Extending and Comparing Cavusgil's Overall Market Opportunity Indexes

Abstract

The imperatives of globalization are clear across many industries: firms must look to expand into international markets to survive and thrive. This study complements and extends a growing body of work developing and using overall market opportunity indexes (OMOIs) based on Cavusgil (1997) to rank the attractiveness of potential foreign markets. The index developed in this paper assesses countries’ market potential beyond the traditional measures of market size and economic development by also including political risk, economic freedom, telecommunications as well as physical infrastructure and geographic distance. We provide a current analysis of market attractiveness and opportunity for the largest set of countries indexed and ranked to date, including 24 countries not in previous OMOI studies. The validity of the OMOI is also so assessed for the first time by comparing the ranking of market opportunity to actual subsequent trade flows from the US. Furthermore, we compare the dimensions, variables, samples and results from three of Cavusgil and colleague's previous studies and the two conducted herein. The choice of sample and, to a lesser degree, weights are shown to directly affect the OMOIs and rankings. The modified OMOI is shown to be a flexible, valid and fairly stable tool for preliminary analysis of foreign market opportunity.

Citation

Mullen, M.R. and Ye Sheng, S. (2006), "Extending and Comparing Cavusgil's Overall Market Opportunity Indexes", International Marketing Research (Advances in International Marketing, Vol. 17), Emerald Group Publishing Limited, Leeds, pp. 219-249. https://doi.org/10.1016/S1474-7979(06)17008-8