Global - (1.4) Characteristics of International Marketing Strategies Flashcards

1
Q

What are special decisions related to international marketing strategy?

A

1) Determination of degree
2) Selection/prioritization of markets
3) Design & structure of int. mar. dev.
(form and timing)
4) Decision on cross-nat standardization
5) Decision on relationship between headquarter and local entities

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2
Q

Describe the motives for internationalization

A
  • Risk reduction and diversification
    » Stabilization sales through various business cycles
    » Compensation for (potential) domestic losses
    » Stronger commitment abroad
    » Following competitors abroad
  • Realization of opportunities
    » SALES = new sources, following customers, participation in growth on foreign markets, escape from saturated markets
    » PRICE = skimming of customers’ higher willingness to pay
    » COST = cost reduction through economies of scale, utilization of lower market development cost
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3
Q

How is degree of internationalization?

A

The degree is variable:
> Expand only sales to foreign markets
> Expand more than sales: R&D, logistics, ..

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4
Q

Describe the importance of country selection

A
  • Impossible to operate in all countries at the same time
  • Not all countries are profitable (dependent on the firm)
  • Financial consequences of poor selection are large
    > Sunk cost = keep pushing a project because you already invested a lo
    > Costs to close
    > Negative image transfer
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5
Q

What are the steps in the process of selecting a country =

A

(1) Macro segmentation = develop broad criteria to get a group of interesting countries
(2) Prelimitary screening = additional criteria to reduce the number of candidate countries
(3) Secundary screening = firm assesses its own capabilities relative to the market
(4) Final selection through site visits

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6
Q

What are market attractiveness and market entry barriers criteria? (Macro segmentation + prelimitary screening)

A

Attractiveness
» Institutional = political stability, local infrastructure, access to resources
» Demand-based = population, buying power, market volume and growth, size of segments,
» Competitor-based = compentitive intensity and advantages

Market entry barriers
» Institutional = quotas, prices, norms and standards, regulations
» Demand-based = patterns, language, loyality toward competitors, switching costs
» Competitor-based = economies of scale advantaged by competitors, positive image of established competitors

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7
Q

What is the best way to decide on market attractiveness and market entry barriers?

A

Portfolio approach - visualize the countries on a 2 dimension quadrant

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8
Q

What are important factors to match capabilities between the firm and selected countries?

A
  • Price > income levels, competition, tarrifs
  • Product quality > position, perceived Q
  • Innoavtiveness > differentiation
  • Reputation > country of origin + overall brand image
  • Firm know-how > patents, knowledge of market, management, adaptability, experiences with strategic partnerships
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9
Q

Explain the quantitive approach for assessing market potential

A

Based on sales/penetration information –> linear regression on country and product characteristics (dependent varibale = sales or market share)

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10
Q

Market entry mode =

A

Institutional arrangement necessary for the entry of a company’s products, technology and human capital into a foreign market
» key determinant for internationalization success
» depends on objectives, available capital, phase of internationalization

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11
Q

Explain the entry mode “direct export”

A

Sales without an intermediary, primarly via agencies, representatives of brances

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12
Q

Explain the entry mode “indirect export”

A

Acquisition of orders and delivery via third-party companies acting as intermediaries

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13
Q

Explain the entry mode “licensing”

A

Transfer of usage rights for the intellectual property of the licensor to the licensee for a fixed fee

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14
Q

Explain the entry mode “contract manufacturing”

A

Manufacturing of the entire product or individual modules by third parties on contractual basis

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15
Q

Explain the entry mode “franchising”

A

Franchisor gives a right to the franchisee against payment = a right to use a total business concept/system

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16
Q

Explain the entry mode “joint venture”

A

Establishment of a jointly managed company = partner capital, knowhow and existing shares are brought into the joint ventures.
3 types based on the distribution of capital shares: majority ; equity ; minority

17
Q

Explain the entry mode “subsidiary”

A

Direct capital commitment in international market, without third party involvement. The subsidiary may perform sales, production or even independent R&D

18
Q

Drivers of opening a subsidiary =

A
  • Higher power distance (centralized authority makes it more easy)
  • Low foreign country risks (ROI)
  • Low restrictions
  • Low market growth, so that you can glide in easy
  • Low market size, otherwise better to go for a cooperative way
19
Q

Explain the location-competence assimilation

A

Activities should be carried out in the location where the best conditions prevail > if R&D is best in Sillicon Vallety, do it there

20
Q

Explain the Waterfall strategy (with advantages and disadvantages)

A

On lead country to entry, other lag countries follow

GOOD
* Successive development and expansion of financial and human resources
* Temporal diversification of risks
* Marketing can be adjusted
* Potential extension of product life cycle

BAD
* Risk of market entry by competitors before you

FACTORS FAVORING
* Necessity for reference markets
* Longer product life cycles
* Lower competitive intensity

21
Q

Explain the Sprinkler strategy (with advantages and disadvantages)

A

All country entries at once

GOOD
* Establishment of market entry barriers for followers
* Regional+geographical diversication of risks

BAD
* Increased financial and HR requirements
* Major losses if strategy fails

FACTORS FAVORING
* Short product and technology life cycles
* Long R&D times

Conclusie: HIGH SALES BUT HIGH RISKS

22
Q

Compare standardization and differentiation in internationalization

A

STANDARD
» Good: potential for international cost synergies
»Bad: limited flexibility to adress differences, intensification of demand-based feedback effects

DIFFER
» Good: adaptation to specific local market and demand charact.
»Bad: high cost

23
Q

Standardization tends to be more succesful if …

A
  • customers in target countries are similar
  • potential for transnational economies of scale
  • product modifications are associated with high costs
  • price elasticity of demand
  • managemen team has intensive markeitng experience and competence