International Market Selection: Developing a Decision Support Model for the Pharmaceutical Industry

Abstract

Globalisation in the last two decades has prompted an increasing number of firms to develop strategies to enter and expand into foreign markets. However, incorrect choices incur not only substantial lost, but the cost of withdrawal and the opportunity costs associated with foregone alternatives are immense. While it is desirable to adopt systematic and rational market selection procedures, it is undoubtedly more realistic to recognise that belief driven, intuition based and ad hoc selection procedures are characteristic of many international market selection decisions. The purpose of this paper, therefore, is to identify major determinants/factors of international market selection used consistently by practitioners and develop a robust decision support model relevant to the pharmaceutical industry. An extensive review of the literature, both empirical and theoretical, on topics such as 'international market selection' and 'export market analysis' led to the identification of fifteen key decision making factors. These factors were used to develop a decision support model which consists of four key dimensions (Economic, Product-specific, Legal and Structural). This model formed the basis of a subsequent online questionnaire which asked respondents to rank all factors according to their importance in decision making. The research produced a weighted decision support model with product-specific dimension ranked as most important, followed by economic, legal and structural dimensions. It is believed that this model will serve as a screening tool for identify potential markets while eliminating unsuitable ones from further in-depth analysis. The model has shortfalls in some aspects and thus could potentially restrict its applicability. However, with careful adjustment we believe that this model will become a useful tool for guiding international market analysis and promote the use of systematic IMS procedures.