By distance we understand the difficulty to enter a certain market. Although this distance can be understood firstly as a distance understood from the geographical point of view, for a company it is something more than that and there are many approaches from which it can be measured, such as:
· From an economic approach. Variables such as per capita income (if there are inequalities or not with respect to income in the country of origin), the currency used in the new country, its exchange rate with respect to the local currency and other currencies, interest rates, price level, consumption patterns, possible levels of inflation or the degree of regulation of the economy are factors that make a market more distant or closer.
· From a demographic perspective. The age structure of the population (if it is an aged or young population), or how it is structured in sex levels, are factors that will also affect the way of entry chosen by a company to enter new markets.
· Taking into account political factors, such as the degree of democratization of the political system of the country of destination, type of regime, etc.
· Culture is another factor to consider, since the presence of different values and social norms condition the consumption patterns of the inhabitants of the new country, which may affect the sales of the company in said destination, so it must be the object of study by the company prior to the election of the entry mode.
· The administrative factors.
· The language barrier (if there it exists) as well as the signs of writing. This is a crucial aspect when marketing in the new market, since the company will have to adapt its marketing policy that it had been doing in the national market to the new patterns of the new market if it really wants to be effective.
· Legal factors (different regulatory frameworks).
One of the first consequences of distance and that some markets are more distant from others for the company is that the it will decide its sequence in the entry mode depending on the distance. From Comerciando Global point of view, we advise penetrating first those markets that are closer to the country of origin of the company. The second consequence is in relation with the selection of the entry mode, since the company will prefer specific entry modes for the closest countries to the country of origin of the company and others for those that are farthest away. A third consequence is that the distance will affect the types of products and services offered in each market.