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2017-02-17 The Lecturer International Marketing Katarzyna Dziewanowska, PhD [email protected] Katarzyna Dziewanowska Department of Marketing Faculty of Management University of Warsaw Course Book Hollensen S., Essentials of Global Marketing, Pearson, 2nd ed., Harlow 2012. Additional (in Polish) E. Duliniec, Marketing międzynarodowy, PWE, Warszawa 2009 Office hours: Mondays, B404 (see announcements at the website) Slides from the class and the syllabus: website folder: International Marketing password: IM2016 I do not send slides and passwords to individuals via email Group project: Our Moral Contract: 1 Assessment • Final written test - 60% of the final grade – May 30th, 2016 • Group project – 30% of the final grade – Presentations: May 23rd, 2016 • Ongoing assessment (class participation, case studies, HWs) – 10% of final grade • You are allowed to miss 2 classes – Missed more? Lower grade, need to visit me during office hours – Missed 50% or more? No grade. • • • • • Goal: introduction of a product into a foreign market Objective: applying knowledge into practice 6 people There will be peer review – you will grade 2 projects Assessment (120 points – 30%): – Presentation 5% (20) – Written report: • Merit/ correctness 10% (40) • Completeness 5% (20) • Creativity 5% (20) • Formal 5% (20) • We come on time – Late x 2 = absence • No food in class • Be respectful to others • Do not use phones or computers for unrelated stuff – if I bore you, just drop the class • Let’s be active and enthusiastic ☺ 1 2017-02-17 Agenda 1. 2. 3. 4. 5. 6. 7. a. b. c. Poland: Economic Data Introduction SME: strategies in foreign markets Analysis of international environment Product selection Foreign market assessment and selection Entry strategy in foreign markets Decisions regarding: • GDP per capita: 68% of the EU average, • GDP value USD: 474.8 bn in 2015 (current prices, GUS), • Economic growth: 3.6% GDP growth in 2015 • Inflation rate in 2015: -0.9%, • Exports USD: 190.7 bn in 2015, • Public debt/GDP: 51.3% (at the end of 2015, GUS). • Area: 312,679 km2 • Population: 38.5 mn (as of 31.12.2012) Polish perspective INTRODUCTION Standardization and adaptation STP Marketing mix 8. Project presentations 9. Final test 7 8 www.paiz.gov.pl Why Invest in Poland? Poland has stable economy and well-grounded macroeconomic position. Unique conditions for running a business are supported by repeatedly confirmed resilience to economic crises. Polish investment attractiveness derives from a number of factors: • Ambitious and hard-working people. • Diversified economy. • Macroeconomic stability. • Transformation. • Vast internal market and free access to the European market. • Price competitiveness. SME - definition Barriers to Polish Dominance in Foreign Markets 3 criteria: employment, turnover, total balance sheet • • • • • Image Key products Trade traditions Mentality of owners and managers Supporting institutions micro small medium <10 <50 <250 ≤ 2mn€ ≤ 10 mn € ≤ 50 mn € ≤ 2 mn € ≤ 10 mn € ≤ 43 mn € Not a SME if other stakeholders (non SME) have: 11 ◦ More than 25% of shares ◦ Right to over 25% of profit share ◦ More than 25% votes of shareholders meeting≤ Źródło: Ustawa o swobodzie działalności gospodarczej z 2 lipca 2004 r. (Dz. U.12z 2004 r., Nr 173, poz. 1807) 2 2017-02-17 Why SME? Internationalization Characteristics of SME • What are they? What makes them different from large companies? • Resources and knowledge • Strategy and planning • Organizational structure • Risk-taking • Flexibility • Economy of scale • Sources of market information High importance of SMEs: • They constitute 99% operators in the market (95% in OECD) • They create 68,4% of GDP • They employ 64,3% of people (60-70% in OECD) • They generate 45% of export value (25-35% in OECD) 13 • All decisions leading to international activity of companies or countries • Macro level – country • Mezzo level - industry • Micro level - company 14 Decision Dimensions 15 Organizational dimension Company Spatial Dimension Country A I-2 • economic and financial – Necessity of allocation of resources – Income from foreign markets Country C Company – Concentric form – Selective form – Island form – Waterfall/cascade – Sprinkler – Mixed/combined Country B I-1 • Spatial dimension • Organizational dimension I-3 Country X Country A Country B Country C Country D Country X S-3 S-2 C-1 DM Company Country A S-1 Country B C-2 Country C Country D Country X 3 2017-02-17 Dimesions of Internationalization Internationalization Models Uppsala Model Using foreign intermediaries Foreign activity internationalization high active approach So-so very similar Similarities of foreign markets ◦ ◦ ◦ ◦ ◦ Intermediaries responsible For foreign operations Domestic activity one Internationalization process is incremental and takes place via a learning process: • Entering foreign markets of bigger cultural distance and higher uncertainty • Increasing involvement ◦ Explain reasons for FDI on the basis of factors such as: capital, labor and its effectiveness, natural resources, etc. Microeconomics models: low Passive reaction very different Macroeconomics models: Own foreign activities medium Involved in Export/import Involved in production and other functions Eclectic models: All functions located abroad few Monopolistic advantage Oligopolistic reaction Currency zones Location Theory of product life cycle Type of involvement many ◦ Uppsala model ◦ J.H. Dunning’s model ◦ Network model 19 20 21 Number of foreign markets Uppsala Model FDI Occasional export Independent intermediaries (eksport) Foreign sales branches Foreign sales and production branches Market A Increasing market involvement Market C … Market N Increasing geographic divesification Market B 22 The Criticism… Network Approach • The model does not allow for skipping of some phases • Doesn’t work for highly internationalized and service industries • Does not work for companies with high resources • Nowadays, internationalization processes become faster due to diffusion of technology, education, etc. Internationalization is a part of development of long-term relations and interactions between suppliers and their customers 23 Market internationalization Company’s internationalization low high low Early beginners Late beginners high Lone internationals International among others 24 4 2017-02-17 Reasons for Internationalization • Pro-Active • • • • • Re-Active High cultural diversification High foreign debt Unstable political situation Unstable government Problems with international exchange (currency exchange, stability of currency) Governmental limits for entering foreign companies Customs and barriers in international trade Corruption Technological piracy High cost of adaptation of marketing activities Difficulty in obtaining reliable market information 25 How to Assess the Degree of Industry Internationalization Market factors: -Customers’ needs -Global customers -Leading countries Cost factors: -Global benefits of scale -Cost differences among countries -High costs of product development Benefits of Internationalization Risk – the Key Difference • • • • • • • • • 26 Different Faces of Marketing • • • • • • MARKETING The core, philosophy, principles Competition factors: -Global competitors -Competitors from different countries -Co-dependence among countries -Technical standards -Marketing regulations -Marketing infrastructure 27 International Marketing Infrastructural factors: Industry globalization Cost-related (production, marketing) Market-related (conditions, customers) Supply-related (sources of supply, prices, labour cost) Politics-related (support and enouragement) methods, techniques, tools Domestic market Export marketing Foreign marketing (domestic marketing) Euromarketing International marketing (Multi-) Intercultural marketing Global marketing Foreign market 29 30 5