Tapping into Global Markets Flashcards
Competing on a Global Basis
- Global industry
* Global firm
Global Industry
Competitors’ strategic positions in major geographic or national markets are affected by their overall global positions
Global Firm
Operates in more than one country and captures R&D, production, logistical, marketing, and financial advantages not available to purely domestic competitors
If you have different functions in different countries (e.g.: R&D in Japan, Marketing Department in Austria, …)
Decisions in International Marketing - Deciding how to enter the market
The 4 Ps (MM) turn into 4 Cs:
• Product turns into a Customer solution
(You adapt the packaging, size, language > it is not the same product anymore)
• Place turns into a Customer convenience
(distribution differs from country to country)
• Price turns into Customer willingness to pay
(there is no world price on this planet, it adapts as well)
• Promotion turns into Customer communication
(what attracts customers differs from country to country as well)
!!!! There is no final marketing organization, it changes over time and never stays the same !!!
Decisions in International Marketing - Deciding wether to go abroad
- Factors that draw companies into the international arena
* Before deciding to go abroad, the company must also weigh several risks
Factors that draw companies into the international arena
o Some intern. markets present better profit opportunities than domestic market
o Firm needs larger customer base to achieve economies of scale
o Firm wants to reduce dependence on any one market
o Firm counterattacks global competitors in home markets
o Customers going abroad require international service
Before deciding to go abroad, the company must also weigh several risks
o Firm might not understand foreign preferences, failing to offer competitively attractive product
o Firm might not understand foreign country’s culture
o Firm might underestimate foreign regulations and incur unexpected costs
o Firm might lack managers with international experience
o Foreign country might change commercial laws, devalue currency, or expropriate foreign property
Internationalization Process
Stage 1: No export activities
Stage 2: Export via independent representatives
Stage 3: Establishment of sales subsidiaries
Stage 4: Establishment of production facilities abroad
Influence Factor Digitalization
Digitalization is disruptive.
Companies realized you need to be a big player within your industry. Success means to be big, quick, dominant, e.g. Facebook bought schülervz because they wanted to be the only player in their industry
Decisions in International Marketing - Deciding Which Markets to Enter
How many markets to enter:
• Waterfall Approach
• Sprinkler Approach
• Born Global
Waterfall Approach
Expanding to one country after another
Sprinkler Approach
Realizing you have a great business idea, you quickly buy all companies in this area to be dominant
Born Global
You have a great idea and you find a big investor and as you start the idea, you go in a lot of countries instantly (mostly in gaming industry). Aim: to be very fast and dominant
Evaluating Potential Markets
- Neighbouring countries
- Psychic proximity/cultural distance
- Fewer countries
Succeeding in Developing Markets
• BRICS (Brazil, Russia, India, China, and South Africa)
Huge countries with high population, everyone needs own marketing strategy
• CIVETS (Columbia, Indonesia, Vietnam, Egypt, Turkey, and South Africa)
Market Profile Brazil
- Biggest economy in Latin America
- Sixth largest economy in the world
- Fifth-largest country of digital users
- High cost of transporting products
- Crime and corruption exist
Market Profile Russia
- Largest exporter of natural gas
- Second-largest exporter of oil
- Third-largest exporter of steel/aluminium
- Make heavy use of social media
- Dwindling workforce/poor infrastructure
Market Profile China
- Largest auto market in the world
- Emerging urban middle class
- World’s top consumer of luxury goods
- Fierce competition among foreign firms
- Opaque and arbitrary bureaucracy
Market Profile India
- Lively democracy/youthful population
- World’s second most populous nation
- One of the youngest large economies
- Has fully embraced mobile technology
- Poor infrastructure/public services
Market Profile South Africa
- Access point to the African region
- Increasing discretionary income
- Consumers are brand conscious
- Increasing reliance on mobile phones
- Logistical/infrastructure problems
Market Profile Indonesia
- Increasing political stability
- Increasing economic growth
- Largest Muslim country
- Consumers are brand conscious
- Distribution/infrastructure limitations
Modes of Foreign Market Entry
- Direct investment:
in the past, not all foreign direct investments were seen as good (bad working conditions, low salaries) - Joint ventures:
start a factory together (e.g.: in China, foreign companies must have a joint venture) - Licensing
- Direct exporting:
you start to go abroad and sell abroad - Indirect exporting:
you don’t actually export
Increasing from 1 to 5: Commitment, risk, control, profit potential
Decisions in International Marketing - Deciding How to Enter the Market
- Indirect exporting
* Direct exporting
Indirect exporting
Working through independent intermediaries
o Domestic-based export merchants
o Cooperative organizations
o Domestic-based export agents
o Export-management companies
