International marketing session i march 2012 [compatibility mode]

1,791 views

Published on

Learn about the key strategic issues in International Marketing

Published in: Business
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,791
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
64
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

International marketing session i march 2012 [compatibility mode]

  1. 1. International Marketing Strategies Delhi, March 19-21, 2012Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  2. 2. ObjectiveUnderstand  – What is international marketing What is international marketing – What are key decisions in international marketing – The strategic options of market entry and expansion and their The strategic options of market entry and expansion and their  implementation – Important factors for each alternative market entry strategy Important factors for each alternative market entry strategy • Export/ Trading • Li Licensing/ Franchising i /F hi i • FDI – Importance of international strategic alliancesProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  3. 3. Agenda Date Subject Responsibility 19‐3‐12 •Introduction Me •Pre Learning Assessment You •Concepts discussion & presentation Us Concepts discussion & presentation •Post Learning Assessment (30%) You •Case Discussion Briefing •Case Discussion Briefing Me 20‐3‐12 •Case Discussion Us •Case Analysis Assessment (30%) You 21 3 12 21‐3‐12 •Concepts Review Concepts Review Me •Module Final Assessment (40%) YouProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  4. 4. Learning AssessmentProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  5. 5. Events and Trends Affecting Global BusinessWhat are the events and trends affecting global business• The rapid growth of the World Trade Organization (WTO) and NAFTA and  EU• The trend toward the acceptance of the free market system among  developing countries in Latin America, Asia, and Eastern Europe• The burgeoning impact of the Internet, mobile phones, and other global  media on the dissolution of national borders• The mandate to properly manage the resources and global environment  for the generations to comeProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  6. 6. International MarketingWhat is international marketing• International marketing is defined as the performance of business  activities designed to plan, price, promote, and direct the flow of a  company’s goods and services to consumers or users in more than one  nations for a profit.How is it different from local marketing• The difference is the “environment”– Competition, legal restraints, government controls, weather, fickle  , , g , consumers, economic conditions, technological constraints,  infrastructure concerns, culture, and political situations. Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  7. 7. The International Marketing TaskProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  8. 8. International Marketing Involvement - Stages No Direct Infrequent Foreign Foreign Marketing Marketing Global Marketing Regular Foreign International Marketing MarketingProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  9. 9. No Direct Foreign Marketing – ReactiveHow do products reach foreign markets?• Products “indirectly” reach foreign markets – Trading companies g p – Foreign customers who contact firm – Domestic wholesalers/distributors – Web orders• Foreign orders stimulate a company’s interest to seek  additional international sales additional international salesProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  10. 10. Infrequent Foreign Marketing – ReactiveWhat causes infrequent foreign marketing?• Caused by temporary surpluses – Sales to foreign markets are made as goods become available  l f i k d d b il blWhat are the firm’s intention?• Firm has little or no intention of maintaining  continuous market representation – Foreign sales activity declines and is withdrawn when domestic demand  increasesProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  11. 11. Regular Foreign Marketing – ProactiveWhat is involved in regular foreign marketing?• Dedicated production capacity for foreign markets• gy Strategy: – Firm employs domestic or foreign intermediaries – Uses its own sales force or sales subsidiaries• Products are adapted for foreign markets as domestic  demand grows• Firms depend on profits from foreign markets Firms depend on profits from foreign marketsProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  12. 12. International Marketing – ProactiveWhat is involved in International Marketing? g• Fully committed and involved in foreign markets and international  activities• Production takes place on foreign soil earning firms the MNC  ( (Multinational Corporation) title p )• Fedders being “proactive:” – Looked to Asia for future growth after stymied U.S. sales Looked to Asia for future growth after stymied U.S. sales – Designed new types of air conditioner unit for the Chinese market  – Plan to introduce new product in the U.S! Plan to introduce new product in the U S!Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  13. 13. Global Marketing – ProactiveWhat about Global Marketing? g• The firm sees the world as one market!• Market segmentation is now defined by income  levels, usage patterns, or other factors that span the  levels usage patterns or other factors that span the globe• More than half of its revenues come from abroad• The firm has a global perspective Th fi h l b l iProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  14. 14. Global Market OrientationWhat about Global Market Orientation?• This orientation entails operating as if all the country markets in a  company’s scope of operations (including the domestic market) were  approachable as a single global market and standardizing the marketing  mix where culturally feasible and cost effective. • Depending on the product and market, firms may pursue a global  market strategy for one product (global market orientation – P&G diapers)  but a multidomestic strategy for another product (international market  b t ltid ti t t f th d t (i t ti l k t orientation = P&G detergents).Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  15. 15. Beyond the First Decade of the 21st CenturyWhat does it look beyond the first decade of 21st century?• Growth of the U.S. economy slowed dramatically in the last few years especially in 2009 Growth of the U.S. economy slowed dramatically in the last few years especially in 2009• Economies of the developed world expected on average to grow annually at 3% for the next 25 years (OECD)• Economies of the developing world expected on average to grow annually at 6% for the next 25 years (OECD)• As a result, economic power and influence will move away from industrialized nations to developing nations  A l i d i fl ill f i d i li d i d l i i (Latin America, Asia, Eastern Europe, and Africa)• Companies are looking for ways to become more efficient, improve productivity, and expand their global reach  while maintaining an ability to respond quickly and deliver products that the markets demand.  • Nestle, Samsung, Whirlpool• Smaller companies also using novel approaches to target global markets • Nochar Inc. (fire retardant) • Buztronics Inc. (promotional lapel buttons) Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  16. 16. Rationale for International Marketing Why  must the domestic companies pay attention  to marketing overseas 1. Saturation of domestic market 2. Opportunity to extend their product’s life cycle 3. Helps increase scale of operation and reduce costs to  l l f d d compete better locally 4. Prevents long term competition from these overseas  marketsProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  17. 17. Risks in International Marketing What are the potential problems in marketing overseas 1. 1 Huge foreign indebtedness Huge foreign indebtedness 2. Unstable Governments 3. Exchange Instability h bili 4. Foreign Government Entry Requirements 5. Tariff and other trade barriers 6. Corruption 7. Technological pirating 8. High cost of product and communication adaptionProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  18. 18. International Product Life Cycle What stages does a product go through in  international marketing 1. Domestic Success and export begins 2. Start of production in overseas markets 3. Overseas markets become competitive in other  k b h markets 4. Beginning of competition in domestic market from  overseas marketProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  19. 19. Major Decisions in International Marketing What are the major decisions in marketing  overseas 1. Appraising the international marketing environment 2. Whether to go overseas? 3. Which markets to enter? h h k ? 4. How to enter these markets? 5. Formulating the marketing program 6. Marketing Organization 6 Marketing OrganizationProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  20. 20. Appraising the international marketing environment What should a company learn for marketing  overseas? 1. The International Trade System 1 Th I t ti lT d S t 2. Economic Environment 3. Politico‐Legal Environment 4. Cultural Environment 5. Business Environment 5 B siness En ironmentProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  21. 21. Appraising the international trade systemWhat should a  company learn about the international trade system1. Various Trade Restriction 1. Tariff 2. Quota 3. Embargo 4. Exchange Control 5. 5 Product standards and country discrimination Product standards and country discrimination 6. Licensing 7. Lack of intellectual property protection 8. Investment barriers2. General Agreement on Tariffs & Trade (GATT) position3. Implication of various economic communities like EU, ASEAN etc Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  22. 22. Trade BarriersWhat are tariffs and what effects do they have?• Tariffs are taxes imposed by a government on goods entering its borders. Inflationary p y pressures, special interests’ p p privileges, g Increase government control and political considerations in economic matters, and the number of tariffs Weaken Balance-of- Balance-of-payment positions, supply and demand patterns, and international relations by starting trade wars Restrict Manufacturer’s supply sources, choices available to consumers, and competitionProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  23. 23. Trade Barriers• What are Quotas and Import Licenses? – Quota is a specific unit or dollar limit applied to a particular type of good (increases price of good) – Import licenses limits quantities on a case-by-case basis – Japan and foreign rice; Banana wars between the United States and the EU• What are Voluntary Export Restraints (VER)? – Often used in the 1980s is an agreement between the importing country and the exporting country for a restriction on the volume of exports. – Japan’s VER on U.S. automobiles pProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  24. 24. The General Agreement on Tariffs and Trade (GATT)• What is GATT? – Shortly after World War II, the U.S. and 22 other countries signed GATT (1947) which paved the way for the first effective worldwide tariff agreement• What are the basic elements of the GATT – Trade shall be conducted on a nondiscriminatory basis – Protection shall be afforded domestic industries through customs tariffs, not through such commercial measures as import quotas – Consultation shall be the primary method used to solve global trade problems• How far are we in eliminating international trade barriers – Uruguay Round – The General Agreement on Trade in Services (GATS) – Trade-Related Investment Measures (TRIMs) – Trade-Related aspects of Intellectual Property Rights (TRIPs)Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  25. 25. Appraising the Economic EnvironmentWhat must you study about the  economy of overseas markets?1. Size of the country’s population2. Country’s Industry Structure3. Country’s Income DistributionProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  26. 26. Appraising the Economic EnvironmentWhat must you study about the economy of overseas  markets1. Size of the country’s population2. Country’s Industry Structure 1. 1 Agricultural economies Agricultural economies 2. Natural Resource economies 3. Industrializing economies 4. Industrialized  economies 5. Service Economies3. Country’s Income Distribution Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  27. 27. Appraising the Economic EnvironmentWhat must you study about the economy of overseas  markets1. Size of the country’s population2. Country’s Industry Structure3. Country’s Income Distribution ’ b 1. Very low family incomes 2. 2 Mostly low family incomes M tl l f il i 3. Very low and very high family incomes 4. Low, medium & high family incomes 5. Mostly medium family incomes Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  28. 28. Appraising the Political-Legal EnvironmentWhat must you study about the political & legal  environment of overseas markets1. Attitudes towards international buying2. Political Stability3. Monetary Regulations l4. Government Bureaucracy Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  29. 29. Appraising the Political-Legal EnvironmentWhat must you study about the political & legal What must you study about the political & legal environment of overseas markets1. Attitudes towards international buying 1. Receptive to foreign firms vs. Hostility 2. Investment Incentives 3. Site location services 4. Tariff and non tariff barriers 5. Other Hassles2. Political Stability3. Monetary Regulation4. Government Bureaucracy Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  30. 30. Appraising the Political-Legal EnvironmentWhat must you study about the political & legal  environment of overseas markets1. Attitudes towards international buying2. Political Stability 1. 1 Changes in governments Changes in governments 2. Populism 3. Changes in policies re company properties, currency holdings, trade barriers3. Monetary Regulation4. Government Bureaucracy4 Government Bureaucracy Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  31. 31. Appraising the Political-Legal EnvironmentWhat must you study about the political & legal  environment of overseas markets1. Attitudes towards international buying2. Political Stability3. Monetary Regulations l 1. Currency restrictions 2. 2 Exchange rate fluctuation E h t fl t ti 3. Countertrade regulations4. Government Bureaucracy4 Government Bureaucracy Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  32. 32. Appraising the Political-Legal EnvironmentWhat must you study about the political & legal  environment of overseas markets1. Attitudes towards international buying2. Political Stability3. Monetary Regulations l4. Government Bureaucracy 1. Licensing procedures 2. Customs handling 3. Market Information  4. Business Laws Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  33. 33. Lessening Political Vulnerability• Relations between governments and MNCs are generally positive if the investment – Improves the balance of payments by increasing exports or reducing imports through import substitution – Uses locally produced resources – Transfers capital, technology, and/or skills – Creates jobs – Makes tax contributions• Political parties often focus public opinion on the negative aspects of MNC whether t ti t f MNCs h th true or f l false – As scapegoats for their own failure – To serve their own interests Roy PhilipProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012 33
  34. 34. Lessening Political VulnerabilityWhat strategies that MNCs use to minimize political vulnerability and risk? – Joint ventures – Expanding the investment base – Licensing – Planned domestication – Political bargaining – Political payoffs Roy PhilipProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012 34
  35. 35. Appraising the Cultural Environment What must you study about the cultural  environment of overseas markets 1. Values 1 V l 2. Customs & Rituals 3. Taboos & Beliefs 4. Business practices  5. Though Processes 5 Tho gh ProcessesProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  36. 36. Elements of CultureWhat Cultural values ?• Individualism/Collectivism Index – R fl t th Reflects the preference of behavior that promotes one’s self interest f f b h i th t t ’ lf i t t• Power Distance Index – Measures the tolerance of social inequality• Uncertainty Avoidance Index – Measures the tolerance of uncertainty and ambiguity• Cultural Values and Consumer Behavior Cultural Values and Consumer BehaviorProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  37. 37. Elements of Culture• What are Rituals?– patterns of behavior and interaction that are learned and repeated – Marriages , funerals, baptisms, graduations• What are Symbols? y – Language • Linguistic distance – relationship between language and international Linguistic distance  relationship between language and international  marketing – Aesthetics as symbols Aesthetics as symbols • Insensitivity to aesthetic values can offend, create a negative  impression, and, in general, render marketing efforts ineffective or  impression and in general render marketing efforts ineffective or even damaging Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  38. 38. Elements of Culture• What are Beliefs? – Superstitions play a large role in a society’s belief system and  therefore, to make light of superstitions in other cultures can be an  expensive mistake – The number 13 in the western hemisphere is considered unlucky,   where as the number 8  in China connotes “prosperity” – The practice of “Feng Shui”• What are Thought processes? – Difference in perception between the East and the West • Focus vs. big‐pictureProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  39. 39. Making culture work for marketing success How can you use culture as a tool for success 1. Embrace local culture 2. Build relationship 2 B ild l ti hi 3. Employ locals to gain cultural knowledge p y g g 4. Help employees understand you 5. Adapt products and processes to local markets 6. Coordinate by regions 6 Coordinate by regionsProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  40. 40. Appraising the Business Environment What must you study about the business  environment of overseas markets 1. Norms 1 N 2. Behaviors 3. Tradition 4. Practices 5. 5 TaboosProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  41. 41. Major Decisions in International Marketing What are the major decisions in marketing  overseas 1. Appraising the international marketing environment 2. Whether to go overseas? 3. Which markets to enter? h h k ? 4. How to enter these markets? 5. Formulating the marketing program 6. Marketing Organization 6 Marketing OrganizationProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  42. 42. Whether to go overseas? What do you need to decide regarding  whether to go overseas? 1. Do you need to go overseas to survive? 1 D dt t i ? 2. What should be its international objectives and  j policies?Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  43. 43. Whether to go overseas? What do you need to decide regarding whether to go  overseas? 1. Do you need to go overseas to survive? 1. Local Businesses like restaurants, cleaning establishments, food  manufacturers 2. Global Industries where overall global position can significantly  affect the local markets 2. What should be its international objectives and policies?Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  44. 44. Whether to go overseas? What do you need to decide regarding whether to go  overseas? 1. Do you need to go overseas to survive? 2. What should be its international objectives and policies? 1. 1 What proportion of overseas to total sales will it seek? Wh t ti f t t t l l ill it k? 2. Few countries vs. many countries? 3. Types of countries‐ Developed vs. DevelopingProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  45. 45. When should a company enter few countries? 1. High market entry and market control costs 2. High product and communication  adaptation costs 3. Higher population, income size and growth  3 Higher population income size and growth a initial countries chosen 4. High entry barriers by dominant overseas  companiesProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  46. 46. Major Decisions in International Marketing What are the major decisions in marketing  overseas 1. Appraising the international marketing environment 2. Whether to go overseas? 3. Which markets to enter? h h k ? 4. How to enter these markets? 5. Formulating the marketing program 6. Marketing Organization 6 Marketing OrganizationProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  47. 47. Which markets to enter? How do you decide which markets to enter? 1. List potential countries based on the International  1 Li i l i b d h I i l Marketing Policies 2. Rate and rank these countries on 1. Market Attractiveness 2. Competitive Advantages 3 3. Risk s 3. Financial Analysis to determine probable Return on  Investment I t tProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  48. 48. Financial Analysis How do estimate the Probable Return on Investment? 1. Estimate current market potential by using 1. 1 Published data Published data 2. Primary data collected through company survey 2. Forecast of future market potential and risk by predicting 1. Economic and political developments 2. Their impact on industry sales 3. Forecast of sales potential by 1. Forecasting its probable market shares based on its competitive advantage 4. Forecast  of costs and profits  1. 1 Estimating  costs Based on its contemplated entry strategy Estimating costs Based on its contemplated entry strategy 2. Derive company profits from the sales less costs for each year of planning horizon 5. Estimate rate of return on investment by 1. Relating the forecast income stream with the investment stream 2. Checking if this is high enough for covering the company normal ROI and the risk of marketing in the countryProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  49. 49. Assessing Country Risks What risks do you assess for marketing in a country? 1. Marco Risks 1. Political risk‐ Asset protection/ investment recovery risk arising from the  direct action taken by the government or people that results in  destruction, expropriation or limiting transfer of investment resources 2. 2 Economic risk‐ operational profitability/ cash flow risk which arises from  E i ik ti l fit bilit / h fl i k hi h i f economic downturns, currency depreciation, strikes etc 2. Micro Risks 2 Micro Risks 1. Risks facing a particular company or industryProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  50. 50. Assessing Country Risks How do you assess the risk of marketing in a country? 1. Marco Risks by 1 M Ri k b – Buying political and economic risk reports published by specialist  firms 2. Micro Risks by – Using advisory council of prominent foreign experts – Having its own risk assessment office – Talking to the foreign governments about recent and expected  development related to their industriesProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  51. 51. Major Decisions in International Marketing What are the major decisions in marketing  overseas 1. Appraising the international marketing environment 2. Whether to go overseas? 3. Which markets to enter? h h k ? 4. How to enter these markets? 5. Formulating the marketing program 6. Marketing Organization 6 Marketing OrganizationProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  52. 52. How to enter these markets? What are the broad choices of entry into these markets? 1. Indirect Exporting 1 I di E i 2. Direct Exporting 3. Licensing 4. Joint Ventures 4 Joint Ventures 5. Direct Investment With increasing amount of commitment, risk, control and  profit potentialProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  53. 53. How to enter these markets? What are the broad choices of entry into these markets?Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  54. 54. What is involved in indirect exporting? p g Indirect Exporting1. Occasional exporting – Passive level of involvement – Exports from time to time E t f ti t ti – On its own or in response to unsolicited demand2. Active exporting – Makes a  commitment to expand exports to a particular market3. Products indirectly reach foreign markets – Trading companies – Foreign customers who contact firm Foreign customers who contact firm – Domestic wholesalers/distributors – Web orders4. All goods are produced in home country5. May or may not adapt these products to the overseas market6. Least changes in product lines, organization, investments or mission7.7 Companies typically start with indirect exporting‐ through independent middlemen C i i ll i h i di i h hi d d iddl8. Foreign orders stimulate a company’s interest to seek additional international sales Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  55. 55. Indirect ExportingWhat types of middlemen are available in indirect exporting?1. Domestic based export merchant – Buys locally and sells overseas on its own account2. Domestic based export agent – Seeks and negotiates overseas purchase on behalf of the company for a commission – Co sells to the overseas purchases directly3. Cooperative organization – Exports on behalf of many companies – Partly under their administrative control Partly under their administrative control – Used for primary products like fruits, nuts, grains etc4. Export Management Company Export Management Company – Manages company’s export activities for a fee Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  56. 56. Indirect ExportingWhen to use Indirect Exporting?1. Company wants to make least investment1 C k l i – Company does not even want to develop export department, overseas  sales force or overseas contacts2. Company does not want to take an risk by p y y – Relying on the middlemen’s know how and services3. In the beginning of international marketing h b i i fi i l k i4. Businesses in high risk countries g Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  57. 57. How to enter these markets? What are the broad choices of entry into these markets? 1. Indirect Exporting 1 I di E i 2. Direct Exporting 3. Licensing 4. Joint Ventures 4 Joint Ventures 5. Direct Investment With increasing amount of commitment, risk, control and  profit potentialProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  58. 58. Direct ExportingWhat is involved in Direct exporting? p g1. Handling their own exports2. Natural next stage to Indirect exporting3. Investment and risk are somewhat greater4. So is the potential return Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  59. 59. Direct ExportingWhat are the ways a company can carry on direct exporting?1. Domestic based export department or division – Export Sales Manager with some clerical staff actually sell overseas – Draw on market assistance as needed – May evolve into a self contained export department  operating as a profit center2. Overseas sales branch or subsidiary – Allows achieve greater presence and program control – Handles sales, distribution, warehousing and/ or promotion H dl l di t ib ti h i d/ ti – Also serves as display and service center3. Travelling export sales representatives – Home based sales representatives travel overseas some time to find business4. Overseas based distributors or agents – Distributors will buy and sell goods vs. Agents sell on behalf of the company – May be exclusive rights or general rights of representation Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  60. 60. How to enter these markets? What are the broad choices of entry into these markets? 1. Indirect Exporting 1 I di E i 2. Direct Exporting 3. Licensing 4. Joint Ventures 4 Joint Ventures 5. Direct Investment With increasing amount of commitment, risk, control and  profit potentialProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  61. 61. Licensing gWhat is involved in Licensing?1. Enters an agreement with a licensee in the overseas market1 Enters an agreement with a licensee in the overseas market – Offering right to use a manufacturing process, trademark, patient, trade secret  or other items of value – For a fee or royalty2. Licensor usually supplies some product or component needed 2 Licensor usually supplies some product or component needed in the products 3. Licensor has to lead in innovation so that licensee will continue  to depend on him Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  62. 62. Licensing gWhat are the Advantages in Licensing?1. Licensor gains entry into a market little risk2. Licensee gains production expertise, or a well known product or name  without having to start from scratchWhat are the potential disadvantages of Licensing?1.1 Company has less control over the licensee than if it had  set up its own  Company has less control over the licensee than if it had set up its own production facilities2.2 If licensee if very successful, the company has foregone profit If licensee if very successful the company has foregone profit3. If and when the contract ends, the company might find that it has created a  competitor. Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  63. 63. What are the option related to Licensing?1.1 Management Contracts Management Contracts – Company offers to manage a hotel, airport hospital or other organization for  fee – Low risk method of market entry y – Yields income from the beginning – Especially attractive if the Company has the option to buy some shares in the managed  organization within a time frame – Not sensible when company can use the scarce talent better or make better profits  with  whole venture2. Subcontracting – Company engages a local manufacturer to produce the product – Has the drawback of less control over manufacturing process and loss of potential profit on  manufacturing – Offers a chance to start faster, with less risk and the opportunity to form a partnership or  buy out the local manufacturer later Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  64. 64. What are the option related to Licensing?• What is Franchising – Franchiser provides a standard p p package of p g products, systems, and , y , management services – Franchise provides market knowledge, capital, and personal involvement in management – 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 – Li Licensing iProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  65. 65. How to enter these markets? What are the broad choices of entry into these markets? 1. Indirect Exporting 1 I di E i 2. Direct Exporting 3. Licensing 4. Joint Ventures 4 Joint Ventures 5. Direct Investment With increasing amount of commitment, risk, control and  profit potentialProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  66. 66. What is involved in Joint Ventures?What is involved in Joint Ventures? Joint Ventures1. Company joins overseas investors to create a overseas business with joint  ownership and control  ownership and control2. Can be formed by – Company may buy an interest in a overseas  business Company may buy an interest in a overseas business – An overseas company may buy an interest in the overseas operation of the company – The two parties can form a new business ventureWhen are Joint Ventures necessary or desirable?1.1 Primarily for economic or political reasons Primarily for economic or political reasons2. The company may lack the financial, physical or managerial resources to go  alone3. Overseas government may require  joint ownership as a condition for entry Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  67. 67. Joint VenturesWhen are drawbacks of Joint Ventures ?1.1 Partners may disagree on investment, marketing or other policies Partners may disagree on investment marketing or other policies2. Can hamper a multinational company from carrying out specific  manufacturing and marketing policies on worldwide basis manufacturing and marketing policies on worldwide basis Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  68. 68. Strategic International Alliances• What are Consortia? – Si il to joint ventures and could b classified as Similar t j i t t d ld be l ifi d such except for two unique characteristics • Typically involve a large number of participants • 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 risksProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  69. 69. How to enter these markets? What are the broad choices of entry into these markets? 1. Indirect Exporting 1 I di E i 2. Direct Exporting 3. Licensing 4. Joint Ventures 4 Joint Ventures 5. Direct Investment With increasing amount of commitment, risk, control and  profit potentialProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  70. 70. Direct InvestmentWhat is involved in Direct Investment?• Company invests directly in an overseas based assembly or manufacturing facilities p y y y g• Suitable for large markets after gaining export experienceWhen are advantages of Direct Investment? g1. Co may secure cost economies in the form of cheap labor or raw materials, overseas  government incentives, freight savings etc2. Gains a better image in overseas country as it creates jobs there.3. Develops deeper relationship with  government, customers, suppliers and  distributors enabling to adapt its product better for the market4. Retains full control over the investment and therefore can develop manufacturing  and marketing policies that serve its long term international objectives  d k i li i h i l i i l bj i Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  71. 71. Direct InvestmentWhen are disadvantages of Direct Investment?When are disadvantages of Direct Investment?1. Exposes the company’s large investment to risks of  blocked or devalued currencies, worsening markets or  expropriations2. Expensive to reduce or close down its operations due  to exit barriers Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  72. 72. Direct InvestmentWhat determines the need for Direct Investment?1. Marketing Factors2. Trade restriction3. Cost factors3 Cost factors4. Investment climate5. Expected higher profits Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  73. 73. Direct InvestmentWhat marketing factors determines the need for Direct Investment?1. Size of market2. Market growth3. Desire to maintain share of market4. Desire to advance exports of parent company4 D i t d t f t5. Need to maintain close customer contact6. Dissatisfaction with existing market arrangement7. Export base7 Export base Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  74. 74. Direct InvestmentWhat kind of trade restrictions determines the need for What kind of trade restrictions determines the need for Direct Investment?1. Barriers to trade2. Preference of local customers for local products2 P f fl l f l l d Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  75. 75. Direct InvestmentWhat cost  factors determines the need for Direct Investment?1. Desire to near source of supply2. Labor availability3. Raw materials availability4. Capital/ Technology availability5. Lower labor costs6. Lower other production costs7. Lower transport costs8. Financial and other inducements by government9. More favorable cost levels Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  76. 76. Direct InvestmentWhat investment climate determines the need for Direct  Investment?1. General attitude towards foreign investment2. Political stability3. Limitation on ownership4. Currency exchange regulations5. Stability of foreign exchange6. Tax structure7. Familiarity with the country Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  77. 77. Internationalization ProcessWhat stages do the companies move in What stages do the companies move in internationalization?1. No regular export activity2. Export via independent representatives (agents)2 E i i d d i ( )3. Establishment of one or more sales subsidiaries in  overseas markets4. Establishment of production facilities overseas Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  78. 78. Major Decisions in International Marketing What are the major decisions in marketing  overseas 1. Appraising the international marketing environment 2. Whether to go overseas? 3. Which markets to enter? h h k ? 4. How to enter these markets? 5. Formulating the marketing program 6. Marketing Organization 6 Marketing OrganizationProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  79. 79. Major Decisions in International Marketing What are the major decisions in marketing  overseas 1. Appraising the international marketing environment 2. Whether to go overseas? 3. Which markets to enter? h h k ? 4. How to enter these markets? 5. Formulating the marketing program 6. Marketing Organization 6 Marketing OrganizationProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  80. 80. Marketing Organization What are ways companies can manage  their international marketing  activities? i ii ? 1. Export Department 1 E D 2. International Division 2 I t ti l Di i i 3. Global Organization 3 Global OrganizationProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  81. 81. Export DepartmentWhen to set up Export Department to manage  international marketing activities? international marketing activities?1. Consists of a Sales Manager and a few assistants2. Normally set up when the international sales begins to expand3. As  the sales further increase, the department is expanded to  , p p include various marketing services to get business more  aggressively4. No longer adequate as the firm moves to Joint Ventures or  Direct InvestmentProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  82. 82. International DivisionWhen to set up International Division to manage  international marketing activities? international marketing activities?1. Headed by an international division president who sets goals  & Budgets and is responsible for the company’s growth into  the international markets2. Normally set up when the company gets involved in several  international markets and ventures. It might export to one,  international markets and ventures. It might export to one, license to another and have JV in 3rd and own subsidiary in  4th. Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  83. 83. International DivisionWhat are the ways to set up International Division to  manage international marketing activities? manage international marketing activities?1. Corporate Staff  – consisting of specialists in marketing, manufacturing, research,  finance, planning & HR – They plan for and provide services to various operation units2. Operating Units can be in three ways – Geographical  Organization – World product groups – International subsidiaries Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  84. 84. Geographical OrganizationWhat will the Geographical Organization look like? President Regional  Corporate  Vice  Staff Presidents Country  Managers Sales Force, Branches,  Distributors & LicenseesProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  85. 85. World Product Group OrganizationWhat will the World Product Group Organization look like? President International Vice Presidents  Corporate Staff by product groupsProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  86. 86. International Subsidiaries OrganizationWhat will the International Subsidiaries Organization look like? President President of Subsidiaries Corporate StaffProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  87. 87. Global OrganizationsHow do Global Organizations operate?1. Thinking a global marketers vs. national marketer with international operations g g p2. Corporate management & staff plan for worldwide manufacturing facilities,  marketing policies, product development, HR policies, financial flows and logistical  system3. Operating units report to the chief executive or Executive Committee, not to head  of international division4. Executives are trained in worldwide operations not just domestic or international5.5 Management is recruited from many countries M i i df i6. Purchase are made from the least cost source globally7.7 Investments are made where the expected returns are greatest Investments are made where the expected returns are greatestProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  88. 88. Learning AssessmentProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  89. 89. Case Example Strategy of ICICI Bank in CanadaMode of Entry1. As a subsidiary – Restriction by Canadian Govt on foreign banks to enter either as a  y g subsidiary of branch – Only subsidiaries can offer full range of retail banking services y g g – Only subsidiaries are eligible for insurance provided by Canada Deposit  Insurance Corporation – Greater strategic control  over decisions locally to respond to local markets – Also allows it to exploit the long term potential of its investment in Canada Also allows it to exploit the long term potential of its investment in Canada Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  90. 90. Case Example Strategy of ICICI Bank in CanadaInternational Strategy of ICICI Bank?1. Resembles a Transnational Strategy – Content quality check on all written customer communication q y – Corporate branding guidelines that outlines the way corporate brand name  and image may be used leading to a consistent brand image on all  g y g g marketing communication – Autonomy in determining appropriate marketing strategies and prioritizing  campaigns – Allows ICICI Bank to exploit its core competencies throughout its subsidiary  and parent firm Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  91. 91. Case Briefing Car Financing in ChinaRead the case and answer the following questions d h d h f ll1. Suggest reasons for GMAC to enter or not enter the Chinese  market for auto financing?   2. What is the most prudent mode of entry and market  development for GMAC, should it choose to enter the market? development for GMAC should it choose to enter the market?3. If it enter, where should GMAC make it moves and with what  type of products?4. What should GMAC do to influence the positive change in its  p g favor?Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  92. 92. Case Assessment Continued growth Zara and InditexRead the case and answer the following questions ( 6 marks each)1.1 What are the ways Inditex ensures that  fast fashion is truly fast? What are the ways Inditex ensures that “fast fashion” is truly fast?2. What are the attributes of a “fast fashion” retailer to customer? To store  managers?3. Why would a retailer introduce their online store country by country?  Why was Inditex slow to embrace online sales when it is so tech savvy in  Why was Inditex slow to embrace online sales when it is so tech savvy in other ways?4. Briefly describe five opportunities for continued growth during the next  Briefly describe five opportunities for continued growth during the next five years for Zara’s parent Inditex SA5. Pick one of the five opportunities and outline the advantages and  Pick one of the five opportunities and outline the advantages and disadvantages of pursuing itProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  93. 93. Case Assessment International Market Selection for CelectronicsRead the case and answer the following questions gq1. What frame work will you use for selection of the new 1 What frame work will you use for selection of the new international markets initially2. Which markets will they be and why?Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  94. 94. Concepts ReviewProfessional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012
  95. 95. Final Assessment (40 Marks)Professional Certificate Program in  International  Marketing 5th Mar – 7th  Apr 2012

×