The ability to select a viable foreign market is a crucial undertaking whenever there is a need to expand and diversify operational strategies. Before expanding to international markets, it is vital to consider the level of demand for products being marketed by an organization. Market demand is an essential selection criterion when diversifying into foreign markets.

Both the world imports and domestic production in the targeted international market should be put into account when assessing the demand level. When demand is evaluated appropriately, it is possible to understand both the growth rate and size of the targeted market in a foreign location. Decreasing market size may not be suitable for expansion purposes. On the other hand, an international market that has been growing for several consecutive years is bound to generate the much-needed demand for new products. In any case, a product receptivity into a new market largely depends on its demand.

Second, the level of competition matters a lot when seeking to diversify in a foreign market. It is necessary for the management team in an organization to clearly understand the degree of competition in a targeted market before making the final decision. Some of the factors worth considering under this domain include loyalty of consumers, methods, and channels of distribution used by competitors, quality of products supplied by competitors as well as their pricing strategies.

The team charged with the diversification task should also perform an assessment on how the selected country performs in various sectors of the economy. Some of the important indicators entail consumer demographics, per capita income, and population. Other key factors to consider trade barriers, political risk, distribution accessibility, climate and location, infrastructure, environmental concerns, intellectual property protection, currency convertibility, cultural knowledge, and the existing legal environment.