2 - international environment Flashcards
5 stage decision model in global marketing
- the decision whether to internationalise
- deciding which markets to enter
- market entry strategies
- designing the global marketing programme
- implementing and coordinating the global marketing programme
External analysis: market, customers, competitors, suppliers
- MARKET
- market segment: geographic, demographic, psychographic, behavioural
- market needs
- market trends: any macro, micro changes
- market growth - CUSTOMERS: customer needs & wants
- COMPETITORS: direct and indirect competitors; strengths and weaknesses of competitors
- SUPPLIERS:
Porter’s diamond
- FACTOR CONDITIONS:
- basic factors: natural resources
- advanced resources: human resources & research capabilities - DEMAND CONDITIONS - presence of early home demand, market size, rate of growth of market
- RELATED AND SUPPORTING INDUSTRIES
- FIRM STRATEGY, STRUCTURE & RIVALRY - the way in which companies are organised and managed, their objectives and the nature of domestic rivalry
Situation analysis tools
- SWOT analysis
2. Porter’s 5 forces
Porter’s 5 forces analysis
- Competition in the industry
- Threat of new entrants into the industry
- Power of suppliers
- Power of customers
- Threat of substitute products
Changes in the international environment PESTEL
Political Economic Sociological Technological Ecological Legal
The political/legal environment
comprises primarily two dimensions:
● the home country environment
● the host country environment.
Host country political environment
● Political risks
1. Import restrictions 2. Local-content laws 3. Exchange controls 4. Market control 5. Price controls 6. Tax controls 7. Labour restrictions 8. Nationalization 9. Change of government party 10. Domestication
Home country political environment - factors that can influence it
● bribery & corruption
● political pressure
● threats in third markets
There are two main reasons why countries levy tariffs:
- To protect domestic producers
2. To generate revenue
How exchange rates influence business activities
Movement in a currency’s exchange rate affects the activities of both domestic & international companies.
When a country’s currency is weak, the price of its exports on world markets declines and the price of imports increases. Lower prices make the country’s exports more appealing on world markets.
Furthermore, a company selling in a country with a strong currency while paying workers in a country with a weak currency improves its profits.
Devaluation lowers the
price of a country’s exports on world markets and increases the price of imports because the country’s currency is now worth less on world markets. Revaluation has the opposite effect: it increases the price of exports and reduces the price of imports.
Law of one price
stipulates that an identical product must have an identical price in all countries when price is expressed in a common-denominator currency.
Limitations of SWOT analysis
- Inadequate definition of factors
2. Lack of prioritisation of factors
Need to adapt to changes in the international environment
- changes are inevitable especially due to globalisation/modernisation
- what to do: accept, communicate (tell the team how we are going to change the mindset and do things differently) and plan accordingly
Phases of change
- denial
- bargaining & negotiation: which are the negative aspects of the change & try to negotiate them
- frustration
- acceptance
Tips on adapting to changes in the international environment:
- becoming aware of the situation
- understanding change
- building skills and knowledge
- agility and speed of response
- challenge and response time
- change psychology: convince the others about the change
Disposition of resources and capacities for international expansion
RESOURCES: What are the main firm resources? How would you identify them? Which are the resources the company has and which are most important to make the company competitive?
TANGIBLE: financial or physical; we need to understand how important some tangible resources are in the given context (having a building in Spain when you want to invest in China)
INTANGIBLE: technological, innovation, human resources; they can be as important as the tangibles are to create competitive advantage
CAPABILITIES
- How capable are we with marketing related issues?
- Our capabilities regarding R&D, management, marketing
- Analyse the company you are analysing and saying if the resources and capabilities it has are enough to bring the firm to a specific country
