Chapter 3 Flashcards
Market entry & marketing strategies
What is franchising?
Foreign market entry strategy: franchiser grants rights to open retail store and use business name, systems and procedures. In return, franchisee pays percentage of its sales to franchiser on regular basis
What is waterfall strategy
practical and less error-prone way to enter foreign market.
Involves sequential (step-by-step) expansion via well-planned stages of entry.
Competence and experience acquired will pave way for the next step until foreign company is fully set up in local country.
What are the 3 phases of IKEA’s Internationalization process?
-Phase 1: Exploratory phase
-Phase 2: Rigorous replication
-Phase 3: Flexible replication
What is exploratory phase?
-period of trial and error
-market research: interview, pop-up stores
What is rigorous replication?
-core idea and values of company were codified in an internal document
-focus on economies of scale
-standardization of organizational structure, store concepts, product ranges, communication policies.
What is flexible replication?
-definition of guidelines
-combination of standardization and local adaptation
-experience and knowledge gained form local exploration is used.
(guiding principles are fixed but may very in practice in response to new knowledge)
What is economies of scale?
The more an item is produced, the cheaper production will be.
Cost is spread throughout the items.
Company must be efficient in managing operations.
What were the internationalization strategies in IKEA when it came to product, price, communication and distribution policy?
Product: has to have discretion in selecting overall range (product range is offered to local markets but some are adapted to taste and preferences of consumer), highly recognizable products, offers economies of scale,.
Price: low costs, markets with high import duties met with increased local production.
Communication: flexible replication applied to strike right tone in international communications policy. catalog layout standardized with minor adaptations, advertising is partly in-house & partly locally to adapt to taste, culture and positioning in country.
Distribution: fixed basic format with local adjustments for cultural, interpretational, infrastructural differences
What is a “born global” company?
company that is driven to excel and achieve competitive advantage in many foreign markets at market launch.
What are characteristics of “born global company”?
-immediately aggressive in pursuing int. markets
-committed to investing financial and material resources
-tech companies
-led by managers with strong int. focus
-driven toward pursuing differentiation strategy
-driven towards pursuing emphasis on high quality
-consistent use of modern information and communication technology
-consistent in employing external, independent sales intermediaries in foreign markets
What were the internationalization strategies in AIRBnB when it came to product, price, communication and distribution policy?
Product: products offered adapted to local conditions. must address tension between global developments and customer needs. different strategies (pictures) for global-competitive advantage
Price: differentiated prices-uses revenue management strategy, adapted to local payment option
Communication: utilizes A/B tests to analyze efficient communication, adapted to local conditions, leverages data from large user base and creates highly targeted campaigns
Distribution: standardized distribution but adapted to language differences through translators (crowd sourcing and internal translation)
What is revenue management?
Approach to integrated price and capacity control with help of various price ranges
Why did Airbnb experience difficulties?
laws and regulatory framework (China)- adapted to local sensitivities by establishment of own product team and new branding
competition (Europe)- acquisitions and rebranding
pandemic (global)- lay off of employees
What are the four dimensional framework that needs to be considered in internationalization?
culture, environment, lifestyle, mentality (CELM)
What are the two types of analysis you can use in internationalization?
political, economic, socio-cultural, technological and agricultural factors (P-E-S-T analysis)
strengths, weaknesses, opportunities, threats
(SWOT analysis)
