Download Eleven

Global Marketing Management:
Planning and Organization
Modular:
Afjal Hossain
Assistant Professor, Department of Marketing
PSTU
McGraw-Hill/Irwin International Marketing, 13/e
Global Marketing Management
• 1970s – “standardization versus adaptation”
• 1980s – “global integration versus local
responsiveness”
• 1990s – “global integration versus local
responsiveness”
• The trend back toward localization is caused by the new
efficiencies of customization made possible by the
Internet and increasingly flexible manufacturing
processes.
• From the marketing perspective customization is always
best.
• As global markets continue to homogenize and diversify
simultaneously, the best companies will avoid the trap
of focusing on country as the primary segmentation
variable.
The Nestle Way: Evolution Not
Revolution
• Nestle is the world’s biggest marketer of infant formula,
powdered milk, instant coffee, chocolate, soups, and
mineral water.
• Nestle strategy can be summarized in four points:
– Think and plan long term
– Decentralize
– Stick to what you know
– Adapt to local tastes
• Long-term strategy works for Nestle because the
company relies on local ingredients and markets
products that consumers can afford.
Benefits of Global Marketing
• When large market segments can be identified,
economies of scale in production and marketing
can be important competitive advantages for
global companies.
• Transfer of experience and know-how across
countries through improved coordination and
integration of marketing activities.
• Marketing globally also ensures that marketers
have access to the toughest customers.
• Diversity of markets served carries with it
additional financial benefits.
• Firms that market globally are able to take
advantage of changing financial circumstances.
Planning for Global Markets
• Planning is the job of making things happen that
might not otherwise occur.
• Planning allows for rapid growth of the
international function, changing markets,
increasing competition, and the turbulent
challenges of different national markets.
• Planning relates to the formulation of goals and
methods of accomplishing them, so it is both a
process and philosophy.
– Corporate planning
– Strategic planning
– Tactical planning
• Successful planning is evaluating company
objectives, including management’s
commitment and philosophical orientation to
international business.
Planning for Global Markets (cont’d)
• Company objectives and resources
– Each new market can require a complete evaluation,
including existing commitments, relative to the
parent company’s objectives and resources.
– Defining objectives clarifies the orientation of the
domestic and international divisions, permitting
consistent policies.
• International commitment
– Commitment in terms of:
• Dollars to be invested
• Personnel for managing the international organization
• Determination to stay in the market long enough to
realize a return in investments.
– The degree of commitment to an international
marketing cause reflects the extend to a company’s
involvement
The Planning Process
Phase 1: Preliminary Analysis and Screening – Matching
Company
and Country Needs.
Phase 2: Adapting the Marketing Mix to Target Markets.
Phase 3: Developing the Marketing Plan
Phase 4: Implementation and Control
International Planning Process
• Insert Exhibit 11.1
Alternative Market-Entry Strategies
•
•
•
An entry strategy into the international market should reflect on analysis of
market characteristics such as:
– Potential sales
– Strategic importance
– Strengths of local resources
– Cultural differences
– Country restrictions
Companies most often begin with modest export involvement.
A company has four different modes of foreign market entry from which to
select:
– Exporting
– Contractual agreements
– Strategic alliances
– Direct foreign investments
Alternative Market-Entry Strategies
• Insert Exhibit 11.2
Exporting
• Exporting accounts for some 10% of global activity.
• Direct exporting - the company sells to a customer in
another country.
• Indirect exporting – the company sells to a buyer
(importer or distribution) in the home country, who in
turn exports the product.
• The Internet
– Initially, Internet marketing focused on domestic sales,
however, a surprisingly large number of companies
started receiving orders from customers in other
countries, resulting in the concept of international
Internet marketing (IIM).
• Direct sales
– Particularly for high technology and big ticket industrial
products.
Contractual Agreement
• Contractual agreements are long-term,
non-equity association between a company
and another in a foreign market.
• Licensing
– A means of establishing a foothold in foreign
markets without large capital outlays.
– A favorite strategy for small and medium-sized
companies.
– Legitimate means of capitalizing on intellectual
property in a foreign market.
Contractual Agreement (continued)
• Franchising
– Franchiser provides a standard package of products,
systems, and management services, and the
franchise provides market knowledge, capital, and
personal involvement in management.
– Despite temporary setbacks, franchising is still
expected to be the fastest-growing market-entry
strategy.
– Two types of franchise agreements:
• Master franchise – gives the franchisee the
rights to a specific area with the authority to sell
or establish subfranchises.
• Licensing
Strategic International Alliances
• A strategic international alliance (SIA) is a business
relationship established by two or more companies to
cooperate out of mutual need and to share risk in achieving a
common objective
• SIAs are sought as a way to shore up weaknesses and
increase competitive strengths.
• Firms enter SIAs for several reasons:
– Opportunities for rapid expansion into new markets
– Access to new technology
– More efficient production and innovation
– Reduced marketing costs
– Strategic competitive moves
– Access to additional sources of products and capital
• Many companies also are entering SIAs to be in strategic
position to be competitive and to benefit from the expected
growth in the single European market.
Strategic International Alliances (continued)
• International Joint Ventures
– A joint venture is a partnership of two or more
participating companies that have joined forces
to create a separate legal entity.
– Four Characteristics define joint ventures:
• JVs are established, separate, legal entities
• The acknowledged intent by the partners to
share in the management of the JV
• There are partnerships between legally
incorporated entities such as companies,
chartered organizations, or governments, and
not between individuals
• Equity positions are held by each of the partners
Strategic International Alliances (continued)
• Consortia
– Consortia are similar to joint ventures and
could be classified as such except for two
unique characteristics:
• They typically involve a large number of
participants
• They frequently operate in a country or market
in which none of the participants is currently
active.
– Consortia are developed to pool financial and
managerial resources and to lessen risks.
Direct Foreign Investment
• Factors that have been found to influence
the structure and performance of direct
investments:
– Timing
– The growing complexity and contingencies of
contracts
– Transaction cost structures
– Technology transfer
– Degree of product differentiation
– The previous experiences and cultural diversity
of acquired firms
– Advertising and reputation barriers
Organizing for Global Competition
• Because organizations need to reflect a wide
range of company-specific characteristics,
devising a standard organizational structure is
difficult.
• Companies are usually structured around one of
three alternatives:
– Global product divisions responsible for product
sales throughout the world
– Geographical divisions responsible for all products
and functions within a given geographical area
– A matrix organization consisting of either of these
arrangements with centralized sales and marketing
run by a centralized functional staff, or a
combination of area operations and global product
management
Organizing for Global Competition (cont’d)
• Locus of decision
– Considerations of where decisions will be made, by
whom, and by which method constitute a major
element of organizational strategy.
• Centralized versus decentralized organizations
– An infinite number of organizational patterns fro the
headquarters activities of multinational firms exist,
but most fit into one of three categories:
• Centralized
• Regionalized
• Decentralized
• No single traditional organizational plan is
adequate for today’s global enterprise seeking to
combine the economies of scale of a global
company with the flexibility and marketing
knowledge of a local company.