strategic market management

1. Strategic Market Management
Global Perspectives
David A. Aaker and Damien McLoughlin
ISBN: 978-0-470-68975-2
www.wileyeurope.com/college/aaker
© Copyright 2010 John Wiley & Sons Ltd
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2. Chapter Thirteen
Global Strategies

3. “It has been said that arguing against globalisation is
like arguing against the laws of gravity.”
Kofi Annan

4. “A powerful force drives the world toward a converging
commonality, and that force is technology…The result is
a commercial reality - the emergence of global markets
for standardized consumer products on a previously
unimagined scale of magnitude”
Theodore Levitt

5. “My ventures are not in one bottom trusted, nor to
one place.”
William Shakespeare, The Merchant of Venice

6. A Global Strategy
Global perspective to realize
 Synergies
 Economies of scale
 Strategic flexibility
 Opportunities to leverage insights, programs and
production economies
 Lenovo’s R&D in Beijing, Shanghai, and Raleigh; production center in
Mexico, India, and China

7. © Copyright 2010 John Wiley & Sons Ltd
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Issues to be addressed

8. © Copyright 2010 John Wiley & Sons Ltd
8
Issues to be addressed
 Motivations - Objectives
 Standardization vs Customization
 Marketing Branding Standardization
 Expansion
 Mode of entry
 Managing the brand globally

9. Cash Cow – Manage Portfolio
PPT 13-9
Global
Brand
Associations Access
Low-Cost
Labor/Materials
Access
National
Investment
Incentives
Cross-
Subsidization
Access
Strategically
Important
Markets
Dodge
Trade
Barriers
Obtaining
Scale
Economies
Figure 13.1
Global Strategy Motivations
Global
Strategies

10. International Sales as % of Total

11. Standardization
 Premium brands. Self expressive
 Country position
 Strong functional benefit
Why…
 Leverage great branding and marketing
 Economies of scale
 Better resources are available
 Easier to manage brands Case

12. Standardization Not Always Optimal
 Market share positions ( Google in Russia )
 Government contexts ( alcohol Products )
 Brand images ( How to position )
 Customer trends ( Different stages in different countries)
 Distribution channels ( DIY and Ready to Drink)
 Social and Economic stages ( Disposable income)
 Local heritage ( Acquire local brands)
 Pre-empted position ( Some may already occupied )
 Customer responses ( Husband in japan)

13. Goal is
Not standardization but
Strong brands
Global brand management to create global strategies

14. 1–14
Wal-mart Retreats
from Germany
• Wal-mart entered Germany
 Acquisition of 21 stores and 74 hypermarkets
• Wal-mart duplicated its U.S. policies and applied them in Germany
 Employees refused to accept those policies
• Wal-mart faced significant cultural differences
• Wal-mart could not develop efficient economies of scale and distribution
centers to drive cost down
• The result is a defeated Wal-mart that sold its stores to Metro,
Wal-mart’s key rival in Germany
• ALDI, another of Wal-mart’s competitors in Germany, is now expanding
aggressively in the U.S.
Case

15. Expanding the Global Footprint
 A strong core ( Strong domestic market)
 Repeatable formula. ( Regional Success)
 Customer differentiation that travels. ( same
segmented targeted…HSBC premier – same
across the world, Youth )
 Industry economics ( IT products go for global
success)

16. Which Countries?
 Is the market attractive in terms of size and
growth?
 Can the firm add value?
 Competition intensity?
 Can business model be implemented abroad?
 Are there political uncertainties that will add risk?
 Critical mass be achieved?

17. Porter’s Diamond Model of National Competitive
Advantage
10–17

18. Modes of Foreign Market Entry
Market Entry along the
Investment and Control Continuum
10–18

19. Chapter 13 - Global Strategies PPT 13-19
Strategic Alliances
Motivations for Strategic Alliances
– Generate scale economies
– Gain access to strategic markets
– Overcome trade barriers
– Fill out a product line to serve market niches
– Gain access to a needed technology
– Use excess capacity
– Gain access to low-cost manufacturing capabilities
– Access a name or customer relationship
– Reduce the investment required

20. 1–20
Does GM’s Future Reside
in China?
• Market opportunity in China
 1.4 billion population, only 1 in 100 people owns a vehicle
• GM entered China in 1997
 Joint venture with Shanghai Automotive Industrial Corp
 China is 25% of GM’s revenues and GROWING fast
 GM China factories are more productive than U.S. plants
• GM’s future relies on China and other emerging economies
 $ 250 million on a state-of-the-art R&D center…in Shanghai
 Future of GM likely decided in their international HQ…in Shanghai
10–20

21. Chapter 13 - Global Strategies PPT 13-21
• A global strategy considers and exploits interdependencies between operations in
different countries.
• Among the motivations driving globalization are obtaining scale economies,
accessing low-cost labor or materials, taking advantage of national incentives to
cross-subsidize, dodging trade barriers, accessing strategic markets, enhancing
firm innovation, and creating global associations.
• Companies successful at expanding their global footprint usually had a strong core
market, a repeatable expansion formula, customer differentiation that travels, and
an understanding of local vs. global scale. The selection of a country to enter
should involve analysis of the attractiveness of the market and the ability of the
firm to succeed in that market.
Key Learnings

22. Key Learnings
 Strategic alliances (long-term collaboration leveraging the strengths of two or more
organisations to achieve strategic goals) can enable an organisation to overcome a lack
of a key success factor, such as distribution or manufacturing expertise. A key to the
long-term success of strategic alliances is that each partner contribute assets and
competencies over time and obtains strategic advantages.
 Global brand management needs to move the silo country business units from
competition and isolation to cooperation and communication.