Idea Transcript
2014-03-18
International Marketing Management
Part 2
Motives of internationalization
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Deciding Whether to Go Abroad - Major Motives for Being Global… Proactive motives
Reactive motives
• strenghts
• weaknesses
•opportunities
• threats
Deciding Whether to Go Abroad - Major Motives for Being Global… Proactive motives
Reactive motives
• Profit and growth goals (potential)
• Competitive pressure
• Goverment’s Stimuli
• Domestic market limited in size
• Technology competence
• Domestic market saturated
• Unique product
• Overproduction (excess capacity)
• Information on foreign opportunities
• Unsolicited foreign orders
• Economies of scale
• Seasonability in demand
• Tax benefits
• Proximity to international markets
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Market Expansion Strategies •
Incremental (experimental) entry – first a single key market to get some experience and then entering other markets one after one; ....called waterfall
approach •
Simultanous entry – a numer of market at the same time to laverage core competences and to get a strong global position in a short time; ... called shower
approach
The form of the firm’s response to global market opportunities depends greatly on the management’s assumptions or beliefs, both conscious and unconscious, about the nature of doing business around the world! This worldview of a firm’s business activities can be described as the EPRG framework.
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EPRG Framework Ethnocentric: home country is superior and the needs of the home country are most relevant Polycentric (multidomestic): each country is unique and therefore each country should be targeted in a different way Regiocentric: the world consists of regions, e.g. Europe, Asia..., the firm tries to standarize its marketing programme within regions, but not across them Geocentric (global): the world is getting smaller and smaller. The firm may offer global product concepts but with local adaptation (‘think global, act local’)
Ethnocentric Orientation • Domestic market is the most important • Foreign market as additional market • Product life cycle & cost reduction • Strategy: let’s do the same, the same way but somewhere else • Standardized marketing decisions & operations
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Polycentric orientation • International market as important as domestic market • Very intensive marketing operations • Market consists of many separated foreign markets
Regiocentric orientation • International market as important as domestic market • Very intensive marketing operations based on similiarities among groups of markets • Standardized strategies at the regional level plus a lot of independence in regions
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Geocentric orientation • One international (global!!!) market • There are no important differences….. • Strategy, enter mode and operations are standardized all over the World • Adv: costs, quality, customer preferences creation, creation of competitive advantage
Dual – glocal orientation • Marketing is mostly standardized, but – when it’s needed- adapted to local environment. • Think global – act local??????????
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Typology of International Marketing Strategies Industry Globalisation Level
Branded
Low
High
hidden master
born global
cooperation Type of Anonimous Sales
anonimous manufacturer
Robbery hit and run
Hidden master strategy • involves entering foreign markets sequentially, after carefully selecting them, •
the sale of products is carried out under its own brand, in order to discount the competitive advantage of domestic market
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Hidden master - basic assumptions • Building the company's position in the domestic market • Multiphase assessment of the attractiveness of foreign markets • Limited quantity of selected foreign markets to service • The entry strategy - direct export… • A careful choice of partner • Building a strong brand in a foreign market • The specific segmentation and target market selection • Adaptation to the specific foreign market
Hidden master - advantages • •
• •
An ambitious strategy - striving to gain market leadership in the market supported Make full use of market opportunities that result from the competitive advantage of small and medium-sized enterprises and the nature of the market served Full control over the sale of products on foreign markets Gradually increasing involvement in foreign markets
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Hidden master - disadvantages • Time-consuming (this follows from the sequential entering foreign markets) • Cost prohibitive (it is connected with the building of a strong brand, not only in domestic market but also overseas) • Risky (focusing on niche market)
Cooperation strategy
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Cooperation strategy The strategy of "cooperation" as „hidden master" sequentially enter foreign markets, after their careful choosing, but the entrance is implemented jointly by the companies offering the same product, it is usually performed under regional brand (or shared)
Cooperation - basic assumptions • Horizontal integration of producers (functional) • Building a strong brand name (common or regional) in the domestic market and later on foreign • Other decisions related to the presence in foreign markets take joint company engaged in foreign trade
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Cooperation strategy - advantages • Building a position on foreign markets on the basis of shared / regional brand • Cheaper and less risky way to enter foreign markets than the strategy of „hidden master" • Avoiding cross-market competition
Cooperation strategy - disadvantges • Real control over marketing activities in foreign markets may get a common business • Reduction of operational flexibility shareholders • This solution works in the markets of homogeneous products
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„Anonymous manufacturer” Strategy "anonymous manufacturer” is a passive entry into foreign markets by establishing cooperation with foreign company for which the product is produced, which is then sold under the brand name of business partner
"anonymous manufacturer” – basic assumptions 1. Entrance to the foreign market is through export processing or indirect 2. A careful choice of partners (foreign or domestic) 3. The choice of foreign markets is secondary 4. Use of the production efficiency and lower cost 5. Almost all marketing activities are planned and implemented by partner 6. The company's marketing activity boils down to look for a partner, negotiating terms and sign a cooperation agreement
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"anonymous manufacturer” - advantages • Cheaper and easier way to enter foreign markets than previous strategies • Adjusting the offer to the specificities of the country • It can be the starting point for a more active stance on foreign markets • Low degree of risk in the short term
"anonymous manufacturer” - disadvantages • The passive strategy, the company misses the experience of conducting marketing activities in foreign markets • Sales faceless - no relationship with the final customer • The risk associated with the continuation of cooperation in the future (cost, quality) • Low profit per unit - a weak bargaining position
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Hit and run strategy Hit and run strategy it is often a one-time export transaction in the country, which is associated with a product of low quality parameters and offered the average market prices
Hit and run – basic assumptions • Select the country - the company has so far not sell there product • A one-time deal with high profitability • The use of brand imitation • Offering a product of low quality parameters (often unaccepted on the domestic market) • Determining the level of average prices on the market
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Hit and run - advantages • Highly profitable strategy in foreign markets in the short term • Getting rid of the stock!
Hit and run - disadvantages • Image of the brand / supplier / country of origin at a low level quality • It is not possible to build a long-term position on foreign markets • It is unethical strategy
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Born global Strategy „born global" is used by companies operating in industries with a high degree of globalization and offering innovative products that almost from the very beginning are focused on customer service (segments) in terms of global, without isolating domestic markets
Born global – basic assumptions 1. 2. 3. 4. 5. 6.
Innovative product related to the market with a high degree of globalization You creating international networks of suppliers, distributors and buyers Building a strong brand in a foreign market Joint segmentation and target market selection The high degree of standardization activities instrumental in a geographical The wide use of the Internet for marketing
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Born global - advantages • An ambitious strategy - striving to gain market leadership in the serviced market • Full control over the sale of products on foreign markets • Networking marketing
Born global - disadvantages • Cost prohibitive (this is related to the building of a strong brand in the global market) • Profitability realizable in the long term • Risky (high degree of dependence on partners in the network marketing) • The company must have a product offering a high degree of innovation
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Market Expansion Strategies •
Incremental (experimental) entry – first a single key market to get some experience and then entering other markets one after one; ....called waterfall
approach •
Simultanous entry – a numer of market at the same time to laverage core competences and to get a strong global position in a short time; ... called shower
approach
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