CH 8 Global Marketing Strategies

INFORMATION TECHNOLOGY AND GLOBAL COMPETITION
Real Time Management
– information technology, access tools, and telecommunication contribute to information flow
– electronic data interchange (EDI) – ordering and purchasing components
– “muda” japanese for waste
Online Communication
telecommunication improves internal efficiency
Electronic Commerce
– changed customers’ expectations about convenience, speed, comparability, price, and service
– buying patterns can change instantaneously
E-Company
– as information flows faster across the organization, the number of “filtering” points between the source of information and users decreases
– nature of the organization chart changes drastically
Faster Product Diffusion
information technology impacts the rapid dispersion of technology and shorter product life cycles
Global Citizenship
– spread of English as the language of international business
– global environment demands a strategy that encompasses numerous national boundaries and tastes
GLOBAL STRATEGY
– have to be able to conceive, develop, and implement an effective global strategy
– array the competitive advantages arising from location, world-scale economies, or global brand distribution
Global industry
– where a firm’s competitive position in one country is affected by its position in other countries and vice versa
– consumer tastes have converged
1. market forces
2. cost forces
3. competitive forces
4. government forces
multidomestic strategy
– firm manages its international activities like a portfolio
– subs and other operations control all important activities necessary to maximize their returns in their area of operation independent of other subs
– subs enjoy a large degree of autonomy
global strategy
integrates the activities of the firm on a worldwide basis to capture the linkages among countries
geocentrically oriented firm
considers whole world as its arena of operation, managers maintain equidistance from all markets, and develop a system which satisfies its needs for both global integration for economies of scale and scope and responsiveness to different market needs and conditions in various parts of the world
– tries to “kill two birds with one stone”
– centralize some resources at home, abroad, and distributes others among its national operations
– complex configuration of assets and capabilities
ethnocentric orientation
dominant influence of home country practices, or polycentric managers of individual subs operate independently of each other
– leads to a multidomestic orientation, which prevents integration and optimization on a global business
Competitive Industry Structure
1. industry competitors – determine rivalry among existing firms
2. potential entrants – may change the rules of the competition but can be deterred by entry barriers
3. bargaining power of suppliers – can change the structure of industries
4. bargaining power of buyers – may affect the firm’s profitability
5. threat of substitute products or service – can restructure the entire industry above and beyond the existing competitive structure
Competitive Advantage
– adopt different strategies for different competitive advantage
– firm has a competitive advantage when it is able to deliver the same benefit but at a lower cost or exceed competing products
– temporary monopoly period that a firm can enjoy over its competitors
cost leadership strategy
when firm builds its competitive advantage on economies of scales
– implementation of cost-leadership strategy by developed MNCs are rarely effective in emerging markets
– cost leaders are vulnerable to product differentiation strategy
niche strategy
focus exclusively on highly specialized segment of the market
first-mover advantage vs disadvantage
advantage:
– w/ technology it’s important to be the first mover
– have to keep moving
– capability to effectively anticipate, react to, and lead change continuously over time
– take small steps to explore their environments
disadvantage;
– unexpected issues
to compete on edge, firms need to understand that:
1. advantage is temporary
2. strategy is diverse, emergent, and complicated
3. reinvention is the goal
4. live in the present, stretch out the past, and reach into the future
5. grow the strategy and drive strategy from the business level. important for managers to pay attention to timing and order in which strategy is grown and agile moves at the business level
6. to maintain sustainable power in fast-paced, competitive, and unpredictable environments, senior management needs to recognize patterns in firms’ development and articulate a semi-coherent strategic direction
Competitor-Focused Approach
– involve comparison with the competitor on costs, prices, technology, market share, profitability, and other related activities
– firms may lose sight of its customers and various constituents
– regulatory and other barriers could prove to be overwhelming in very promising markets
Customer-Focused Approach
– looks to gain competitive advantage emanate from an analysis of customer benefits to be developed
– listening too closely may cause a firm to miss the bus on innovation
– Estee Lauder researched to determine feasibility and compatibility of its product with each market -> Europe served as a springboard to other European markets
Hypercompetition
– all firms are faced with a form of aggressive competition that is tougher than oligopolistic and monopolistic competition, but not perfect competition where the firm can’t influence the market at all
– shift in competition is referred to as creative destruction
– assumes continuous change, where the firm’s focus is on disrupting the market
– firm competes on the basis of price, quality, timing, know-how, creating strongholds in the markets it operates in, and financial resources to outlast one’s competitors
Interdependency
– for firms to make optimal use of outside technologies a degree of components standardization is required
– standardization allows firms to develop different end products using the same components
– e.g., computer industries using chips from other companies
– tariffs and non-tariff barriers and restrictive customs procedures could change cost structures
GLOBAL MARKETING STRATEGY
Benefits
1. cost reduction
– when national marketing functions are consolidated
– availability of a global span coverage by various forms
– owning a website -> benefits consumers who can order their own specifications and help manufacturers avoid inventory buildups
– can translate to increased program effectiveness -> allow more money and resources into smaller number of more focused programs
2. improved products and program effectiveness
– a globalization program that overcomes local objections allow the spread of good marketing idea -> raise effectiveness of the program
– ability to set up major R&D facilities in each of its major markets
– development costs are spread over a much larger market
– increased sources from which product ideas are available
3. enhanced customer preference
– global marketing strategy helps build recognition -> enhance customer preferences through reinforcement
– uniform marketing message reinforces the awareness, knowledge, and attitudes of people toward the product or service
4. increased competitive advantage
– by focusing resources into smaller number of programs, global strategies magnify the competitive power of the program
– using focused global marketing strategy could allow smaller firms to compete in a more effective manner
Limits of Global Marketing
– to effectively target and reach global consumers online, many companies still need to approach them in their languages, conforming to their cultural value systems
left-side concept
– unification, standardization, globalization, global integration, scale, and online scale
– supply-side argument in favor of the benefits of economies of scale and scope
right-side concept
– fragmentation, adaption, localization, local responsiveness, sensitivity, and offline market sensitivity
– demand-side argument addressing the existence of market differences and the importance of catering the differing market needs and conditions
COMPETITIVE ANALYSIS
– use SWOT to analyze firm’s competitive position
– drawback: companies compile lists rather than think about what’s important to their business
– aim: isolate key issues that will be important to the future of the firm and the marketing strategies will address