International marketing123

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  • 1. International Marketing
  • 2. Opportunities and Outcomes of International Strategy Exporting Licensing Strategic alliances Acquisitions Establishment of a new subsidiary International business-level strategy Multidomestic strategy Global strategy Transnational strategy Increased market size Return on investment Economies of scale and learning Advantage in location Identify International Opportunities Explore Resources and Capabilities Use Core Competence International Strategies Modes of Entry
  • 3. Opportunities and Outcomes of International Strategy: Continued Better performance Innovation Exporting Licensing Strategic alliances Acquisitions Establishment of a new subsidiary Use Core Competence Modes of Entry Strategic Competitiveness Outcomes Management problems and risk Management problems and risk
  • 4. Motivations for International Expansion
    • Increase Market Share
      • domestic market may lack the size to support efficient scale manufacturing facilities
    • Return on Investment
      • large investment projects may require global markets to justify the capital outlays
      • weak patent protection in some countries implies that firms should expand overseas rapidly in order to preempt imitators
  • 5. Motivations for International Expansion
    • Economies of Scale or Learning
      • expanding size or scope of markets helps to achieve economies of scale in manufacturing as well as marketing, R & D or distribution
      • can spread costs over a larger sales’ base
      • increase profit per unit
    • Location Advantages
      • low cost markets may aid in developing competitive advantage
      • may achieve better access to:
    • Raw materials
    • Lower cost labor
    • Key customers
  • 6. International Corporate-Level Strategy Need for Local Responsiveness Need for Global Integration Low High Low High Global strategy Transnational strategy Multidomestic strategy
  • 7. International Corporate-Level Strategy
    • Type of corporate strategy selected will have an impact on the selection and implementation of the business-level strategies
    • Some corporate strategies provide individual country units with flexibility to choose their own strategies
    • Others dictate business-level strategies from the home office and coordinate resource sharing across units
  • 8. International Corporate-Level Strategy: Multidomestic Strategy
    • Strategy and operating decisions are decentralized to strategic business units (SBU) in each country
    • Products and services are tailored to local markets
    • Business units in one country are independent of each other
    • Assumes markets differ by country or regions
    • Focus on competition in each market
    Multidomestic strategy
  • 9. International Corporate-Level Strategy: Global Strategy
    • Products are standardized across national markets
    • Decisions regarding business-level strategies are centralized in the home office
    • Strategic business units (SBU) are assumed to be interdependent
    • Emphasizes economies of scale
    • Often lacks responsiveness to local markets
    • Requires resource sharing and coordination across borders (which also makes it difficult to manage)
    Global strategy
  • 10. International Corporate-Level Strategy: Transnational Strategy
    • Seeks to achieve both global efficiency and local responsiveness
    • Difficult to achieve because of simultaneous requirements
      • strong central control and coordination to achieve efficiency
      • decentralization to achieve local market responsiveness
    • Must pursue organizational learning to achieve competitive advantage
    Transnational strategy
  • 11. Global Market Entry: Choice of Entry Mode Type of Entry Characteristics Exporting High cost, low control Licensing Low cost, low risk, little control, low returns Strategic alliances Shared costs, shared resources, shared risks, problems of integration Acquisition Quick access to new market, high cost, complex negotiations, problems of merging with domestic operations New wholly owned subsidiary Complex, often costly, time consuming, high risk, maximum control, potential above-average returns
  • 12. Strategic Competitiveness Outcomes: Returns
    • International diversification and returns : firm expands the sales of its goods or services across the borders of global regions and countries into different geographic locations or markets
      • may increase a firm’s returns
      • such firms usually achieve the most positive stock returns
      • firm may achieve economies of scale and experience, location advantages, increased market size and opportunity to stabilize returns
  • 13. Strategic Competitiveness Outcomes: Innovation
    • International diversification and innovation : firm expands the sales of its goods or services across the borders of global regions and countries into different geographic locations or markets
      • potentially greater returns on innovations (larger markets)
      • generate additional resources for investment in innovation
      • exposed to new products and processes in international markets, generates additional knowledge leading to innovations
  • 14. Risks in an International Environment Political Risks Economic Risks
    • Political risks include
      • instability in national governments
      • war, both civil and international
      • potential nationalization of a firm’s resources
    Political Risks
  • 15. Risks in an International Environment Economic Risks
    • Economic risks are interdependent with political risks and include
      • differences and fluctuations in the value of different currencies
      • differences in prevailing wage rates
      • difficulties in enforcing property rights
      • unemployment
    Political Risks
  • 16. Limits to International Expansion: Marketing Problems
    • Cost of coordination across diverse geographical business units
    • Institutional and cultural barriers
    • Understanding strategic intent of competitors
    • The overall complexity of competition