern service distribution in the countries, and therefore making it hard for the company to sell any products. A distribution strategy is important because the companies can identify where the products can make greater influence and from which point can distribution be less costly and easy. Identifying the market targets also allows the distribution channels to be established in such a manner that the consumers and the company itself can access each other with no difficulties, (Hitt, Ireland and Hoskisson 2008, 97).

Strategic market framework and information: this includes a study on the nature of consumers that the company will serve. What are the social cultural factors that may influence the decisions they make regarding the insurance services and products. In addition what is the political climate of the country that may affect the development of the company? Such information will allow the company executives and analysts to make proper and informed decisions on the risk involved in accessing the market, (Madurra 2006, 53).

In principle the information on the markets can allow the company to set achievable goals and objectives with regard to the foreign expansion. Whereas the profits and incomes may seem high, the social cultural aspects and political climate may render the company’s strategic plans useless and make it difficult to survive. What is the nature of technology applied in the service provision and is it easily accessible? There are countries that have not yet introduced modern technology such as wireless internet making its hard to market to many consumers at once and to serve the clients easily. Countries that rely on traditional technology are often hard to penetrate.

Pricing strategies: understanding the marketing policies, the target markets and the distribution channels gives the company a chance to come up with a pricing strategy. The first step in establishing a strategy is comparison with competitors. New products cannot be introduced into a market without understanding the local pricing policies and strategies, (Mathieson, Schinasi et al 2001, 124).

Secondly, there is need to see how the product is viewed in the country. Is it a necessity or a luxury? If an insurance product is considered a necessity then the pricing may not really affect the sales, but on the other hand if the insurance is a luxury, sales depend totally on pricing.  The company must take into consideration the cost of the product reaching the consumer and the environment of sale in making a pricing strategy. Each of these determines the profit arising from the product which in turn negates the risk.

Preparing a time plan: A time plan defines clearly, the activities that will take place when penetrating the new market and how long it will take to accomplish the set strategies. It sets the objectives and goals, what it will take to achieve them and how long the company is willing to invest in the plans. After the timeline has expired, the company then evaluates the potential of the market. What have they managed to achieve in the time? What has it cost them to make the achievements? And were the risks worth it? A timeline plan also sets strategies for combating different situations that may arise in the new markets.

Application of the Plan

Wells Fargo Insures Malaysia

Wells Fargo is the largest banking affiliated insurance broker. Even though the company’s finance affiliated departments is widely spread in the world, the insurance company has been slow to develop. The below is a plan for the introduction of Wells Fargo insurance to the Malaysia market.

Malaysia market: Malaysia consists of 13 states, and a population of about 28 million. In the year 2004, the insurance market had an estimated growth of 11%. The Malaysia market is diversifies mainly because of the nature of the country. Whereas there are some traditional states, the influence of tourism has modernized most of the states. Perhaps most notable in the market analysis is that the insurance market is the presence of foreign companies in the major cities. Malaysia has a high percentage of foreign businesses and foreign workers in the country, (Meersook and IMF 2001, 40). The potential of growth for Wells Fargo in the country is amazing. The company has enough resources to distribute and market their products. The insurance industry in Malaysia has been growing exponentially for the past decade. It follows therefore that with proper application of resources and potential growth of the industry in the years to come Wells Fargo insurance will develop successfully in Malaysia.

Target markets and products: Wells Fargo will target the foreign employees in the country and the city dwellers. The traditional culture of Malaysia that has great influence especially in the communities away from the city cites that insurance is bad luck. For this reason penetrating the traditional market may prove to be difficult. Foreigners on the other hand have had previous relationships with Wells Fargo; for example in sending money or banking; they may therefore be more receptive of the insurance products by the company.

Market information: Malaysia is currently being marketed as a hot spot for tourists. Most of the investors in the country are building resorts or finding ways to tap into the ripe tourist market. Foreigners are settling in the country after successful investments or gainful employment. These are the people to be targeted by the Wells Fargo insurance. Although they have settled in the country, Wells Fargo can approach as a link to home. People often find it easier to deal with companies they already know even in the foreign territories. For the locals superstition and cultural believes are being slowly eroded by education and modernism to pave way for a ripe insurance market. Resort owners and other large businesses may find it easier to rely on a large international insurance company for the protection of their businesses.

Premium charges: Malaysia is still a fast developing country with very high costs of living.  Insurance is often viewed as a luxury and not a necessity. In addition, though education and modernism are fast diminishing the traditional believes, many Malaysians still consider insurance a bad luck attraction. Based on these factors insurance premiums are much lower in this country than in others. This especially applies to personal insurance.  On the other hand, insurance for businesses and companies often charge higher interest. Most of the investors in the country are foreign, and they go an extra mile to protect their investment. Such investors especially like to rely on insurance companies that are large and international for uniform costs in all subsidiaries     (Mathieson, Schinasi et al 2001, 126).  Considering all these factors Wells Fargo may have to reduce their premiums for personal insurance and cover the costs through an increase in the company and business covers.

Time plan: The Company has always set a minimum of three years in which they evaluate their progress and decide what steps to take either to increase the market or to remove the products completely. In the three years, Wells Fargo Insurance hopes to have established a client base that provides premiums for minimum profits after settlement of claims.  During the three years, the insurance department will operate as a subsidiary of its much successful Kuala Lumpur cash and banking office. Claims will be investigated and settled through the headquarter offices in the United States until such a time that the shareholders and executives shall feel that the company can succeed on its own. Although the company will be physically located in Malaysia, most of its operations will be done through the United States office for easier evaluation. At the end of the three years, if the company has proven itself, Wells Fargo will increase its investment in the country, providing more resources for the marketing and establishment of better products.


The focus of market assessments relies heavily on the company’s reason to venture to that specific market. Each company should note that; while pursuing new markets it is important to develop strategies that are in line with the specific market. Relying on strategies for other international markets strategies is a recipe for failure and at an extent exposing the firm to unknown risks without cover of mitigating them. Every market has its own unique factors which need to be identified and encompassed within any firm strategy. This however does not mean that successful strategies in other areas cannot be applied. It is possible to apply some but mostly firms need to identify and craft their strategies according to the new market features. Most of the information required to study the foreign markets is available from the domestic governments and research survey firms. Revenues and profits to be gained from venturing to new markets with a lot of potential are enormous and limitless, but serious planning must be done to ensure that the strategies which are put in place are going to ensure the goals are achieved.


1.Hitt. M, Ireland. D And Hoskisson. R (2008). Strategic Management: Competitiveness And Globalization. United States.  Cengage Brain Publishers

2. Madurra. J (2006). International Financial Management. United States. Cengage Learning Publishers

3. Mathieson. D, Schinasi. G And IMF (2001). International Capital Markets: Developments, Prospects And Key Policy Issues. International Monetary Fund. 124,126

4. Meersook. K and International Monetary Fund. (2001) Malaysia: From Crisis to Recovery. International Monetary Fund.40

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