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Chapter11

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  • 1. Global Marketing Management Planning and Organization McGraw-Hill/Irwin International Marketing, 13/e © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 2. Global Perspective Global Gateways
    • Confronted with increasing global competition for expanding markets, multinational companies are changing their marketing strategies and altering their organizational structure.
    • A recent study of North American and European corporations indicated that nearly 75% of the companies are revamping their business processes.
    • The flexibility of a smaller company may enable it to reflect the demands of global markets and redefine its programs more quickly than larger multinationals .
  • 3.
    • Acquiring a global perspective is easy, but the execution requires planning, organization and willingness to try new approaches.
  • 4. Global Marketing Management
    • 1970s – “standardization versus adaptation”
    • 1980s – “global integration versus localization”
    • 1990s – “global integration versus local responsiveness”
    • The trend back toward localization is caused by the new efficiencies of customization made possible by the Internet and increasingly flexible manufacturing processes.
    • From the marketing perspective customization is always best.
    • As global markets continue to homogenize and diversify simultaneously, the best companies will avoid the trap of focusing on country as the primary segmentation variable .
  • 5. The Nestle Way: Evolution Not Revolution
    • Nestle is the world’s biggest marketer of infant formula, powdered milk, instant coffee, chocolate, soups, and mineral water.
    • Nestle strategy can be summarized in four points:
      • Think and plan long term
      • Decentralize
      • Stick to what you know
      • Adapt to local tastes
    • Long-term strategy works for Nestle because the company relies on local ingredients and markets products that consumers can afford.
  • 6. Benefits of Global Marketing
    • economies of scale in production and marketing can be important competitive advantages for global companies.
    • Transfer of experience.
    • Marketing globally also ensures that marketers have access to the toughest customers.
    • Diversity of markets served carries with it additional financial benefits.
    • Firms that market globally are able to take advantage of changing financial circumstances.
  • 7. Planning for Global Markets
    • Planning is the job of making things happen that might not otherwise occur.
    • Planning allows for rapid growth of the international function, changing markets, increasing competition, and the turbulent challenges of different national markets.
    • Planning relates to the formulation of goals and methods of accomplishing them, so it is both a process and philosophy.
      • Corporate planning
      • Strategic planning
      • Tactical planning
    • Successful planning is evaluating company objectives, including management’s commitment and philosophical orientation to international business.
  • 8. Planning for Global Markets (cont’d)
    • Company objectives and resources
      • Each new market can require a complete evaluation, including existing commitments, relative to the parent company’s objectives and resources.
      • Defining objectives clarifies the orientation of the domestic and international divisions, permitting consistent policies.
    • International commitment
      • Commitment in terms of:
        • Dollars to be invested
        • Personnel for managing the international organization
        • Determination to stay in the market long enough to realize a return in investments.
      • The degree of commitment to an international marketing cause reflects the extend to a company’s involvement
  • 9. The Planning Process
    • Phase 1: Preliminary Analysis and Screening – Matching Company and Country Needs.
    • Phase 2: Adapting the Marketing Mix to Target Markets.
    • Phase 3: Developing the Marketing Plan
    • Phase 4: Implementation and Control
  • 10. International Planning Process
    • Insert Exhibit 11.1
  • 11. Alternative Market-Entry Strategies
    • An entry strategy into the international market should reflect on analysis of market characteristics such as:
      • Potential sales
      • Strategic importance
      • Strengths of local resources
      • Cultural differences
      • Country restrictions
    • A company has four different modes of foreign market entry from which to select:
      • Exporting
      • Contractual agreements
      • Direct foreign investments
  • 12. Alternative Market-Entry Strategies
    • Insert Exhibit 11.2
  • 13. Exporting
    • Exporting accounts for some 10% of global activity.
    • Direct exporting - the company sells to a customer in another country.
    • Indirect exporting – the company sells to a buyer (importer or distribution) in the home country, who in turn exports the product.
    • The Internet
      • Initially, Internet marketing focused on domestic sales, however, a surprisingly large number of companies started receiving orders from customers in other countries, resulting in the concept of international Internet marketing (IIM).
    • Direct sales
      • Particularly for high technology and big ticket industrial products.
  • 14. Contractual Agreement
    • Contractual agreements are long-term, nonequity association between a company and another in a foreign market.
    • Licensing
      • A means of establishing a foothold in foreign markets without large capital outlays.
      • A favorite strategy for small and medium-sized companies.
      • Legitimate means of capitalizing on intellectual property in a foreign market.
  • 15. Contractual Agreement (continued)
    • Franchising
      • Franchiser provides a standard package of products, systems, and management services, and the franchise provides market knowledge, capital, and personal involvement in management.
      • Despite temporary setbacks, franchising is still expected to be the fastest-growing market-entry strategy.
      • Two types of franchise agreements:
        • Master franchise – gives the franchisee the rights to a specific area with the authority to sell or establish sub franchises.
        • Licensing- L a local franchisee to use a product good services, trademark.
  • 16. Strategic International Alliances
    • A strategic international alliance (SIA) is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective
    • SIAs are sought as a way to shore up weaknesses and increase competitive strengths.
    • Firms enter SIAs for several reasons:
      • Opportunities for rapid expansion into new markets
      • Access to new technology
      • More efficient production and innovation
      • Reduced marketing costs
      • Strategic competitive moves
      • Access to additional sources of products and capital
    • Many companies also are entering SIAs to be in strategic position to be competitive and to benefit from the expected growth in the single European market.
  • 17. Strategic International Alliances (continued)
    • International Joint Ventures
      • A joint venture is a partnership of two or more participating companies that have joined forces to create a separate legal entity.
      • Four Characteristics define joint ventures:
        • JVs are established, separate, legal entities
        • The acknowledged intent by the partners to share in the management of the JV
        • There are partnerships between legally incorporated entities such as companies, chartered organizations, or governments, and not between individuals
        • Equity positions are held by each of the partners
  • 18. Strategic International Alliances (continued)
    • Consortia
      • Consortia are similar to joint ventures and could be classified as such except for two unique characteristics:
        • They typically involve a large number of participants
        • They frequently operate in a country or market in which none of the participants is currently active.
      • Consortia are developed to pool financial and managerial resources and to lessen risks.
  • 19. Direct Foreign Investment
    • Factors that have been found to influence the structure and performance of direct investments:
      • Timing
      • The growing complexity and contingency of contracts
      • Transaction cost structures
      • Technology transfer
      • Degree of product differentiation
      • The previous experiences and cultural diversity of acquired firms
      • Advertising and reputation barriers
  • 20. Organizing for Global Competition (cont’d)
    • Locus of decision
      • Considerations of where decisions will be made, by whom, and by which method constitute a major element of organizational strategy.
    • Centralized versus decentralized organizations
      • An infinite number of organizational patterns fro the headquarters activities of multinational firms exist, but most fit into one of three categories:
        • Centralized
        • Regionalized
        • Decentralized
    • No single traditional organizational plan is adequate for today’s global enterprise seeking to combine the economies of scale of a global company with the flexibility and marketing knowledge of a local company.
  • 21. Schematic Marketing Organization Plan Combining Product, Geographic, and Functional Approaches
    • Insert Exhibit 11.4
  • 22.
    • Thank you