Within the CPA-CAGE-PMA analysis the Global Expansion Country Potential Analysis (CPA) should always serve as the initial phase. Setting the stage is crucial because the entire framework requires a solid starting point. The CPA provides this foundation.
It might seem counterintuitive that this blog series began with the middle part of the model. This choice was intentional! The mid-section, often overlooked, is critical to ensuring that the overall analysis is comprehensive. Such, global expansion efforts are successful rather than flawed.
Regardless of the product, solution, or service being offered, a Country Potential Analysis can always be developed using generally available data. The fine-tuning of products occurs later, during the Product Market Alignment (PMA) phase.
However, if a well-defined Total Addressable Market (TAM) per country, provided by a leading industry analyst, is available, it should take precedence over a general Country Potential Analysis.
While obtaining a Total Addressable Market analysis can be costly, it is a worthwhile investment. Particular when conducting an in-depth Global Expansion Country Potential Analysis. The CPA-CAGE-PMA model is robust! Yet, it becomes even more powerful when the foundational data is accurately measured and predicted by an independent industry analyst organization.
The general Country Potential Analysis can be skipped! When there is a solid Total Addressable Market research available.
During this initial stage, the emphasis is on assessing the overall potential of the target market. Key factors such as market size, growth potential, and various macroeconomic indicators are thoroughly examined. This to determine whether the market is viable and worth pursuing.
Attributes to the Country Potential Analysis:
- Market size: Often referred to as market value, market size is typically expressed as “Gross Domestic Product” (GDP). While GDP is widely used for country comparisons, it has its limitations. Alternative metrics, such as the Human Development Index (HDI) or the Better Life Index, can offer more human-centered insights. However, these indices are not consistently calculated across all countries, making GDP a more reliable measure for comparing markets.
- Market segmentation: A crucial starting point for any analysis is understanding the “real” size of the market segment. Often referred to as the industry. When accurate market segmentation data is available, there’s no need to estimate within the country’s GDP. Ideally, a Total Addressable Market (TAM) analysis, provided by reputable industry analysts, serves as the best foundation.
- Population: In the absence of specific market segmentation data, population size should be used as the basis for calculating GDP per capita. When considering future trends, both GDP growth and population growth are vital metrics. They provide insights into the potential future growth (or decline) of GDP per capita.
- Growth potential: Macro-economic growth can be measured in various ways. Regardless of the indicator chosen—whether real or nominal GDP growth—it is essential to use the same metric consistently across all countries. This ensures comparability and clarity in the analysis.
In addition to GDP, another relevant metric is Gross National Income. GNI has the advantage of accounting for income earned abroad and repatriated by citizens. This provides a more comprehensive view of a country’s economic health.
Visualization of the Global Expansion Country Potential Analysis
In addition to conducting a Country Potential Analysis to assess market potential, it is also crucial to carefully select the values for the x- and y-axes when creating a visual overview of potential target countries.
If there are no specific industry benchmarks available, general indicators such as GDP per capita, inflation rate, or similar economic metrics can be used. However, if industry-specific data is accessible, it is preferable to utilize these values. For example, in the Fiber-to-the-Home (FTTH) industry, metrics such as “homes passed” and “homes connected” are commonly used. These indicators provide valuable insights, making it easier to compare the current market development status across different countries.
Visualizing the analysis will greatly enhance everyone’s understanding of the recommended course of action.