International Marketing Chapter 12

The Big Debate
Which is the best approach for global markets? Marketing mix standardization or adaption?— Most favor Adaption
Economies of Scale
Black & Decker- realized significant product cost savings motor tipes from 260 to 8
Ford Motor- by unifying product development purchasing & supply activities across several countries
Transfer of Experience and Know How across Countries
Unilever- Introduced 2 global brands developed by its South African subsidiary
International Corporate Planning
deals with long term generalized goals fro the enterprise as a whole
Strategic Planning
deals with products capital research and the long and hsort term goals of the company
Tactical Planning
deals with market planning pertaining to specific actions and resource allocations to implement goals
Phase 1 Preliminary Analysis and Screening
1st Countries are analyzed and screened to eliminates those that do not offer potential

2nd Screening Crietria are established to evaluate

3rd Perform a complete analysis of the company’s expected operating envrinoment

Phase 2 Defining Target Markets and Adapting the Marketing Mix
devlop an adapted marketing mix consistent with the cultural and environmental constraints of the target market
Phase 3 Develop the Marketing Plan
The marketing plan includes a situation analysis an entry mode sleection and specifc action.

*If marketing plan implementation does not match company resources, a decision is made not to enter the market

Phase 4 Implementation and control
develop performance metrics timelines and benchmarks. These measures provide coordination evaluation control and early warning should the plan not meet performance goals
Alternative Market Entry Strategies
Exporting
Contractual Agreements
Strategic Alliances
Direct Foreign Investment
Exporting
Accounts for 10% of global economic activity
Done through large retailers, wholesalers, trading companies
Motives – skim the market cream; leverage unexpected opportunities
Direct Exporting – the company sells to a customer in another country
Most common first step approach – minimizes risks of financial loss
Indirect Exporting – the company sells to a home country buyer who exports the product (importer or distributor)
Contractual Agreements
Long-term, non-equity business association between a home company & foreign market company
Involves the transfer of technology, processes, trademarks, human skills & knowledge – and without any equity transaction
Direct Exporting
This method is the most common approach employed by companies taking their first international step because the risks of financial loss can be minimized
Indirect Exporting
Indirect exporting can be done through large retailers such as Wal-Mart or Sears, wholesale supply houses, trading companies, and others that buy to supply customers abroad.
Licensing
a low risk means of doing business in foreign markets without large capital outlays

Includes patent rights trademark rights and technological processes

Advantages of Licensing
Scarce Capital
No other viable means of entry
Foreign country ownership sensitivity
Patent & trademark protection
Risks of Licensing
Choosing the wrong partner
Quality & production problems
payment problems
contract enforcement
loss of marketing control
Franchising
Franchiser provides a standard package of products, systems & management services
Provides the franchiser with a reasonable degree of control
Franchisee provides market knowledge, capital & personal management
Provides an effective blending of business skill centralization & operational decentralization (to deal with local market conditions)
Foreign laws & regulations are friendly toward franchising (fosters local ownership, operations & employment)
Despite economic downturn, franchising is expected to be the fastest growing market-entry strategy
Strategic International Alliance
Business relationship established by two or more companies to:
Cooperate out of mutual need
Share risk in achieving a common objective
Shore up weaknesses & increase competitive strengths
Contribute to profits
Reason to enter in an SIA
Opportunities for rapid expansion into new markets
Access to new technology & more efficient production
Reduced marketing costs
Access to additional sources of products & capital
International Joint Venture
a partnership of two or more companies that have joined forces.
Are established, separate, legally incorporated entities, not individuals
Have acknowledged intent to participate in the management
Share equity ownership among partners
Consortia
Are similar to IJVs except that: (Huge construction projects with different specialties)
Typically, they involve many participants to lessen risks
They operate in a country in which no participant is currently active
They are formed to pool financial & managerial resources
Direct Foreign Investment
Capital assets are directly invested in a foreign country
Why direct foreign investment?
Gain quick & unencumbered market entry (NestlĂ©’s strategy)
Capitalize on low cost labor & avoid high import taxes
Improve the degree of product differentiation
Gain access to raw materials & technology
Capture the timing advantages of first mover
Obtain better technology & knowledge transfer
Overcome advertising & reputation barriers