International Marketing Strategies

Decision Criteria for Int.Business

1. 2. 3. 4. 5. 6. 7. 8. 9. Political Risk Market Access Factor Costs and Conditions Shipping Considerations Country Infrastructure Foreign Exchange Product-Market Profile Creation Market Selection Criteria Visits to Potential Market

Product-Market Profile-Nine Ws
Who buys our product? Who does not buy our product? What need or function does our product serve? What problem does our product solve? What are customers currently buying to satisfy/solve their problems for which our product is targeted.

 What price are they paying for the products they are currently buying? When is our product purchased? Where is our product purchased? Why is our product purchased?

Market Selection Criteria

Market Potential Market Access Shipping Costs Potential Competition Service Requirements Product Fit

International Alternatives
Exporting Sourcing Licensing Joint Ventures Foreign Direct Investment

Exporting
One of the strategies for the company which has decided to go international. Export Selling-Does not involve tailoring of the product, the price or the promotional material to suit the requirements of the global markets. Only marketing mix element that differs is place,that is the country where the product is sold. Export Marketing-It is opposite to export selling.

 Where in the other elements of marketing mix are also tailored as per the target nation. In global marketing the issue of customer value is given prime importance. Such as nationalistic values. Eg.-Be Indian , Buy Indian campaign. To counter such resistance, companies needs to convince the customer on the basis of branding.

Exporting Decision Criteria

Targets the customer in context of the total market environment. The marketing mix elements have to be evaluated in the global scenario. Export marketing requires the following 1. An understanding of the target market environment. 2. The use of marketing research and identification of market potential. 3. Decisions concerning the marketing mix.

Sourcing
Opposite of exporting is importing. Importing can be sub divided into two categories: 1. Goods that are purchased readymade 2. Goods that a foreign company has a voice in their design and packing(labels). The latter goods are referred to as sourced goods and involve different marketing considerations than goods that are solely imported. There are no simple rules to guide sourcing decisions.

Factors Influencing Sourcing

1. 2. 3. 4. 5. 6. Factor Costs and Conditions Logistics Country infrastructure Political risk Market Access Exchange rates

Licensing
A Contractual arrangement whereby one company(licensor) makes an asset available to another company(licensee) in exchange of a fees or some form of compensation. The licensed asset may be a patent ,trade secret or company name. Effective strategy for expansion as it incurs least cost. The only cost involved is the cost of signing the agreement and the cost of policing it.

 The disadvantage of licensing is that it can be a very limited form of participation. Potential returns from marketing and manufacturing are lost. Agreement may have a short life if licensee develops its own capability. Thereby resulting in producing competitors in the market. Franchising is a form of licensing.

Joint Ventures
More extensive form of participation in foreign markets than either exporting or licensing. Leads to sharing of risk and the ability to combine different value chain strengths for exampleinternational marketing capability and manufacturing. Sourcing of funds. Companies that lack sufficient capital resources might seek partners to jointly finance a project. It is one of the most optimum way of entering into a emerging market.

 The disadvantages of joint venturing can be significant .The partners must share rewards as well as risks. The main disadvantage of this global expansion strategy is that a company incurs very significant costs associated with control and coordination issues that arise when working with a partner. Also as in the case of licensing, a joint venture partner can evolve into a strong competitor.

Foreign Direct Investment

Gives control to the foreign partner on the operations. It results in acquisition of plants or facilities out side the home country.

Five Market Expansion Strategies

Market
Concentration Diversification 2. Country Focus
4.Global Diversification

Country

Concentration

1.Narrow Focus
3.Country Diversification

Diversification

Five Market Expansion Strategies

Expansion can be done by seeking new markets in existing countries or seeking new country markets for already identified and served market segments. These two combinations provide 4 strategic options: Strategy 1- Narrow Focus Starting Point for most companies.It matches company resources and market investment needs.

 Strategy 2-Country Focus Country concentration and segment diversification. A company serves many market in few countries. This strategy is widely used by American Companies.

 Strategy 3- Country Diversification This one is a global strategy. Where companies seek out for the world market for their product. Which leads to achieving economies of scale . This is the strategy of the well managed business that serves a distinct need and customer category.

 Strategy 4 Global diversification This is the strategy of Global Multinational Companies like Toyota and LG.

Stages of Development Model

Organization Characteristics Stage and Company
1.Domestic 2.International 3.Multinationa l 4.Global 5.Transnational

Key Assets

Located in home country

Core centralized others dispersed

Decentraliz ed and self sufficient

All in home country except marketing or sourcing

Dispersed,in dependent and specialized.

Role of Country units

Single country

Exploiting Adapting and local leveraging opportuniti competencies es Created at center and transferred Restained within operating units

Contribution Marketing or to company sourcing world wide Marketing or sourcing developed jointly and shared All functions developed jointly and shared.

Knowledge

Home country

Cooperative Strategies and Global Strategic Partnership

Introduction
Now that we have seen a company going to get global has options like exporting, licensing, joint ventures and ownership (FDI) left to it. But with the changes in socio-cultural, technological, political and economic environments the relative importance of these strategies have been affected.

 Today the Trade Barriers have fallen Markets have globalized Consumers needs and demands have converged Product life cycles are shortened New Technology and Trends have now emerged. All this also results into unlimited market opportunities.

Global Strategic Partnerships

Terminology used to describe the new forms of cooperation strategies varies. Phrases like collaborative agreements, strategic alliances, strategic international alliances and global strategic partnerships are used to refer to linkages between companies to jointly pursue a common goal. Joint ventures can also be covered under these terminology.

Characteristics of SA
The participants remain independent subsequent to the formation of the alliance. The participants share the benefits of alliance as well as control over the performance of assigned tasks. The participants make ongoing contributions in technology, products, and other key strategic areas.

Difference from a JV
Traditional JVs are alliances focusing on a single national market or a specific problem. A true GSP has the following attributes1. Two or more companies develop a joint longterm strategy aimed at achieving world leadership by pursuing cost leadership, differentiation or a combination of the two and by creating a variety, needs, or accessbased combination.

2. The relationship is reciprocal in nature. 3. The partners vision and efforts are truly global, extending beyond home countries and home regions to the rest of the world. 4. If the relationship is organized along horizontal lines, continual transfer of resources laterally between partners is required.(eg. Jet-Kingfisher Alliance) 5. If the relationship is along vertical lines, both parties must understand their core strengths and be able to defend their competitive position and must work together to create a unique value for the customers.

6. When competing in markets excluded from the partnership ,the participants retain their national ideological identities.

Success Factors for a GSP

1. Mission-Objectivity of Alliance. 2. Strategy-Clear action plan help in avoiding conflicts. 3. Governance-Discussion/Consensus must be norms along with equality of partners. 4. Culture-Personal bonding is a must. 5. Organization-Inter organizational setup needs to be set up among the various partners. 6. Management-Unitary lines of authority needs to be established.

Beyond Strategic Alliance

The Relationship Enterprise is said to be the next stage of evolution of the strategic alliance. Groupings of firms in different industries and countries ,held together by common goals that encourage them to act almost as a single firm. Another perspective on the future of cooperative strategies envisions the emergence of the Virtual Corporations.

 Virtual Corporations will be a single entity with vast capabilities and will be the result of numerous collaborations assembled when needed. Virtual Corporations could combine the twin competencies of cost-effectiveness and responsiveness.

Advantages of GSP
High product development costs. Technology requirements. Access to new markets(national and international).

Disadvantages of GSP
Sacrificing of power and control. Strengthening of competitor.

Competitive Analysis and Strategy

The essence of global marketing strategy is in successfully relating the strengths of an organization to its environment. Today almost every industry is under global competition. This results in an increased pressure on the companies to master techniques for conducting industry analysis, competitor analysis, understanding competitive advantage and maintaining it.

Forces Influencing Competition in an Industry

Threat of New Entrants Threat of Substitute Products Bargaining Power of Suppliers Bargaining Power of Buyers Rivalry Among Competitors