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1. Imnt Mkting

1. Imnt Mkting






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    1. Imnt Mkting 1. Imnt Mkting Presentation Transcript

    • Jan Surya Sharma International Marketing Management
    • Objective
      • To Understand:
      • Growth Factors - Internationalism & Globalization
      • Major Concepts & Themes – Intl. Mkting
      • Planning for Intl. Marketing.
      • For Developing & Enhancing:
      • Critical Skills for effective Intl. Mkting Strategies
      • Global Perspective on Intl. Mkting Problems Unique to India
      • Capability for Handling Intl. Mketing Mgmt. Tasks
    • Course Details …
      • S.No. Chapter
      • 1. Concept of Intl. Marketing
      • 2. Decision Making Process - Intl. Mkts
      • 3. Intl. Markets Entry
      • 4. Product Strategy for Intl. Mkts
      • 5. Pricing Decisions for Intl. Mkts.
      • 6. Distribution Decisions for Intl. Mkts.
      • 7. Promotional Decisions for Intl. Mkts.
      • 8. Branding for Intl. Mkts.
    • Concept of Intl. Marketing
      • History
      • - Pre WW-II - Post WW-II - Recent
      • Definition & Facets of Intl. Marketing
      • Significance of International Marketing
      • Reasons for Entering Intl. Markets
      • Domestic vs. Intl. Marketing
      • Problems of Intl. Marketing
      • Barriers of Intl. Marketing
      • Intl. Marketing Environment
      • Evolution Process of Global Markets - EPRG Concept
        • Born Global Concept
        • SRC – Adaptation the Critical Factor
      • Theories of International Trade
      • Globalization
    • Ancient International Business V. Gordon Childe -“Man Makes Himself” 6000 – 4000 BC Animal imports from Asia by Sahara People 3000 BC – Trade between India, Mesopotamia & Egypt 5 th BC - Indian merchants Colony in Egypt & SE Asia 100 BC - Silk Route - Xian to Rome Exports: Food Items, Craft Work, Pepper & Spices Imports: Luxury items, Exotic stones etc.
      • Era of Liberal Trade - Negligible Trade Barriers
      • 18 & 19 th AD – Industrialisation – Europe, US & Japan
      • - Colonisation - UK, Spain, France, Japan,
      • Portugal, Germany
      • for Markets, Resources & Manpower
      • Market Textile, Coffee, Tea, Sugar, Machines,
      • RM Cotton, Metals, Sugarcane, Tea leaves & Coffee beans etc .
      • Labour Agriculture, Mining, Construction, Shipping etc.
      • 1911 – Outbreak of WW- I
      • 1917 – Russian Revolution & Emergence 1 st Socialist State -USSR
      • 1930s - Great Depression – a big threat to world capitalism
      • 1939 – 1945 : World War II - Fight for Political & Economic Supremacy, Markets, RM & Labour
      Pre WW-II Developments
    • Post WW II Developments - 1945 WB (IBRD+IDA) 186 countries - 1945 UN 192 members - 1945 IMF 186 member countries - 1947 GATT now WTO 153 members Change in attitudes – Reconstruction & Self- reliance Bi-polarisation of Geopolitics Creation of Trade Barriers – tariff & non-tariffs 1944 - Britton Woods Agreements & Need for Multilateral Org. for revival & growth of trade 1980 - Disintegration of USSR/End of Cold War
    • More recently…
      • - L P G
      • - Sustained World Peace & Growing Terrorism
      • - Pace of ICT- Globe Shrunk (Time-Distance-Cost)
      • - New Business Forms (E-business/ E-commerce)
      • - Standardisation, Customisation & Customerisation
      • - Emergence of RTAs (ASEAN, EU, NAFTA, APEC etc.)
      • - Varying Degree of loss of Sovereignty
      • - Emergence of New Economies & Mkts.
      • - Ethics & Ecological Concerns
      1992 - Emergence of EC 1995 - WTO , EC Transforms to EU 2008-09 - Global Meltdown & Financial Crisis
    • Reasons of Recent International Growth Rapid Increase in Technology Liberalization, Privatization & Globalization Development of Institutions supporting & facilitating International Trade Consumers/Customers Pressure Increased Global Competitiveness
    • Other Drivers
      • Convergence of consumer tastes
      • Emergence of global niche markets
      • Self Reliance to Interdependence
      • Economies of Scale
      • Standardisation
      • Consumerism
      • LPG
    • What is Marketing?
      • Marketing:
      • Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably. (Chartered Inst. Marketing)
      • Marketing in a Changing World:
      • Process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. (AMA)
      • More Simply
      • Creating & delivering Customer Value & Satisfaction at profit.
    • International Marketing - Definition
      • “ The definition of International Marketing is different from the general definition of Marketing only in that goods and services are marketed across political boundaries.” (Albaum)
      “ International Marketing is the performance of business activities that direct the flow of a company’s goods and services to consumers or users in more than one nation for profit.” (Cateora)
      • Thus Intl. Marketing revolves around:
        • Identifying needs & wants of Diverse Intl. Markets
        • Marketing Mix Decisions & Strategies in relation to Diverse & Dynamic Intl. Mkts.
        • Choosing the right Intl. Mkt. entry mode/modes
        • Decisions in line with dynamic Intl. Mkting Environment
    • Terms In International Marketing
      • Made up of many facets based on levels of involvement
        • Domestic Marketing
        • Export Marketing
        • International Marketing
          • Multi National Marketing
          • Global Marketing
    • Domestic Marketing
      • One set of Competitors
      • One Economy
      • One set of Market Pressures
      • One set of Customers
      • Marketing mix and plan for domestic mkts.
    • Export Marketing
      • Where the company markets its goods/services across national or political boundaries
      • Usually a reactive situation
      • Emphasis on product modification , if required.
      • Most traditional and least complicated form of international marketing.
    • International Marketing
      • Entire marketing strategy will need to be adapted .
      • Understanding of different environments becomes essential.
      • Several markets
      • Differing controllable variables across markets
      • Differing uncontrollable variables across markets
      • Giving
        • Differing infrastructures
        • Differing advertising/promotions
        • Differing complexity of market
    • Multinational Marketing
      • Where similar activities apply to more than one country
      • Some limited control on the market place variables
      • Markets may be independent profit centres
      • Marketing strategy can be tailored to local market, individual strategy per location, can have many and varied strategies.
      • Marketing strategies for regions rather than countries.
      • e.g. Asia , fastest growing market for West’s top brands at lower costs. (GM Motors, Honda, Toyota, Dior, Rolex, Cartier, Gucci)
    • Global Marketing
      • The whole organisation exploits one strategy on a worldwide basis
      • No individual country influence , although often some form of local modification necessary.
      • One strategy fits all
        • Efficiencies of scale
        • Needs significant market segments with similar demand world over
        • Might need marketing mix tweaked per region?
    • Significance of International Marketing
      • Provides new markets
      • Presents opportunities for growth, expansion & income
      • Allows for the flow of ideas, services & capital
      • Increases the speed of innovation
      • Allows for better usage of human capital
      • Allows greater access to financing
      • Gives consumers more choice
      • Several trends highlight the importance of international business
        • The continued expansion of international trade
        • The changing composition of trade
        • The growing interdependence of economies
        • The increasing size and power of TNE’s
        • Globalization
    • Objectives of Going International Development, Growth & Employment Defense Needs Balance of Payment Control Inflation & Recession
        • Growth & Profitability
        • Economies of Scale
        • Minimizing Risk
        • Acquiring Inputs, Resources & Technology
        • Uniqueness Providing Opportunities
        • Opportunities Arising out of PLC
        • R&D Cost Spread
    • Why is Intl. Marketing Different?
      • Culture Diverse, Multi-cultured
      • Markets Widespread, Fragmented,different
      • Data Difficult to get, expensive
      • Politics Varying stability and attitudes
      • Governments Attitudes towards foreign trade
      • Competitors Varying levels
      • Economies Varying levels & Systems
      • Finance Varying systems & regulatory bodies
      • Currencies Varying & Fluctuating
      • Businesses Cross Cultural Influences
      • Control Remote & Difficult
    • Problems of Intl. Marketing
      • Debt
      • Unstable countries
      • Protection of intellectual rights
      • Tariff regulations
      • Instability in Foreign Exchange markets
      • Non tariff barriers, e.g. specifications, quotas,
    • Barriers to Intl Marketing
      • Control
      • Language
      • Red tape
      • Cash flow
      • Logistics
      • Lack of trained staff
      • Tariff & Non-Tariff Barriers
    • Manipulate a series of Variables
        • Controllable by business (Internal)
          • Price
          • Promotion
          • Distribution
          • Product
        • Uncontrollable by business (External)
          • Economic structure
          • Competitors
          • Cultural
          • Legal
    • SLEPT Factors (Framework to analyse macro environment )
      • S ocial & cultural values
      • L egislation affecting trade
      • E conomic conditions
      • P olitical systems & attitudes
      • T echnological level & infrastructure,
      • & Competition within the market
    • EPRG CONCEPT – Howard Perlmutter Orientation: International Marketing Organization ETHNOCENTRIC
      • Considers own culture as superior–same Mkting strategy
      • Ignore environmental differences
      • Domestic or extension to export marketing
      • Treats region as a uniform mkt. Segment
      • Adapts similar mkting strategy within region but
      • across the region
      • Highly Market Oriented
      • Considers each mkt. Unique
      • Decentralization on marketing activities
      • Needs corporate resources
      • Whole world a single market
      • Formulate integrated marketing strategies
      • Economies of scale
    • Evolutionary Process- Global Marketing Stages Marketing Market Focus Orientation Marketing Mix Decisions I Domestic Domestic Ethnocentric SMEs Domestic Customer Focussed II Export Overseas Ethnocentric Food products, Jewelleries,
      • Mainly Domestic customers
      • Overseas mkt. only an Extn.
      • of domestic marketing
      • - Decisions made at HQ
      III International Differentiation by developing products & brands Polycentric Corporate sector Product development upon Country needs. Decisions by individual subsidiaries IV Multinational Consolidation of operations on regional basis. Gains from Economies of Scale Regiocentric Product standardization within regions but not across them. i.e., Regional basis V Global Consolidation on global basis Geocentric IBM, SONY Globalisation of marketing mix decisions with local variations Jt. Decision making across globe .
    • Stages of Domestic to Global MGMT. EMPHASIS FOCUS Marketing Strategy Structure Management Style Manufacturing Stance Investment Policy Performance Evaluation STAGE - I DOMESTIC Domestic Domestic Domestic Domestic Mainly Domestic Domestic Domestic Market Area STAGE - II INTL. Ethnocentric Extension International Centralized Top Down Mainly Domestic Domestic used Worldwide Against home Country Mkt. Share STAGE – III MULTINATIONAL Polycentric Adaptation Worldwide Area Decentralized Bottom Up Host Country Mainly in Each Host Country Each Host Country Mkt. Share STAGE - IV GLOBAL Geocentric Extension Adaptation creation matrix/mixed Integrated Lowest Cost Worldwide Cross Subsidization Worldwide
    • Process Of Internationalization
      • Strategic advantage as positive stimulus:
        • Gains in terms of increased profits,
        • Increased market share,
        • Economies of scale,
        • Competition in domestic or in other international operated mkt.
      • High degree of marketing complexity
          •  Evolution from Domestic to Exports,
      •  Exports to International Markets,
      •  Intl. Markets to Multinational Markets,
      •  Multinational to Global Markets, and
      •  Global approach with Local orientation
    • BORN GLOBALS International new venture of business organization, which right from its inception, seeks to derive significant competitive advantage by using resources & marketing of outputs in multiple countries. Their start-ups is international, by significant commitments of resources (material, people, financing, time) in more than one nation. Coined by McKinsey Consultants, the concept has 2 phenomena: 1. Small is beautiful 2. Gradual internationalization is old
      • High-tech firms , some use well-known technology
      • Higher growth rates than other industries
      • Larger growth in export than home-market sales
      • Management’s commitment to internationalization
      • Ability to standardize production, marketing , etc.
      • Unconscious reference to one’s own cultural values,
      • experiences & knowledge as basis for decision making
      • Isolate the influences of SRC – 4 steps
      • 1. Define business problem or goal in terms of the home-country traits, habits, or norms
      • 2. Define business problem or goal in terms of foreign country cultural traits, habits, or norms. Make no value judgments
      • 3. Isolate the SRC influence in the problem and examine it carefully to see how it complicates the problem
      • 4. Redefine the problem w/o the SRC influence and solve for optimum business goals
    • MNC vs. TNC
      • International Companies : Importers & Exporters -
      • No investment outside their home country.
      • Multinationa l: Investment in other countries , but do not have coordinated product offerings in each country . More focused on adapting their products and service to each individual local market.
      • Global : Investment & Presence in many countries. Market their products using same coordinated image/brand in all markets. Generally one corporate office responsible for global strategy. Emphasis on volume, cost management and efficiency.
      • Transnational: More complex organizations with investment in foreign operations , having central corporate facility with decision-making, R&D and marketing powers to each individual foreign market.
    • Intl. Trade & Investment Theories
      • Comparative advantage of Nations
      • Nations can gain & sustain economic superiority for global competition – derived from either national endowments or from national policies
      • Competitive advantage of Firms
      • Individual firms can gain & sustain distinctive competencies from: cost, size, resources control or innovation edge over competitors.
    • Nation Level Firm Level Why do Nations trade? How nations enhance Competitive advantage? Why & how do Firms Internationalize? How Internationalizing Firms gain & sustain Competitive Advantage? International Trade & Investments
      • Classical Theories Explanation
      • Mercantilism
      • Absolute Advantage
      • Comparative Advantage
      • Factor Endowment
      • Intl. Product Cycle
      • Contemporary Theories Explanation
      • Competitive Advantage of Nations
      • Michael porter’s Diamond Model
      • National Industrial Policy
      • New Trade Theory
      • Firm Internationalization Explanation
      • Internationalization Process
      • Born Global & Intl. Entrepreneurship
      • FDI-based Explanations
      • Monopolistic Advantage Theory
      • Internationalization Theory
      • Dunning Eclectic Paradigm
      • Non-FDI Based Explanations
      • International Collaborative Ventures
      • Networks & Relative Assets
    • Why Nations Trade: Classical Theories
      • Mercantilism: national prosperity comes from a positive balance of trade – maximize exports and minimize imports.
      • Absolute Advantage Theory : a country produces those products in which it has absolute advantage to other country
      • Comparative Advantage Theory : it is beneficial for two countries to trade even if one has absolute advantage in both products’ production by specializing in what they produce best & trade for the rest using scarce resources more efficiently on the basis of relative efficiency.
      • Factor Proportions (endowments) Theory : country to produce & export products by intensively using relatively abundant factors, & import goods that intensively use relatively scarce factors of production.
      • Leontief paradox suggested that that international trade is complex and countries can be successful even if it require a less abundant resource (e.g., the U.S. with its labor-intensive exports).
      • International product cycle theory: each product and its associated manufacturing technologies go through three stages of evolution: introduction, growth, and maturity
    • How Nations Enhance Competitive Advantage contemporary view
      • Govts. Policies : proactively enhance nation’s competitive advantage by stimulating innovation, targeting industries for development, providing low-cost capital, and through other incentives
      • Porter’s Diamond Model: Factor Conditions, Demand Conditions, Related Support Industries and Firm’s strategy structure and rivalry.
      • New Trade Theory: economies of scale an important factor for superior international performance – even without any clear comparative advantage possessed by the nation.
    • PORTER’S DIAMOND MODEL Competitive Advantage of Nations ( Diamond Porter) CHANCE Government FACTOR CONDITIONS DEMAND CONDITIONS Firm Strategy, Structure, and Rivalry Related and Supporting Industries
    • Factor Conditions -Country creates its own skilled resources & technological base - Stock of factors needs to be upgraded and deployed - Disadvantages in factors force innovation Demand Conditions - Local demanding market leads to national advantage - Trend-setting strong local market supports local firms anticipate global trends Related & Supporting Industries - Firms having local supporting competitive industries, enjoy more cost effective & innovative inputs - This effect is strengthened when the suppliers themselves are strong global competitors Firm Strategy, Structure & Rivalry - Local conditions affect firm strategy: . German companies tend to be hierarchical . Italian cos. tend to be small & run more like extended families - Such strategy & structure helps to determine in which types of industries a nation's firms will excel. - While at a single point in time a firm prefers less rivalry, over the long run more local rivalry is better because it puts pressure on firms to innovate and improve. - In fact, high local rivalry results in less global rivalry.
    • Why and How Firms Internationalize?
      • Evolutionary Process: EPRG Approach: suggests a gradual, evolutionary path to internationalization: stages: domestic focus, pre-export stage, experimental involvement, active involvement, and committed involvement.
      • Born Global & International Entrepreneurship: many firms, even young or without experience, take bold steps to internationalize indicating on the emergence of Born Global companies in today’s fast-paced, interconnected economy.
    • Theories of INTL. Trade
      • Theory of Mercantilism: create trade surplus, accumulate wealth at another trading partner’s cost (zero-sum game), restrict import & promote exports, exploitation & colonial mkts for finished goods & RM
      • Theory of Absolute Advantage: Adam Smith – A nation exports goods which it produces more efficiently & enables it to acquire more goods by imports
      • Theory of Comparative Advantage: David Ricardo- country benefits from Intl. Trade even it is less efficient in one product but specialize in other.
      • Factor Endowment Theory: H.O. - relative commodity prices and comparative advantage between two nations. Land-Labour relationship, technological complexities.
      • Theory of Intl PLC: Raymond Vernon - shifting of mkts, cyclical pattern, to achieve cost-efficiency,
      • Theory of Competitive Advantage: Michael Porter Diamond Model
      • -> Factor Input conditions (efficiency, quality, technology infrastructure & natural resources),
      • -> Demand Conditions ( natural demand, size & growth patterns, upgrade product & services),
      • -> Related support industry , -> Firm strategy, structure & Rivalry ,
      • -> Chance & -> Govt.
    • PORTER’S DIAMOND MODEL Competitive Advantage of Nations (aka Diamond Porter) CHANCE Government FACTOR CONDITIONS DEMAND CONDITIONS Firm Strategy, Structure, and Rivalry Related and Supporting Industries
    • Factor Conditions -Country creates its own skilled resources & technological base - Stock of factors needs to be upgraded and deployed - Disadvantages in factors force innovation Demand Conditions - Local demanding market leads to national advantage - Trend-setting strong local market supports local firms anticipate global trends Related & Supporting Industries - Firms having local supporting competitive industries, enjoy more cost effective & innovative inputs - This effect is strengthened when the suppliers themselves are strong global competitors Firm Strategy, Structure & Rivalry - Local conditions affect firm strategy: . German companies tend to be hierarchical . Italian cos. tend to be small & run more like extended families - Such strategy & structure helps to determine in which types of industries a nation's firms will excel. - While at a single point in time a firm prefers less rivalry, over the long run more local rivalry is better because it puts pressure on firms to innovate and improve. - In fact, high local rivalry results in less global rivalry.
    • To Gain & Sustain Intl. Competitive Advantage
      • FDI : MNE traditionally been the major player in international business by FDI to control over resources & capabilities in the foreign market.
      • Monopolistic Advantage: include proprietary knowledge, patents, unique know-how and skills, and sole ownership of other assets.
      • Internationalization Theory: Firms acquire & retain one or more value-chain activities for effective control over foreign operations & avoiding the disadvantages of dealing with external partners against arm’s-length entry strategies.
      • Dunning’s Eclectic Paradigm: 3 advantages
      • - Ownership-specific - Location-specific - Internalization
    • Non-FDI Based Explanations
      • INTERNATIONAL COLLABORATIVE VENTURES: partners share risk of their joint efforts for pool resources & capabilities to create synergy to gain access to partner’s know-how, capital, distribution channels, and marketing assets, and overcome government imposed obstacles.
      • Equity-based joint ventures: In contrast to the wholly-owned FDI, the firm collaborates with local partner(s) to reduce risk and commitment of capital.
      • Project-based alliances: Do not require equity commitment from the partners but simply a willingness to cooperate in R&D, manufacturing, design, or any other value-adding activity.
      • FII/PORTFOLIO INVESTMENTS: Investments in equity or portfolios & funds with no interest on operations and control of the organizations.
    • Globalization “ It has been said that arguing against globalization is like arguing against the law of gravity.” General Kofi Annan, - UN Secretary
      • Global characteristics
        • Customer needs are similar internationally
        • Compete in globalized industries
        • Locate value-adding activities in places world-wide where competitive advantage can be gained
        • Integrate & coordinate intl. activities between countries
    • Globalization: Opportunity or Threat?
      • Promotes free trade
      • More goods & services are available at lower cost to wider people
      • Globalized capital markets attract money to economies for growth and allow for greater returns for investors
      • Creates jobs and economic growth
      • Creates a common culture, allowing people around the world to understand each other more easily
      • Breaks down isolation
      • Favors wealthy, industrialized countries
      • Occurs at the expense of workers in poorer countries
      • Rapid movement out of countries can cause political, economic and social problems
      • Exploits cheap labor and natural resources where laws don’t adequately provide protection
      • Undermines traditional culture, language and values
    • Future of Intl. Business & Globalization
      • Globalization is inevitable
      • Intl. Business to grow along
      • Regional lines than Global lines.
      • Anti-Globalization & Anti Intl. Business Forces
      • to slow down.
    • Expansion of International Trade
      • Volume of Intl. trade up from $200 bn to $10 tr. in past 30 yrs.
    • World GDP Growth
    • Volume of World Merchandise Exports & GDP, 2000 - 2007
    • Source: International Trade Statistics (WTO)
    • The Composition of Trade
      • Between the 1960’s and the 1990’s the importance of manufactured goods increased while the role of primary commodities (i.e. rubber or mining) had decreased.
      • More recently, there has been a shift of manufacturing to countries with emerging economies.
      • There has been an increase in the area of services trade in recent years, although it remains less than 19% of all trade.
    • Recent Changes in International Trade
      • Trade slowed in 2007 on weakening demand from developed economies
      • Agricultural products experienced the greatest value growth in 2007, due to higher prices
      • Brazil, India and China continue to show growth trends in trade, but in terms of global exports Brazil and India only have 1%, while China has nearly 10%
      • The value of trade in commercial services increased at a faster rate (18%) than the trade in goods
    • The Powerful MNEs
      • Modern MNE’s are larger economies than some nations
      • Measuring company sales against GDP, half of the top 100 economies in the world are companies
        • Mitsubishi is larger than Indonesia
        • Ford is bigger than Turkey
        • Wal-Mart is bigger than Israel
    • Coca-Cola
      • 80% of operating income is derived outside the U.S.
      • Distributes its products in more than 200 countries
      • Employs more than 71,000 worldwide
    • General Electric Corporation
      • In 2005, 61% of General Electric’s assets were foreign assets
      • GE had 155,000 foreign employees
      • Foreign sales accounted for 1/3 of GE’s total sales (source: www.unctad.org)
    • Thanks!
    • Group Assignment – 5 students in each group .
      • Find the motivating factors of any Indian Firm entering Intl. Mkts.
      • Find the motivating factors of any Multinational Co. entering Intl. Mkts.
      • Find the motivating factors of any GLOCAL Co. entering Intl. Mkts.
      • BROWSE Internet & Identify 2 companies that have different orientations towards International Marketing as per EPRG & BORN GLOBAL.
      • Find their key reasons of success.
    • Thanks!