Cavendish University Uganda
Discuss the impact of globalization to international
Discuss how the international trade system,
economic, political-legal, and cultural environments
affect a company’s international marketing decisions
Describe Key approaches to entering international
Explain how companies adapt their marketing mixes
for international markets.
Identify the three major forms of international
Discuss the benefit and challenges of international
Global Marketing is the decision by an enterprise to
extend its presence or operations beyond its domestic
market and into foreign markets - with a focus not only
at the immediate regional markets but also at the whole
world market as one within its reach.
It is the act of an enterprise engaging in trade or
investment outside its domestic market of origin with a
view of the world market.
Hence the Global Firm attempts to achieve competitive
advantage by delivering value to customers in foreign
markets effectively, efficiently, and innovatively. It tries
to cheaply produce and sell, expand its international
customer base and market share,
Global marketing has especially assumed
greater importance today because of the
terrific tide of Globalization that has
characterized the past 3 decades.
Globalization is a phenomenon today
referring to the continuously unrestricted
flow, movement or influence of people,
resources, ideas, information, or
technologies, across and beyond national or
Globalization has been especially accelerated by
technological advancements in information,
communication, production and transportation processes,
techniques as well as product /service options available.
This has been accompanied by reduction in costs, speed to
markets plus shorter product life cycles due to the pace of
new innovations .
Globalization has consequently led to ever stiffer
competition for access to strategic markets and resources
transcending the domestic contexts of enterprises.
The Globalization of the world economy has also led to the
concept of new “emerging” markets outside the traditional
industrial West (Western Europe and North America) with
the present heightened focus on China, India, South East
Asia, Brazil, Russia, South Africa, and Africa in general.
The decision by an enterprise to go global is a
strategic one i.e of a high level and of a long term
stretch with implications for the overall direction,
resources and competencies of the enterprise in its
domestic and global competitive environment.
Most of the basic concepts (eg Environmental
scanining, the marketing mix of 4 Ps etc)
applicable in domestic markets can also be
extended to international or global markets.
However the environments of global markets are
challengingly more diverse, volatile, and complex -
hence calling for more critical analysis and
adaptation before venturing into them.
Going global calls for an understanding of the
International Trading System as regulated by such
World bodies such as World Trade Organization
(WTO) or Regional economic blocs such as the
European Union (EU), or the East Africa Community
(EAC). Again the role of commodity trading bodies
like Organization of Petroleum Exporting Countries
(OPEC). Indeed there are endless global trade
Also noteworthy is the reality of existing barriers to
global trade such as Tariffs, Quotas, Embargoes,
Exchange Controls, and Non-tariff barriers (eg.
Product standards, roadblocks, national bias etc).
Kotler et al (2004) identifies 6 major decision
steps for venturing into global markets:
1. Analyzing the Global Marketing
2. Deciding Whether to go Global.
3. Deciding which markets to enter.
4. Deciding how to enter the market.
5. Deciding on the global marketing program.
6.Deciding on the global marketing
Deciding on the global marketing organization
Deciding on the global marketing program
Deciding how to enter the market
Deciding which markets to enter
Deciding Whether to go Global
Analyzing the Global Marketing Environment
We could use PESTEL, an acronym for Political,
Social, Economic, Technological,
Environmental(Ecological), Legal for analyzing
environmental factors in markets abroad.
a) Political – Legal Factors:
Ideology of foreign Government.
Political Stability – both domestically and inter-
Uncertainty due to elections, or impending
change of government
Foreign Policy and Diplomatic Relations
inclusive of bilateral and multilateral
Existing laws and regulations governing
foreign trade and investment, immigration,
taxation, intellectual property rights
(patents,), labor, environmental compliance
b). Economic Factors:
Economic System of foreign market (i.e Free
Competition, Command, Mixed)
National Economic Growth rates (by GDP, GNP etc)
Per Capita Income and Effective Demand potential
Competition and state of market concentration or
structure (Open competition, Monopoly, Oligopoly,
Productive Resource Endowments (Availability of
Natural resources, Skilled labour, infrastructure
Foreign Exchange Rates
c) Social Factors:
Demographics i.e Population size, structure,
behavior and lifestyle and trends.
Culture i.e Language, Religious beliefs,
traditional norms, ethics, values and attitudes.
Social Responsibility expectations.
d) Technological Factors:
Progression from manual to mechanized,
automated or digitalized methods of work eg
use of ICT in E-commerce.
Development of new inventions and
innovations in products.
Modernization in Transportation and
communication equipment and infra-structure
e) Ecological /Environmental Factors:
The obligation to engage in trade and
investment practices that minimize
environmental degradation (by pollution or
resource and specie extinction) in foreign
market. Impact on flora, fauna, water, air,
soils, and humans should be considered.
Different countries have their environmental
laws and standards of compliance.
Issues of health, safety, and security are
The decision to go global or international is
also made after an enterprise has appraised its
competitive position within the domestic
market as well as its internal organizational
resources, competences or capabilities vis avis
the external global environment just discussed
- as would give it leverage over competitors.
Taggart et al (2000) attempts to explain the
imperatives for internationalization by firms
using the theoretical bases of Market
Imperfections and also the General Theory of
The Market Imperfections approach justifies
internationalization based on exploitation of
Firm specific advantage as well as Location
specific advantage. This is a clear reference to
why an enterprise decides to deploy its unique
capabilities or competences (eg Skills,
technology, experience, capital etc) in a bid for
advantage over its domestic and foreign
competitors in markets abroad. It also points to
the bid for more favorable market incentives or
resource endowments prevailing in foreign
markets compared to the enterprise’s domestic
The General Theory of International trade looks at
the role of comparative costs between two foreign
markets. Where the costs of production,
communication and transaction are cheaper abroad
then foreign direct investment or even trade may
The following specific factors will inform the
decision to venture into global or foreign
a) A Retaliation against a foreign competitor who has attacked a firm in
the domestic market. The local firm would likewise enter the
competitors home market abroad so as to divide the competitor’s
energies and tie up its resources at its base (Kotler et al, 2004).
b) A ploy to keep abreast with domestic competitors who
themselves have expanded their market abroad. A firm then
reacts in a manner to demonstrate that it will not lag behind
while its competitors advance.
c) The attempt to recover from a declining or stagnant
domestic market for a firm’s products whereby the identified
foreign markets promise greater effective demand and
improved profitability. The Product Life Cycle Theory
(Taggert et al, 2000) hence explains how new market
prospects can increase sales and profitability at the growth
to maturity phases of product existence. Hence Foreign
markets abroad could compensate for declining product life
d)Diversification into global markets is undertaken as
a risk hedging strategy against over dependence
on just the domestic market or a few international
markets often characterized by political or
economic certainty eg fluctuation of prices or
exchange rates, disruptive elections or war.
e) For purposes of accessing cheaper and more
abundant factor inputs for production so that the
resultant products can be sold at comparatively
lower price than of competitors and earn higher
profitability for the firm, Examples include raw-
materials, labour, energy, equipment and so on.
f) Its is a ploy to follow up and retain key
customers who have themselves expanded or
even relocated abroad and therefore requiring
international servicing in the respective new
g) Availability of favorable incentives by
governments or institutions in foreign
markets for trade and investments for
example tax exemptions, free profit
repatriation, subsidies for production, etc.
h) For purposes of full capacity utilization, a firm will
weigh in its internal resource and competencies eg
skilled staff, machinery, unsold stock. Hence to avoid
idling and wastage a firm would rather deploy them
abroad where there is promising market.
i) To achieve economies of scale and scope for its
products among various markets. Economies of scale
is the deriving of advantage from reduction in unit
fixed costs over large volumes of products produced
and sold consequently at reduced prices compared to
competitors. When these advantages are extended
over a diversified product range and markets then we
talk of economies of scope.
The selection of by an enterprise of what
foreign markets to enter would substantially
benefit from an application of Porters Industry
analysis among others within particular
markets of interest (Taggart etal, 2000).
Thus along with the macro-environmental
factors an analysis of the relative strength of
buyers, suppliers, ease of entry by new
competitors, rivalry among existing firms, and
the threat of substitute products.
Also cost considerations should be borne in
mind in selecting markets abroad.
A systematic approach to selection of foreign
markets would essentially entail the following:
a) Defining the firm’s international marketing
objectives and policies.
b) Determining the number of foreign
countries or markets to enter.
c) Identifying specific foreign country
markets of interest and then ranking them
based on several factors, including market
size, market growth, and cost of doing
business, competitive advantage, product and
communication adaptation cost and risk level.
d) Market entry and market control costs.
e) Product and communication adaptation
costs are high.
f) Population and income size and growth.
e) Dominant foreign firms can establish high
barriers to entry.
f) How many competitor already exist in that
g) What are the barriers to entry into the
There are 3 main forms of entry with further sub-
a) Exporting b) Joint Venturing c) Foreign Direct
This is the sale of an enterprises goods to a foreign
market and it can be Direct Export or Indirect
Direct export is where an enterprise establishes an
active visible presence in the freign market of its
products eg by creating an export department, a
foreign branch Office and sales staff to stock,
distribute, promote and sell to customers within
the foreign market.
Indirect Export is where the enterprise
employs intermediaries to sell, distribute
and promote its products in the foreign
market eg. Export Merchants based in the
enterprise’s country, Import Merchants
based in the foreign market, and Export
management companies who have expertise
b) Joint Venturing:
This refers to entry of foreign markets
through formal collaborative arrangements
with other parties in the foreign markets in
pursuit of mutual benefit. Firms have 4
types of joint venture available to them.
Licensing: occurs when a company enters
into an agreement with a licensee in the
foreign market. Licensing means little risk
but also little control
Contract Manufacturing: arranges for a
foreign producer to make products in the
host country for that market.
Management Contracting: has the exporting
firm provide the management team with the
host country supplying the capital.
Joint Ownership consists: of one company
joining with another in the host country to
create a local business in which they share
owner ship and control.
c) Foreign Direct Investment (FDI)
This is where a country establishes
manufacturing or assembly facilities in a
foreign host country eg a food processing plant
or a vehicle assembly plant.
FDI is premised on the quest for cheaper raw-
materials, labour, energy, communication and
It is also done in order to gain closer contact
with customers of the foreign market.
FDI is also a result of favorable host
government incentives to encourage foreign
This entails the application of the Marketing Mix
of Product, Price, Promotion, and
Place(Distribution) and complimenting these
further with the necessary People, Processes, and
Physical evidence in the global markets.
We can have either a Standardized Marketing Mix
or an Adapted Marketing Mix.
A Standardized Marketing Mix is one where there
is uniform extension of what is applied in the
country of origin to foreign market in terms of
product, price, promotion and distribution.
An Adapted Marketing Mix is one that is
customized to meet the unique
requirements or behavior's of targeted
foreign markets eg. Exporting non-pork
sausages from USA to Saudi Arabia.
Sometimes it calls for new product or
An Enterprise can organize its global marketing
structure by means of an Export Department,
opening International Divisions, or engage in
Joint Ventures by licensing /Franchising.
During early international marketing efforts,
companies typically just create a new
department to coordinate international
operations. The sales manager may take on
larger staff if and as the international business
grows in importance and more marketing
services are needed to support it.
As the level of involvement in and complexity
of international operations increases,
companies commonly organize an international
division. In addition to running international
operations, the division oversees strategic
growth and investigates different types of
foreign entry opportunities in new countries.
Operating units in foreign markets under
division control may be organized by
Geographical organization, world product
groups, or international subsidiaries.
The Global Organization.
For many large companies, the scope of
operations grows to the point where they are
no longer a firm involved in many foreign
markets, they are a truly a multinational
company. Recruitment, management,
suppliers, manufacturing, and financing are no
longer linked to a single-country mentality.
The entire world becomes a single market
whose segmentation is base upon strategic and
tactical competitive advantage, not national
To Increase Sales
To Reduce Costs
1. Maintain or increase the market share of current products:
This strategy focuses on the areas of sales and marketing responsible
for managing the pricing and promotion of the product. This
strategy can be achieved by adopting combination of competitive
pricing strategies, advertising, and sales promotion
2. Secure dominance of growth markets:
This approach is to identify a new demographic for your product, for
example another age group. Of your product users and to then
aggressively market your product to this age group. This was exactly
what happened in the cell phone market when it was realized that
teenagers were emerging as a key demographic. Previously it had been
users in their 20s who were seen as the biggest group of first-time
users. Substantial growth in market share and dominance in this sector
was achieved by ensuring cell phone companies’ promotions met the
needs of this younger group.
Restructure a mature market by driving out competitors
Many organizations find themselves in a mature or
saturated market and to achieve further market share
requires a different approach. This strategy requires an
aggressive promotional campaign, supported by a
pricing strategy designed to make the market
unattractive for smaller competitors.
With a mature market there are no more demographic
sectors to exploit and the only way to attain market
share is to take it from competitors. Examples of this
strategy can be seen in the newspaper, telecoms, and
cable TV industries, where the larger players now
dominate. Another good example is the rapid growth of
the supermarket chains, which have taken
Increase usage by existing customers:
Another approach to market penetration is
to persuade your existing customers to use
your product or service more frequently.
There are several tactics you could use to
do this, including loyalty schemes, adding
value to the current product, or making
alterations to the product that encourage
Economies of scale in production and distribution
Lower marking costs
Power and scope
Consistency in brand image
Ability to leverage good ideas quickly and
Uniformity of marketing practice
Helps to establish relationship outside of the
Helps to encourage ancillary industries to be set up
cater for needs of the global player
For overall competitiveness
Difference in consumer needs, wants and usage
pattern for product
Difference in customer response to marketing mix
Difference in brand and product development and
the competitive environment
Difference in legal environment, some of which
may conflict with those of the home market
Difference in the institution available, some of
which may call for the creation of entirely new ones
( e.q infrastructure)
Difference in administration procedure
Difference in product placement
Identifying a Market Need
Distance and Time
Finding Reliable Partners
Assess the cost of global market entry.
Identify emerging market.
Identifying a Customer need, Population
growth and Income.
Carefully identify the Socio-cultural
1. Kotler A. and Armstrong (2004), Principles of
Marketing, Pearson, New Jersey
2.Andersen, O. (1997), ‘Internationalization and Market Entry
3.Taggart J. and McDermott M.(2000), The Essence
Of International Businesss, Prentice Hall, New Delhi