The Five-Contexts Frameworks In The Global Market

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Modern companies strive to increase their global presence. Therefore, they put a close attention to the developing markets, in particular to the BRIC countries that provide numerous opportunities but also have considerable business risks. When taking decision on whether to enter a certain market, the firm should clearly analyze the conditions in the target country using different research frameworks. Moreover, after having conducted the detailed research, the company can realize whether its strategy is appropriate for the target market or need justifications. A Five-Contexts Framework is a useful tool to be applied by the multinationals to evaluate the attractiveness of the local market. According to authors, it includes the detailed investigation of the local political and social systems, local market openness, product markets, labor and capital markets. The companies should realize that there can be a huge difference between the developed markets and the developing markets, in particular in the key labor, capital and product markets. It is necessary to state that in order to enter the developing countries market, it is not sufficient to minor adjust the products. This is even more than studying the characteristics of the local cultures to fit company's products into the existing values, expectations and needs of the…show more content…
It is important to estimate whether the new market will provide more benefits than the costs needed to enter and operate in this market. The companies have three strategic directions. They can make an attempt to adapt their strategies but keep their core products value, change the local context, and to refuse from entering the local market because of the negative economic projections for the costs-benefits

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