At the basis of the analysis of potential markets stands the business policy of the firm. Company’s managers are the ones who decide which markets it will serve, according to the vision, mission and business philosophy of the company. Relevant markets of the company are usually found in a number of countries. The evaluation of the most attractive national market will depend on the company's major objectives and also on its priorities. Objectives considered for selection may include: growth and stability, recovery of investment, market share, the acceptable risk level, the way of approaching technology and innovation, brand image, independence and cooperation as general approach of business.competitive strategies, foreign market selection, firm’s market portfolio, internationalization.

Carmen IORDACHE

Dorin HOARCA

Iuliana CIOCHINA

Razvan DECUSEARA

Sorin MANOLE

English

Research Papers in Economics

         Special Number 1/2011                         Review of International Comparative Management  202 
 
REORGANIZING THE FOREIGN MARKETS 
PORTFOLIO, PART OF THE COMPANY'S 
COMPETITIVE STRATEGY 
 
Iuliana CIOCHINA 
Carmen IORDACHE 
Sorin MANOLE 
Răzvan DECUSEARĂ 
Dorin HOARCA 
“Constantin Brâncoveanu” University Piteşti, Romania 
 
 
 
 
 
 
 
 
 
 
 
 
 
KEYWORDS:  competitive  strategies,  foreign  market  selection,  firm’s  market 
portfolio, internationalization 
 
Introduction  
 
Economic  changes  occurring  in  the  world,  have  led  to  changes  in  the 
structure  of  different  national  markets  and  the  attractiveness  of  these  markets. 
Markets, at a given moment, were not attractive to the firm have turned and now 
represent  real  opportunities.  On  the  opposite  side  are  the  markets  where  the 
company is already present but, because of their economic situation, they do not 
maintain  the  attractiveness  which  they  have  had  it  when  the  company  entered. 
These elements are necessary to reconsider the company's portfolio of markets, in 
order to maintain its parameters. If in the first group of markets, the firm must 
decide  on the sequence and the strategy  of penetration, in the second category, 
where the company has already made investments, it must choose whether to stay 
or leave. If it decides to leave that market, it must choose an exit strategy with the 
lowest costs, both present and future. 
Due to limited resources a company cannot serve all potential markets in 
the world in order for customers to be satisfied and business goals achieved, which 
is why the firm should select the most appropriate markets. It can focus on a single 
product market, can serve many geographic areas, but may also decide to serve 
different product markets in a small group of selected geographic areas. Due to the 
Abstract 
At the basis of the analysis of potential markets stands the business policy of 
the firm. Company’s managers are the ones who decide which markets it will serve, 
according to the vision, mission and business philosophy of the company. 
Relevant markets of the company are usually found in a number of countries. 
The evaluation of the most attractive national market will depend on the company's 
major objectives and also on its priorities. Objectives considered for selection may 
include: growth and stability, recovery of investment, market share, the acceptable risk 
level, the way of approaching technology and innovation, brand image, independence 
and cooperation as general approach of business. Review of International Comparative Management                              Special Number 1/2011  203 
large  number  and  diversity  of  markets  that  can  choose,  analyzing  the  market 
attractiveness and selecting the most interesting ones represent a complex activity. 
 
1.  The need for reorganizing the foreign markets portfolio  
 
The vast diversity of the markets requires a careful approach to selection of 
international markets. Differences in income, culture, politics, involve a market by 
market approach. The similarities between markets help the standardization of the 
strategies,  costs  reduction  and  provide  maximum  benefit  due  to  transfer  of 
experience. 
Choosing the correct market and correct sequence of entrance as well as 
portfolio  reorganization  of  foreign  markets  is  an  integral  part  of  competitive 
strategy.  The  successful  companies  tend  to  operate  in  a  balanced  portfolio  of 
markets,  grouped  according  to  their  similarities  with  a  deliberate  policy  of 
concentration  or  diversification  of  marketing  efforts  depending  of  the 
circumstances and setting precise sequence of market entry to ensure the optimal 
international competitive advantage. 
The  globalization  of  markets  determined  that  the  problem  of  portfolio 
reorganization to get new features and requirements related to identification and 
selection of transnational market segments. Virtually all firms that are present or 
intending  to  enter  international  markets  support  their  marketing  strategies  on 
identification and choosing the most appropriate market or market segment, and on 
this basis, they are structuring their offer in accordance with specific conditions of 
these markets. 
The markets selection and the portfolio reorganization are processes that 
establish  the  markets  that  are  interesting  for  the  firm.  These  processes  include 
strategic choice of potential buyers groups and the benefits required in order to 
satisfy their needs. They imply, however, policy harmonization of the marketing 
policies with the market structure. 
The  determinants of foreign  markets selection can be grouped  into two 
categories: 
  Those related to the  company: the  degree  of  internationalization and 
foreign experience; the size of available resources; market type / nature 
of  the  business;  internationalization  goals;  existing  networks  of 
relationships. 
  Those related to the environment: international market structure, degree 
of internationalization of the market, the host country (market potential, 
competition, geographical distance; market similarity). 
The  firm  decision  on  the  alternatives  for  the  reorganization  of  markets 
portfolio must take into account the fact that this costs money. The costs involved 
will  depend  on  the  objective,  the  number  of  markets  to  be  analyzed,  each 
company's  market  position,  whether  or  not  the  firm  is  already  present  in  that 
market, without forgetting the need for careful and accurate market research. The 
firm must consider both the costs that probably will not be recovered, and those          Special Number 1/2011                         Review of International Comparative Management  204 
that will be covered later entry into the selected target markets. Correct estimate of 
the costs claimed by choosing target markets, however, is a difficult operation. 
Firms must consider the amount spent to reorganize the market portfolio as 
an investment type that can be recovered if those markets will produce results that 
generate revenues and profits. 
The  firm  must  decide  whether  to  concentrate  resources  on  a  limited 
number of similar or alternatively to diversify in a number of different markets. A 
firm can focus its efforts by entering markets that are very similar in characteristics 
and infrastructure with the domestic market. Alternatively, a firm may prefer to 
diversify its risk by entering countries that differ in the environment and market 
characteristics. An economic recession in one country may be offset by growth in 
another  market.  The  power  of  competition  can  also  vary  from  one  market  to 
another.  The  profits  gained  from  the  relatively  protected  or  less  competitive 
markets  can  be  channeled  to  markets  with  fierce  competition.  The  spread  of 
operations over a larger geographical area, and investing in various regions of the 
world may also diversify risk since markets in different parts of the world are not 
interdependent (a market trends do not automatically spread to another). 
For many firms the problem of reorganizing its markets portfolio must take 
into account the product power (on the national level) and geographic expansion. 
At  the  corporate  level,  the  company  manages  a  portfolio  of  products  and 
geographic markets. Its main coordinates, that is product strength and geographic 
coverage (number and size of target markets of the firm) should be managed in a 
balanced manner. If the firm invests too much in trying to strengthen the product 
may lose some international opportunities, and if invests too much in geographical 
expansion, may lose sight of the product, weakening its competitive position. 
Focusing  on  one  or  other  of  the  two  problems  depends  on  the  firm’s 
position to competition. To resolve this problem, the firm can use the International 
Competitive Position Matrix with its two axes, namely the power of product and 
geographic  coverage  to  fit  its  competitors  in  four  categories:  kings,  barons, 
crusaders and ordinary people. (as shown in Figure 1). 
 
 
 
 
 
 
 
Figure 1 International Competitive Position Matrix 
   
Kings  are  firms  with  the  strongest  position  because  of  their  broad 
geographical coverage and a strong portfolio of products.  
Barons  have  a  strong  position  in  a  limited  number  of  countries  and, 
therefore, may extend to other countries or into new product areas.  
Crusaders have geographical coverage, but are weak in terms of product 
strength. They are very vulnerable to competition. 
  Mică  Mare 
Mare  Barons  Kings 
Mică  Ordinary people  Crusaders 
Geographic coverage 
Product 
power Review of International Comparative Management                              Special Number 1/2011  205 
Ordinary  people  have  a  weak  position  in  terms  of  both  geographical 
coverage and product strength. Prior to  expand  geographically,  ordinary people 
must strengthen the position of the product by removing some of the products to 
create a high market share or developing niche strategies.  
Another approach to  managing the portfolio  of  markets and products is 
proposed by Frank Bradley (2001, p. 161), which classifies products and markets 
into three categories, in order to manage the products-markets variety:  
1.  Core  products  -  high  revenue  and  high  material  value,  are  often 
responsible for 80% of sales or profits, but accounting for only 20% of the firm's 
products.  
2. Products-star - have great potential, having the perspective to achieve 
the status of core products.  
3.  Edge  products  -  low  cost,  small  returns,  being  produced  with  an 
uncertain future and being less likely to register growth.  
In a similar manner it is possible the classification of the firm’s markets:  
1. Core markets - markets that are vital for the company.  
2. Markets-star - is likely to contribute to higher profits in the future, but 
currently requires investment.  
3. Marginal markets - not likely to be important for the firm, of any view.  
Albaum and Strandskov (2002, p. 176) see two major strategic alternatives 
of  market  expansion:  the  strategy  of  markets  concentration  and  the  strategy  of 
markets diversification.  
The  market  concentration  strategy  envisages  channeling  the  available 
resources to a small number of markets, allocating significant resources and high 
marketing efforts for each market in an attempt to gain significant market share. 
After building a strong position in these markets, the company is moving its efforts 
into other markets and / or consumer segments.  
Instead,  the  strategy  of  market  diversification  is  characterized  by  the 
allocation of company resources for a large number of markets in an attempt to 
reduce  the  risk  of  resources  concentration  and  to  exploit  the  flexibility  of 
economies. 
 
2.  The reorganization of the foreign markets portfolio of a Romanian 
chemical company 
 
The  analysis  carried  out  on  the  foreign  market  portfolio  of  a  known 
company,  part  of  the  Romanian  chemical  industry  highlighted  the  need  for 
reorganizing  this  foreign  market  portfolio  due  to  the  emergence  of  other  new 
markets with great potential, especially for polyether polyols. The area indicated 
for identifying and selecting new markets is the Central and Eastern Europe, an 
area dominated by many economies in the process of development. Also, they are 
as near Romania, which will facilitate an easier and faster access of the firm on 
these markets.          Special Number 1/2011                         Review of International Comparative Management  206 
The analysis has revealed a major group of potential markets, consisting of 
Russia, the Czech Republic and Slovakia, on which the company can invest with 
confidence. Especially in Russia, the increase of the construction sector and the car 
production, after 2010, will lead to a very large increase in demand for polyether 
polyols. This market is not yet covered by the major Western European producers 
of polyether polyols. 
The  company  is  already  present  on  these  markets,  but  through  indirect 
export. Now it is time for the company to move to direct export and to give up 
intermediaries. It is recommended for the company to open a commercial agency 
on each market of Russia, Czech Republic and Slovakia, which can help it to find 
customers more easily and to be permanently connected with the development of 
these markets. 
By reorganizing the foreign market portfolio and increasing exports to the 
markets of Russian, Czech Republic and Slovakia, without abandoning its existing 
markets, the company can achieve a balanced markets portfolio. It needs to secure 
exports,  given  that  its  current  markets  have  attracted  strong  competition  from 
Central and Western Europe. 
 
Conclusions 
 
Reorganizing the firm's portfolio of foreign markets is strictly linked to the 
firm's competitive strategy. Thus, the firm will always look to concentrate on those 
markets  that  allow  gaining  and  maintain  its  competitive  advantages.  These 
competitive advantages allow firm to maintain the gained market position and to 
have a solid foundation in the competitive battle. 
In the reorganization of the market portfolio, each company must take into 
account the most important criteria that can be used for sizing and structuring it, as 
well as recommended solutions for achieving a balanced portfolio.  
Countries or markets that are much closer in terms of business are those 
that are politically stable, economically well-developed, culturally homogeneous, 
providing more opportunities and having the legal and trade barriers reduced. Such 
markets  are  usually  geographically  close,  and  cultural  differences  and 
communication problems arising from social  differences, attitudes and language 
are not impediments to business. 
 
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Reorganizing the Foreign Markets Portofolio, Part of the Company's Competitive Strategy

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Reorganizing the Foreign Markets Portofolio, Part of the Company's Competitive Strategy

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