Market Types etc.? Flashcards
What happens in local markets?
Concerned with customers clustered tightly around the marketer
Can learn a great deal about the customer and make necessary changes quickly
Potential market is limited-can be susceptible to local competitors
What happens in national markets?
They distribute their product throughout a country-may involve multiple manufacturing plants, a distribution system including warehouses…
Offers tremendous profit potential-exposes marketer to new, aggressive competitors
What happens in international markets?
They operate in more than one country
Adjustments are normally made in the marketing mix in various countries
If national markets became more saturated the continued expansion into foreign markets will be inevitable
What are 4 reasons for growth in multinationals?
Emerging economies
Economies of scale
Protectionism(taxing imports to protect domestic markets)
External growth through takeovers+mergers
What are some benefits of multinationals(in the host country)?
Significant employment and training to the labour force
Adds to the host country’s GDP
Increased competition+consumer choice
Increased tax revenues to the host country
What are some drawbacks of multinationals?
Domestic business may not be able to compete
Tax avoidance
Could damage domestic business
May not feel as socially responsible as domestic businesses
Imposes culture on the host nation
What makes a business classified as ‘small’?
50 or less employees
What makes a business classified as ‘large’?
250 or more employees
What factors affect the size of a business?
Market size
Nature of the product
Personal preference
Ability to access resources for expansion
Why might a business want to grow?
Entrepreneur wants a greater challenge
Owners want a higher return on investments
Growth into new markets can spread risks
A bigger business is better placed to fight external threats
Opportunity to gain unit cost reduction through economies of scale
What are the strategic options for growth with the methods involved?
Innovation+Diversification-organic growth
Internal Expansion-takeovers/mergers
Cost Leadership+Product Development-joint ventures/strategic alliances
Define organic growth-give examples
Growth from within the business
Eg.launching new products, franchising, exporting…
Define external growth-give examples
Growth from outside the business
Eg.takeovers, mergers, joint ventures…
What is organic growth seen to be?
Lower risk Slower Building on existing activities Good for high growth markets Rewards innovation+brand building
What is external growth seen to be?
Higher risk Faster Transformational Popular in mature or declining markets Can acquire missing technology/brands
What are the different types of integration-usually takeovers?
Backward vertical-business behind in supply chain
Forward vertical-further up in the supply chain
Horizontal-same stage in supply chain
Conglomerate-no clear connection(diversification)
What’s the difference between a merger and a takeover
Merger=a new business created
Takeover=one business takes control of another business
What are some common features of a merger?
Both businesses broadly equals in size, value... Usually operate in the same industry Potential for growth Usual risks there Shares increase
What are some advantages of organic growth?
Can be financed internally-retained profits…
Builds on businesses strengths
Allows growth at a sensible rate
Define a joint venture-what are some reasons behind forming one?
Involves 2+ businesses pooling their resources and expertise to achieve a particular goal(risks+rewards shared)
Expansion
Newly developed products
Moving to a new market-especially overseas
What some benefits to a joint venture?
Shared expertise
Each partner may have the options to acquire the JV business in the future based on agreed terms
Reduced risk of a growth strategy
What some drawbacks to a joint venture?
Risk of clashing management styles
Conflict of interest
Imbalance of expertise/investment/assets from partners
What is the difference between international companies and multinationals?
International=importers/exports in their home country
Multinational=investors in other countries
Define strategic alliance
An arrangement between 2 companies that have decided to share resources to undertake a mutually beneficial project
(Less involved and less permanent than JV)
What’s the difference between strategic alliances and JV?
Strategic alliance=2+ companies remaining separate entities
JV=new entity formed
What are some problems with strategic alliances?
No better at the end of it
Legal disputes over who owns what
Expensive
Difficult to coordinate
