L10: International Marketing

Question 1

Reason for a internationalization (example: Spotify)

Answer 1

• Technical solution that can reach people across the globe

- Relationships with global record companies

Question 2

Considerable investments and costs for internationalization

Answer 2

Investments:
• knowledge investment
- Market research to understand growth and identify markets and segments

• Relationship investments
- Build networks of market relations and market contacts

Costs:
• Transaction costs
- Sales and other work to get a deal

• Organizational costs
- More employees and larger number of administrative personnel

Question 3

Successful internationalization depends on a number of factors

Answer 3

Dunning’s eclectic paradigm (OLI-Framework) :

Ownership advantages
- The firm’s own competitive advantage

Locational advantages
- The markets potential and risk

-> Depends both on market selection & entry mode

Internalization advantages
- The costs of own overseas establishment, in relation to allowing an external party to perform the same task in the new market

-> Depends primarily on entry mode

Question 4

Influence on market selection

Answer 4

• resource seeking
• market seeking
• cost reduction/efficiency seeking
• technology/strategic asset seeking
• client following

Question 5

Ownership advantages

Answer 5

• Knowledge about specific market
• Products’ attractiveness (in relation to competitors and substitutes)
• Network and contacts
• Ability to get established in specific market

Question 6

Comparison of different markets

Answer 6

• markets can be compared by

• the market’s potential
• the firms competitive advantage

Question 7

Market selection according to the funnel function

Answer 7

1. Preliminary selection: 30 markets
   - Where does demand exist for our product?
2. Second selection: 10 markets
   - Assessment of economic and financial forces
3. Third selection: 5 markets
   - Assessment of political and socio-cultural factors
4. Final selection: 3 markets
   - In-depth market analysis of the offerings’ competitive advantage

Question 8

Entry modes in general

Answer 8

Independent
Licensing, franchising, agents, and/or distributers
• Little investment necessary, limited financial risk
• Weak control

Cooperative
Joint venture, strategic alliance
• Partial control, costs, and potential

Integrated
Own production, sales offices or service organization
• Either through acquisition or own entry (greenfield)

Question 9

Reasons for entry mode choice

Answer 9

Ownership advantages
• International experience
• Size

Locational advantages
• Demand
• Minor cultural differences

Internalization advantages
• Low costs compared to paying an external party to
perform the same tasks in the new market.

Question 10

Advantages of own sales offices

Answer 10

• No goal conflicts
• No suspicion about hidden or undeserved profits
• Independent of external party
• Better management of marketing and
sales strategies

Question 11

Advantage of distributers

Answer 11

• Lower cost and less investment
• Less bureaucracy
• Less sensitive to business cycles
• Complementing sales possible for distributers

Question 12

Advantages & disadvantages with different entry modes

Answer 12

Acquisition
• Already established, fast start
• Expensive
• Hard to restructure

Joint Venture
• Access to important resources
• Splitting the risk • Less control
• Risk of conflicts

New venture
• Great freedom to organize
• Expensive and time intensive

Question 13

Entry modes for service firms

Answer 13

Direct export
- Base in home market, resources are “moved” when the service is sold (e.g., consultants)

Systems export
- Services related to other business activities (e.g., machine installation, banks, advertising agencies)

Direct entry
- Service provider organization is established “on site” (through establishment, JV, or acquisition)

Indirect entry
- Local business is given exclusive rights to use the company’s concept

E-marketing
- Communication over the network, partners provide payment solutions and any deliveries

Question 14

Internationalization of services

Answer 14

Hard service (Entry mode similar to products)
• ”Production”canbetoalargeextent separated from consumption
• Design,insurance,music,…

Soft services (Requires local presence)
• ”Production”andconsumptionhappen
to a large extent simultaneously
• Food,healthcare,rentofreal-estate,…

Question 15

Simplified process for handling risk

Answer 15

1. Identify market risks
2. Assess likelihood and consequences
3. Develop action plan(s)

Question 16

Market risks can be identified through external analysis

Answer 16

Micro analysis:

• threat of new entrants/ substitutes
• bargaining power of buyers/ suppliers

Macro analysis:

• political
• economic
• social
• technological

-> political and technological risk are often the most important ones