Chapter11

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Chapter11

  1. 1. Global Marketing Management Planning and Organization McGraw-Hill/Irwin International Marketing, 13/e © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.
  2. 2. Global Perspective Global Gateways <ul><li>Confronted with increasing global competition for expanding markets, multinational companies are changing their marketing strategies and altering their organizational structure. </li></ul><ul><li>A recent study of North American and European corporations indicated that nearly 75% of the companies are revamping their business processes. </li></ul><ul><li>The flexibility of a smaller company may enable it to reflect the demands of global markets and redefine its programs more quickly than larger multinationals . </li></ul>
  3. 3. <ul><li>Acquiring a global perspective is easy, but the execution requires planning, organization and willingness to try new approaches. </li></ul>
  4. 4. Global Marketing Management <ul><li>1970s – “standardization versus adaptation” </li></ul><ul><li>1980s – “global integration versus localization” </li></ul><ul><li>1990s – “global integration versus local responsiveness” </li></ul><ul><li>The trend back toward localization is caused by the new efficiencies of customization made possible by the Internet and increasingly flexible manufacturing processes. </li></ul><ul><li>From the marketing perspective customization is always best. </li></ul><ul><li>As global markets continue to homogenize and diversify simultaneously, the best companies will avoid the trap of focusing on country as the primary segmentation variable . </li></ul>
  5. 5. The Nestle Way: Evolution Not Revolution <ul><li>Nestle is the world’s biggest marketer of infant formula, powdered milk, instant coffee, chocolate, soups, and mineral water. </li></ul><ul><li>Nestle strategy can be summarized in four points: </li></ul><ul><ul><li>Think and plan long term </li></ul></ul><ul><ul><li>Decentralize </li></ul></ul><ul><ul><li>Stick to what you know </li></ul></ul><ul><ul><li>Adapt to local tastes </li></ul></ul><ul><li>Long-term strategy works for Nestle because the company relies on local ingredients and markets products that consumers can afford. </li></ul>
  6. 6. Benefits of Global Marketing <ul><li>economies of scale in production and marketing can be important competitive advantages for global companies. </li></ul><ul><li>Transfer of experience. </li></ul><ul><li>Marketing globally also ensures that marketers have access to the toughest customers. </li></ul><ul><li>Diversity of markets served carries with it additional financial benefits. </li></ul><ul><li>Firms that market globally are able to take advantage of changing financial circumstances. </li></ul>
  7. 7. Planning for Global Markets <ul><li>Planning is the job of making things happen that might not otherwise occur. </li></ul><ul><li>Planning allows for rapid growth of the international function, changing markets, increasing competition, and the turbulent challenges of different national markets. </li></ul><ul><li>Planning relates to the formulation of goals and methods of accomplishing them, so it is both a process and philosophy. </li></ul><ul><ul><li>Corporate planning </li></ul></ul><ul><ul><li>Strategic planning </li></ul></ul><ul><ul><li>Tactical planning </li></ul></ul><ul><li>Successful planning is evaluating company objectives, including management’s commitment and philosophical orientation to international business. </li></ul>
  8. 8. Planning for Global Markets (cont’d) <ul><li>Company objectives and resources </li></ul><ul><ul><li>Each new market can require a complete evaluation, including existing commitments, relative to the parent company’s objectives and resources. </li></ul></ul><ul><ul><li>Defining objectives clarifies the orientation of the domestic and international divisions, permitting consistent policies. </li></ul></ul><ul><li>International commitment </li></ul><ul><ul><li>Commitment in terms of: </li></ul></ul><ul><ul><ul><li>Dollars to be invested </li></ul></ul></ul><ul><ul><ul><li>Personnel for managing the international organization </li></ul></ul></ul><ul><ul><ul><li>Determination to stay in the market long enough to realize a return in investments. </li></ul></ul></ul><ul><ul><li>The degree of commitment to an international marketing cause reflects the extend to a company’s involvement </li></ul></ul>
  9. 9. The Planning Process <ul><li>Phase 1: Preliminary Analysis and Screening – Matching Company and Country Needs. </li></ul><ul><li>Phase 2: Adapting the Marketing Mix to Target Markets. </li></ul><ul><li>Phase 3: Developing the Marketing Plan </li></ul><ul><li>Phase 4: Implementation and Control </li></ul>
  10. 10. International Planning Process <ul><li>Insert Exhibit 11.1 </li></ul>
  11. 11. Alternative Market-Entry Strategies <ul><li>An entry strategy into the international market should reflect on analysis of market characteristics such as: </li></ul><ul><ul><li>Potential sales </li></ul></ul><ul><ul><li>Strategic importance </li></ul></ul><ul><ul><li>Strengths of local resources </li></ul></ul><ul><ul><li>Cultural differences </li></ul></ul><ul><ul><li>Country restrictions </li></ul></ul><ul><li>A company has four different modes of foreign market entry from which to select: </li></ul><ul><ul><li>Exporting </li></ul></ul><ul><ul><li>Contractual agreements </li></ul></ul><ul><ul><li>Direct foreign investments </li></ul></ul>
  12. 12. Alternative Market-Entry Strategies <ul><li>Insert Exhibit 11.2 </li></ul>
  13. 13. Exporting <ul><li>Exporting accounts for some 10% of global activity. </li></ul><ul><li>Direct exporting - the company sells to a customer in another country. </li></ul><ul><li>Indirect exporting – the company sells to a buyer (importer or distribution) in the home country, who in turn exports the product. </li></ul><ul><li>The Internet </li></ul><ul><ul><li>Initially, Internet marketing focused on domestic sales, however, a surprisingly large number of companies started receiving orders from customers in other countries, resulting in the concept of international Internet marketing (IIM). </li></ul></ul><ul><li>Direct sales </li></ul><ul><ul><li>Particularly for high technology and big ticket industrial products. </li></ul></ul>
  14. 14. Contractual Agreement <ul><li>Contractual agreements are long-term, nonequity association between a company and another in a foreign market. </li></ul><ul><li>Licensing </li></ul><ul><ul><li>A means of establishing a foothold in foreign markets without large capital outlays. </li></ul></ul><ul><ul><li>A favorite strategy for small and medium-sized companies. </li></ul></ul><ul><ul><li>Legitimate means of capitalizing on intellectual property in a foreign market. </li></ul></ul>
  15. 15. Contractual Agreement (continued) <ul><li>Franchising </li></ul><ul><ul><li>Franchiser provides a standard package of products, systems, and management services, and the franchise provides market knowledge, capital, and personal involvement in management. </li></ul></ul><ul><ul><li>Despite temporary setbacks, franchising is still expected to be the fastest-growing market-entry strategy. </li></ul></ul><ul><ul><li>Two types of franchise agreements: </li></ul></ul><ul><ul><ul><li>Master franchise – gives the franchisee the rights to a specific area with the authority to sell or establish sub franchises. </li></ul></ul></ul><ul><ul><ul><li>Licensing- L a local franchisee to use a product good services, trademark. </li></ul></ul></ul>
  16. 16. Strategic International Alliances <ul><li>A strategic international alliance (SIA) is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective </li></ul><ul><li>SIAs are sought as a way to shore up weaknesses and increase competitive strengths. </li></ul><ul><li>Firms enter SIAs for several reasons: </li></ul><ul><ul><li>Opportunities for rapid expansion into new markets </li></ul></ul><ul><ul><li>Access to new technology </li></ul></ul><ul><ul><li>More efficient production and innovation </li></ul></ul><ul><ul><li>Reduced marketing costs </li></ul></ul><ul><ul><li>Strategic competitive moves </li></ul></ul><ul><ul><li>Access to additional sources of products and capital </li></ul></ul><ul><li>Many companies also are entering SIAs to be in strategic position to be competitive and to benefit from the expected growth in the single European market. </li></ul>
  17. 17. Strategic International Alliances (continued) <ul><li>International Joint Ventures </li></ul><ul><ul><li>A joint venture is a partnership of two or more participating companies that have joined forces to create a separate legal entity. </li></ul></ul><ul><ul><li>Four Characteristics define joint ventures: </li></ul></ul><ul><ul><ul><li>JVs are established, separate, legal entities </li></ul></ul></ul><ul><ul><ul><li>The acknowledged intent by the partners to share in the management of the JV </li></ul></ul></ul><ul><ul><ul><li>There are partnerships between legally incorporated entities such as companies, chartered organizations, or governments, and not between individuals </li></ul></ul></ul><ul><ul><ul><li>Equity positions are held by each of the partners </li></ul></ul></ul>
  18. 18. Strategic International Alliances (continued) <ul><li>Consortia </li></ul><ul><ul><li>Consortia are similar to joint ventures and could be classified as such except for two unique characteristics: </li></ul></ul><ul><ul><ul><li>They typically involve a large number of participants </li></ul></ul></ul><ul><ul><ul><li>They frequently operate in a country or market in which none of the participants is currently active. </li></ul></ul></ul><ul><ul><li>Consortia are developed to pool financial and managerial resources and to lessen risks. </li></ul></ul>
  19. 19. Direct Foreign Investment <ul><li>Factors that have been found to influence the structure and performance of direct investments: </li></ul><ul><ul><li>Timing </li></ul></ul><ul><ul><li>The growing complexity and contingency of contracts </li></ul></ul><ul><ul><li>Transaction cost structures </li></ul></ul><ul><ul><li>Technology transfer </li></ul></ul><ul><ul><li>Degree of product differentiation </li></ul></ul><ul><ul><li>The previous experiences and cultural diversity of acquired firms </li></ul></ul><ul><ul><li>Advertising and reputation barriers </li></ul></ul>
  20. 20. Organizing for Global Competition (cont’d) <ul><li>Locus of decision </li></ul><ul><ul><li>Considerations of where decisions will be made, by whom, and by which method constitute a major element of organizational strategy. </li></ul></ul><ul><li>Centralized versus decentralized organizations </li></ul><ul><ul><li>An infinite number of organizational patterns fro the headquarters activities of multinational firms exist, but most fit into one of three categories: </li></ul></ul><ul><ul><ul><li>Centralized </li></ul></ul></ul><ul><ul><ul><li>Regionalized </li></ul></ul></ul><ul><ul><ul><li>Decentralized </li></ul></ul></ul><ul><li>No single traditional organizational plan is adequate for today’s global enterprise seeking to combine the economies of scale of a global company with the flexibility and marketing knowledge of a local company. </li></ul>
  21. 21. Schematic Marketing Organization Plan Combining Product, Geographic, and Functional Approaches <ul><li>Insert Exhibit 11.4 </li></ul>
  22. 22. <ul><li>Thank you </li></ul>

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