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Entering foreign markets

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  • There follows an explanation of some key terms: Coordinate its marketing activities : coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness. Find global customer needs : this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries. Satisfy global customers : adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions. Being better than the competition : assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image.
  • There follows an explanation of some key terms: Coordinate its marketing activities : coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness. Find global customer needs : this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries. Satisfy global customers : adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions. Being better than the competition : assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image.
  • Fundamentally, there are four ways of using information to create business value (Marchand, 1999): 1 Managing risks . In the twentieth century the evolution of risk management stimulated the growth of functions and professions such as finance, accounting, auditing and controlling. These information-intensive functions tend to be major consumers of IT resources and people ’s time. 2 Reducing costs . Here the focus is on using information as efficiently as possible to achieve the outputs required from business processes and transactions. This process view of information management is closely linked with the re-engineering and continuous improvement movements of the 1990s. The common elements are focused on eliminating unnecessary and wasteful steps and activities, especially paperwork and information movements, and then simplifying and, if possible, automating the remaining processes. 3 Offering products and services . Here the focus is on knowing one ’s customers, and sharing information with partners and suppliers to enhance customer satisfaction. Many service and manufacturing companies focus on building relationships with customers and on demand management as ways of using information. Such strategies have led companies to invest in point-of-sale systems, account management, customer profiling and service management systems. 4 Inventing new products . Finally, companies can use information to innovate – to invent new products, provide different services and use emerging technologies. Companies such as Intel and Microsoft are learning to operate in ‘continuous discovery mode’, inventing new products more quickly and using market intelligence to retain a competitive edge. Here, information management is about mobilizing people and collaborative work processes to share information and promote discovery throughout the company.
  • There follows an explanation of some key terms: Coordinate its marketing activities : coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness. Find global customer needs : this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries. Satisfy global customers : adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions. Being better than the competition : assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image.
  • Transcript

    • 1.
      • Entering foreign markets
    • 2.  
    • 3. Figure 10.1 Export modes 10-
    • 4. Indirect export modes
      • Sale is like a domestic sale
      • Most appropriate for firms with limited international expansion objectives
      • Appropriate for firms using international sales as a means of disposing of surplus production
      10-
    • 5. Definitions
      • Export buying agent: a representative of foreign buyers who is located in the exporter ’s home country and provides services such as identifying potential sellers and negotiating prices
      • Broker: an agent, based in the home country, who is a specialist in performing contractual functions but does not actually handle the products sold or bought?
      • Piggyback: an indirect mode of export which entails an inexperienced SME ‘riding’ on the capabilities of a larger company already experienced in foreign markets
      10-
    • 6. Figure 10.1 Export modes 10-
    • 7. Direct Exporting
      • Contracting with intermediaries located in the foreign market to perform export functions.
      • The foreign intermediaries serve as an extension of the exporter, negotiating on behalf of the exporter and assuming such responsibilities as local supply-chain management, pricing, and customer service.
      • It gives the exporter greater control over the export process and potential for higher profits, as well as allowing a closer relationship with foreign buyers.
      • However, exporter must dedicate more time, personnel, and corporate resources in developing and managing export operations.
      International Business: Strategy, Management, and the New Realities
    • 8. Direct entry modes 10- Export via distributors Export via agents
    • 9. Definitions
      • Distributor: An independent company that stocks the manufacturer ’s product, but has substantial freedom to choose its own customers and price
      • Agent: An independent company that sells on to customers on behalf of the manufacturer, does not stock the product, and earns profits from commission paid by the manufacturer
      • Hierarchical modes: The entry modes by which the firm completely owns and controls the foreign entry mode
      10-
    • 10. Hierarchical modes 12- Domestic-based representatives Resident sales representatives Foreign sales subsidiary Sales and production subsidiary Region centres
    • 11. Figure 12.1 Domestic-based sales representatives/ manufacturer’s own sales force 12-
    • 12. Figure 12.1 Resident sales representatives/ sales subsidiary 12-
    • 13. Figure 12.1 Sales and production subsidiary 12-
    • 14. Figure 12.1 Region centre 12-
    • 15. Definitions
      • Domestic-based sales representative: sales representative that resides in the home country of the manufacturer and travels abroad to perform the sales function?
      • Subsidiary: a local company owned and operated by a foreign company under the laws and taxation of the host country?
      12-
    • 16. Company-Owned Foreign Subsidiary
      • The firm sets up a sales office or a company-owned subsidiary that handles marketing, physical distribution, promotion, and customer service activities in the foreign market.
      • The firm undertakes major tasks directly in the foreign market, such as participating in trade fairs, conducting market research, searching for distributors, and finding and serving customers.
      • Would pursue this route if the foreign market seems likely to generate a high volume of sales or has substantial strategic importance.
      International Business: Strategy, Management, and the New Realities
    • 17. Summary of domestic-based sales representatives
      • Advantages
      • Better control of sales
      • Close contact with customers
      • Disadvantages
      • High travel expenses
      • Too expensive for markets far from home
      12-
    • 18. Summary of foreign sales, sales and production subsidiary
      • Advantages
      • Full control of operation
      • Market access
      • Market knowledge
      • Reduced transport costs
      • Access to raw materials
      • Disadvantages
      • High initial capital investment
      • Loss of flexibility
      • High risk
      • Taxation problems
      12-
    • 19. Summary of region centres
      • Advantages
      • Synergies on regional/global scale
      • Scale efficiency
      • Ability to leverage learning on cross-national scale
      • Disadvantages
      • Potential for increased bureaucracy
      • Limited national level responsiveness
      • Missing communication between head office and centre
      12-
    • 20. Summary of acquisition
      • Advantages
      • Quick access to
        • Distribution channels
        • Labour force
        • Management experience
        • Local knowledge
        • Local contacts
        • Established brand names
      • Disadvantages
      • Expensive option
      • High risk
      • Integration concerns
      12-
    • 21. Summary of greenfield investment
      • Advantages
      • Optimum format possible
      • Optimum technology possible
      • Disadvantages
      • High investment cost
      • Slow entry of new markets
      12-
    • 22. Figure 9.1 All factors affecting decision 9-