challenges Use of assets

 Currency Global business

 Interest rates  Licensing of intellectual property
 Taxation systems  Royalty
 Government regulations  Patents
 Language  Trademarks
 Culture  Technology
 Uncertainties  Export of intangibles
• FDI-ADVANTAGES
LICENSING -ADVANTAGES • Locals partner knows the domestic
• Less risk business environments better
• No investment needed • Easy management
• Assured returns • Easy access to local market
• Less uncertainty –local licensee • Good image for both
• Less fear of govt. controls • Can abide by local rules and regulations
• Good for host country • RISK
• Local partner’s interference
LICENSING- DIS ADVANTAGES
• Quality cannot be assured • Difficulty to ensure quality
• Nurturing a competitor abroad • Supremacy of local partner
• Reduced opportunity to enter and • Repatriation limitations
establish business
• Technology sharing
• Technology theft
 Global Marketing Adaptation
• Identifying goods and services that  Differences in technical standards
customers outside the home country want  Consumer and personal use product
 Variations in consumer needs
• Provide these at the right time and place
 Variations in conditions of use
Marketing for different type of Consumer and  Variations in abilities to buy
Product  Independent national subsidiaries
• Consumer marketing -Supplying  Cultural impact
consumers generally with branded  Government influence
products  Export Pricing policies
• Industrial marketing -Supplying  a) Cost-Plus Pricing: adds international costs
differentiated ingredients to processors and a mark-up to the domestic manufacturing
and manufacturers cost. 
 b) Dynamic Incremental Pricing: only variable
• Commodity marketing -Supplying costs and a portion of the overhead load
undifferentiated raw materials (incremental costs) should be recuperated.
Standardization • Exporting-related incremental costs
High cost of adaptation (manufacturing costs, shipping expenses,
insurance, and overseas promotional costs).
• Industrial products
GLOBAL MARKETING
• Convergence and similar tastes in divergent • Denotes the use of advertising and marketing on
• markets a global basis.
• Predominant use in urban environments • Marketing is at the threshold of a new and
• Marketing to predominantly similar exciting era: e-business, e-commerce and e-
marketing
countries
• Business has two basic functions: marketing and
• Centralised management and operations innovation (Drucker)
• Country-of-origin effect • New era of competition, demanding customers
• Economies of scale • More stakeholders (customers, employees,
media).
 GLOBAL MARKETING-INTEGRATION
FORCES
Driving Forces Challenges
Technology • Markets can present higher profit opportunities than present
Culture markets.
• Markets can offer size but not profits.
Market Needs
• Company needs a larger customer base for economies of scale.
Costs
• Present customers are needing service and products as they go
Free Markets international.
Economic Integration DUMPING
Peace • WTO: Sale of an imported product at ‘less than fair value’ and
Strategic Intent causes ‘material injury to a domestic industry’.
Management Vision, • US: An unfair trade practice that results in injury, destruction, or
Strategy and Action the prevention of the establishment of an American industry.
Restraining Forces • US considers dumping when price is >5% below home market
price or,
Culture
• Price is below cost of production
Market Differences
Costs • 4P’S
National Controls • Place (distribution)
• Transportation to international freight carrier
Nationalism
Freight,
Peace vs. War/ Stability Insurance,
Management Myopia Documentation,
Organization History Customs clearance,
Domestic Focus Local transportation,
Logistic management “in the market”,
Currency risk
Product – usually controlled by the exporter, initially the least
impacted element of the marketing mix

• “localization” often required

• approvals and certificates
•  packaging & labeling
•  measures, etc
 
 Promotion – success at home leads to interest from
potential importers, licensors, joint venture partners
International strategic management Types of Strategy 
• Competitive Advantage – something which gives the
A comprehensive and ongoing management organisation some advantage over its rivals
planning process aimed at formulating and • Cost advantage – A strategy to seek out and secure a cost
implementing strategies that enable a firm to advantage  
compete effectively internationally. of some kind - lower average costs, lower labour costs, etc.
  Strategic goals • Market Dominance- Achieved through:
• Strategic goals are the major objectives the – Internal growth
firm wants to accomplish through pursuing a – Acquisitions – mergers and takeovers
particular course of action. • New product development: to keep ahead of rivals and set
• they should be measurable, the pace
• feasible, • Contraction/Expansion – focus on what you are good at
• time-limited, (core competencies) or seek to expand into a range of
• Five-Forces (developed by Michael Porter) markets?
• forces that shape and influence the industry • Price Leadership – through dominating the industry –
or market the organisation operates in. others follow your price lead
• Global – seeking to expand  global operations
1.Strength of Barriers to Entry - how easy is
it  for new rivals to enter the industry? • Reengineering – thinking outside the box – looking at news
ways of doing things to leverage the organisation’s
2.Extent of rivalry between firms – how performance
competitive is the existing market?
• Downsizing – selling off unwanted parts of the business –
3.Supplier power – the greater the power, similar  to contraction
the less control the organisation has on • Delayering – flattening the management structure,
the supply of its inputs. removing bureaucracy, speed up decision making
4.Buyer power – how much power do • Restructuring – complete re-think  
customers  in the industry have? of the way the business is organised
5.Threat from substitutes – what alternative
products  and services are there and
what is the extent  of the threat they
Home Replication Strategy
Perceived Benefits of Strategic Planning 
– Coordinate and monitor operations
• a firm utilizes the core competency or firm- – Streamline product lines and supply chains
specific advantage it developed at home as its – Manage political, currency, and competitive risks
main competitive weapon in the foreign markets – Potential costs
Micromanagement of subsidiary operations
that it enters. – Misallocation of time and staff resources
• it takes what it does exceptionally well in its – Over-planning and lower profitability
home market and attempts to duplicate it in
foreign markets.
• Multidomestic strategy :
• Main aim is maximum local responsiveness • Global Integration
• Products and services homogeneous in terms of type and quality
• Customize product offering, market strategy • Customers have common taste preferences
including production, and R&D according to • National Responsiveness
national conditions • Segmented regional markets
• Generally unable to realize value from • Need to respond to differing national standards and regulations
experience curve effects and location economies • Adaptation of tools and techniques to manage local workforces
• Possess high cost structure
• Transnational strategy  • Pyramid” Strategies 
•  To meet competition firms aim to reduce costs, Engage in significant international activity a short time after being
transfer core competencies while paying established
attention to pressures for local responsiveness • Successful firms leverage a distinctive mix of orientations and
• Global learning strategies
– Valuable skills can develop in any of the • Global technological competence
firm’s world wide operations • Unique-products development
– Transfer of knowledge from foreign • Quality focus
subsidiary to home country, to other • Leveraging of foreign distributor competences
foreign subsidiaries • Targeting emerging market
• Transnational strategy difficult task due to • Marketing requires smaller-scale strategies
contradictory demands placed on the • Building relationships with local governments, small entrepreneurs,
organization and nonprofits
• Less dependence on central governments and large local
companies
Pyramid” Strategies