Global Sales Strategies by fiv10297

VIEWS: 5 PAGES: 44

More Info
									“GLOBAL MARKETING STRATEGIES”




             M. Fatih Akkaya
      Undersecretariat of Foreign Trade
                   Expert
Index:

   1) Executive Summary

   2) Global Marketing Strategies

   3) Global Market Entry Strategies

   4) Appendices

   5) References




                                       2
1) Executive Summary:

Usually, selling focuses on the needs of the seller, marketing on the needs of the buyer

(customer). The purpose of business is to get and keep a customer. Or, to use Peter

Drucker`s more refined construction to create and keep a customer. (through product

differentiation and price competition)

International marketing involves the marketing of goods and services outside the

organization`s home country. Multinational marketing is a complex form of international

marketing that engages an organization in marketing operations in many countries.

Global marketing refers to marketing activities coordinated and integrated across multiple

markets.

A firm`s overseas involvement may fall into one of several categories:

   1- Domestic: Operate exclusively within a single country.

   2- Regional exporter: Operate within a geographically defined region that crosses

       national boundaries. Markets served are economically and culturally homogenous.

       If activity occurs outside the home region, it is opportunistic.

   3- Exporter: Run operations from a central office in the home region, exporting

       finished goods to a variety of countries; some marketing, sales and distribution

       outside the home region.

   4- International: Regional operations are somewhat autonomous, but key decisions

       are made and coordinated from the central office in the home region.

       Manufacturing and assembly, marketing and sales are decentralized beyond the

       home region. Both finished goods and intermediate products are exported outside

       the home region.



                                             3
   5- International to global: Run independent and mainly self-sufficient subsidiaries

       in a range of countries. While some key functions (R&D, sourcing, financing) are

       decentralized, the home region is still the primary base for many functions.

   6- Global: Highly decentralized organization operating across a broad range of

       countries. No geographic area (including the home region) is assumed a priori to

       be the primary base for any functional area. Each function including R&D,

       sourcing, manufacturing, marketing and sales is performed in the location(s)

       around the world most suitable for that function.

Technology and globalization shape the world. The first helps determine human

preferences; the second, economic realities. Standardized consumer products, low p rice

and technology are key points for successful globalization.

The globalization of markets is at hand. With that, the multinational commercial world

nears its end, and so does the multinational corporation. The world`s needs and desires

have been irrevocably homogenized (market needs). This makes the multinational

corporation obsolete and the global corporation absolute. Nobody is safe from global

reach and the irresistable economies of scale (reduction of costs and prices) and scope.

The multinational and global corporation are not the same thing. The multinational

corporation operates in a number of countries and adjusts its products and practices in

each at high relative costs. The global corporation operates with resolute constancy at low

relative cost (price) as if the entire world (or major regions of it) were a single entity; it

sells markets the same high-quality things similarly everywhere. But, many global firms

produce the same products the same way for a global market but tailor their selling

approaches to local variations in the global market. (Standardization vs Localization)




                                              4
The modern global corporation contrasts powerfully with the aging multinational

corporation. Instead of adapting to superficial and even entrenched differences within and

between nations, it will seek sensibly to force suitably (more or less) standardized

products and practices on the entire globe. (think globally, act locally)

2) Global Marketing Strategies:

Although some would stem the foreign invasion through protective legislation,

protectionism in the long run only raises living costs and protects inefficient domestic

firms (national controls). The right answer is that companies must learn how to enter

foreign markets and increase their global competitiveness. Firms that do venture abroad

find the international marketplace far different from the domestic one. Market sizes,

buyer behavior and marketing practices all vary, meaning that international marketers

must carefully evaluate all market segments in which they expect to compete.

Whether to compete globally is a strategic decision (strategic intent) that will

fundamentally affect the firm, including its operations and its management. For many

companies, the decision to globalize remains an important and difficult one (global

strategy and action). Typically, there are many issues behind a company`s decision to

begin to compete in foreign markets. For some firms, going abroad is the result of a

deliberate policy decision (exploiting market potential and growth); for others, it is a

reaction to a specific business opportunity (global financial turmoil, etc.) or a competitive

challenge (pressuring competitors). But, a decision of this magnitude is always a strategic

proactive decision rather than simply a reaction (learning how to business abroad).

Reasons for global expansion are mentioned below:




                                              5
           a) Opportunistic global market development (diversifying markets)

           b) Following customers abroad (customer satisfaction)

           c) Pursuing geographic diversification (climate, topography, space, etc.)

           d) Exploiting different economic growth rates (gaining scale and scope)

           e) Exploiting product life cycle differences (technology)

           f) Pursuing potential abroad

           g) Globalizing for defensive reasons

           h) Pursuing a global logic or imperative (new markets and profits)

Moreover, there can be several reasons to be mentioned including comparative

advantage, economic trends, demographic conditions, competition at home, the stage in

the product life cycle, tax structures and peace. To succeed in global marketing

companies need to look carefully at their geographic expansion. To some extent, a firm

makes a conscious decision about its extent of globalization by choosing a posture that

may range from entirely domestic without any international involvement (domestic

focus) to a global reach where the company devotes its entire marketing strategy to global

competition. In the development of an international marketing strategy, the firm may

decide to be domestic-only, home-country, host-country or regional/global-oriented.

Each level of globalization will profoundly change the way a company competes and will

require different strategies with respect to marketing programs, planning, organization

and control of the international marketing effort. An industry in which firm competes is

also important in applying different strategies. For example, when a firm which competes

in the pharmaeutical industry which is heavily globalized, it has to set its own strategies

to deal with global competitors. (constant innovation)




                                            6
Tracking the development of the large global corporations today reveals a recurring,

sequential pattern of expansion. The first step is to understand the international marketing

environment, particularly the international trade system. Second, the company must

consider what proportion of foreign to total sales to seek, whether to do business in a few

or many countries and what types of countries to enter. The third step is to decide on

which particular markets to enter and this calls for evaluating the probable rate of re turn

on investment against the level of risk (market differences). Then, the company has to

decide how to enter each attractive market. Many companies start as indirect or direct

export exporters and then move to licensing, joint- ventures and finally direct investment;

this company evolution has been called the internationalization process. Companies must

next decide on the extent to which their products, promotion, price and distribution

should be adapted to individual foreign markets. Finally, the company must develop an

effective organization for pursuing international marketing. Most firms start with an

export department and graduate to an international division. A few become global

companies which means that top management plans and organizes on a globa l basis

(organization history).

Typically, these companies began their business development phase by entrenching

themselves first in their domestic markets. Often, international development did not occur

until maturity was reached domestically. After that phase, these firms began to turn into

companies with some international business, usually on an export basis. But, this process

may vary dramatically with the size of the domestic market. For example, when we

contrast the Netherlands market for Philips vs the US market for GE, we see that

smallness of Netherlands`s market resulted in rapid globalization of Philips` activities




                                             7
when compared with GE`s activities in US. As the international side of their sales grew,

the companies increasingly distributed their assets into many markets and achieved what

was once termed the status of a multinational corporation (MNC). Pursuing multi-

domestic strategies on a market-by- market basis, companies began to enlarge and build

considerable local presence. Regions are treated as single markets and products are

standardized by region or globally; promotion projects a uniform image. Although this

orientation improves coordination and control, it often discounts national differences. The

French automobile industry offers a good illustration of the evolution of an international

marketing strategy. In the 1980s, according to an industry analyst for Eurofinance:

“For years, the French industry depended on the domestic market. Then in the 1970s, it

developed a Europewide market. Now it finds it must crack the world market if it expects

to survive. And it is getting a late start.”

France`s Renault was moving quickly into the world market. It purchased 10 percent of

Sweden`s Volvo and planned to design a new car in conjunction with Volvo. But, the

Volvo deal fell apart which is one of the reasons that they went to Nissan. Only during

their latest phase have these firms begun to transform themselves into global marketing

behemoths whose marketing operations are closely coordinated across the world market

rather than developed and executed locally. This traditional sequencing of the growth

from domestic to international, to multi-domestic or multinational to global seems to be

followed by most firms and also by many newly formed companies. However, some

newer firms are jumping right into the latest or global category and not necessarily going

through the various stages of development (management vision).




                                               8
Once a company commits to extending its business internationally management is

confronted with the task of setting a geographic or regional emphasis. A company may

decide to emphasize developed nations such as Japan or those of Europe or North

America. Alternatively, some companies may prefer to pursue primarily developing

countries in Latin America, Africa or Asia. Management must make a strategic decision

to direct business development in such a way that the company`s overall objectives are

congruent with the particular geographic mix of its activities. Other factors in this

decision of foreign market selection include in addition to macro-environmental issues

(economic, socio-cultural and political- legal factors), micro-environmental issues such as

market attractiveness and company capability profile (skills, resources, product

adaptation and competitive advantage).

Developed economies account for a disproportionately large share of world gross

national product (GNP) and tend to create many new companies. In particular, firms with

technology- intensive products have concentrated their activities in the developed world.

Although competition from both other international firms and local companies is usually

more intense in those markets, doing business in developed countries is generally

preferred over doing business in developing nations. Because the business environment is

more predictable and the investment climate is more favorable.

Emerging markets differ substantially from developed economies by geographic region

and by the level of economic development. Markets in Latin America, Africa, the Middle

East and Asia are also characterized by a higher degree of risk than markets in developed

countries. Because of the less stable economic climates (income, employment, prices,

development, etc.) in those areas, a company`s operation can be expected to be subject to




                                            9
greater uncertainty and fluctuation. The issues are infrastructure such as transportation,

technology, telecommunications, stable banking, convertibility of currency, protection of

Intellectual Property Rights, enforceability of contracts, and transparency in the legal

system (government agencies&systems, laws and ordinances, etc.). Moreover, huge

foreign indebtedness, unstable governments, foreign exchange problems, foreign

government entry requirements, tariffs and other trade barrie rs, corruption, bureaucracy,

technological pirating and high cost of product and communication adaptation can be

issues in those countries. Furthermore, the frequently changing political situations in

developing countries (war, nationalism, etc.) often affect operating results negatively. As

a result, some markets that may have experienced high growth for some years may

suddenly experience drastic reductions in growth. In many situations, however, the higher

risks are compensated for by higher returns, largely because competition is often less

intense in those markets. Consequently, companies need to balance the opportunity for

future growth in the developing nations with the existence of higher risk.

The economic liberalization of the countries in Eastern Europe opened a large new

market for many international firms. The market typically represents about 15 percent of

the worldwide demand in a given industry, about two-thirds of that accounted for by

Russia and other countries of the former Soviet Union.

Although many companies consider this market as long-term potential with little profit

opportunity in the near term, a number of firms have moved to take advantage of

opportunities in areas where they once were prohibited from doing business. Many

countries are changing from a centrally planned economy to a market-oriented one. East

Germany has made the fastest transformation because its dominant western half was




                                            10
already there. Eastern European nations like Hungary and Poland have also been moving

quickly with market reforms. Many of the reforms have increased foreign trade and

investment. For example, in Poland, foreigners are now allowed to invest in all areas of

industry, including agriculture, manufacturing and trade. Poland even gives companies

that invest in certain sectors some tax advantages.

At some point, the development of any global marketing strategy will come down to

selecting individual countries in which a company intends to compete. There are more

than two hundred countries and territories from which companies have to select, but very

few firms end up competing in all of these markets. The decision on where to compete,

the country selection decision is one of the components of developing a global marketing

strategy.

Why is country selection a strategic concern for global marketing management? Adding

another country to a company`s portfolio always requires additional investment in

management time and effort and in capital. Although opportunities for additional profits

are usually the driving force, each additional country also represents both a new business

opportunity and risk. It takes time to build up business in a country where the firm has

not previously been represented and profits may not show until much later on.

Consequently, companies need to go through a careful analysis before they decide to

move ahead. They can analyze the investment climate of the country and determine

market attractiveness of it.

In the context of selecting markets for special emphasis, the lead market concept ca n help

in identifying those countries. Lead market is the market where a company should place




                                            11
extra emphasis. It is essential for globally competing firms to monitor lead markets in

their industries or better yet to build up some relevant market presence in those markets.

As global marketers eye the array of countries available for selection, they soon become

aware that not all countries are of equal importance on the path to global leadership.

Markets that are defined as crucial to global market leadership, markets that can

determine the global winners among all competitors, markets that companies can ill

afford to avoid or neglect-such markets are “must win” markets. Contrary to other

markets, “must win” markets can not be avoided if global market leaders hip is at stake.

Firms need to understand their competitors because corporate success results from

providing more value to customers than the competition. Industry structure is the

framework within which companies compete. Five forces determine the attractiveness of

an industry: the threat of new entrants, the bargaining power of suppliers, the bargaining

power of buyers, the presence of substitute products and the intensity of the rivalry

between firms in the industry. Firms need to manage these factors so that industry

structure is favorable.

Generic strategies are general classifications of prototype strategies that help us

understand different approaches to globalization. The concept has been widely used by

writers on business and corporate strategies including Michael E. Porter.

Generic strategies such as differentiation, cost leadership and the like are archetypes that

describe fundamentally different ways to compete. Creating and sustaining a competitive

advantage can be achieved by offering superior value through a differential advantage or

managing for cost leadership. Firms can gain a competitive advantage through

differentiation of their product offering or marketing mix which provide superior




                                            12
customer value or by managing for lowest delivered cost. These two means of

competitive advantage when combined with the competitive scope of activities (broad vs

narrow) result in four generic strategies: differentiation, cost leadership, differentiation

focus and cost focus. The differentiation and cost leadership strategies seek competitive

advantage in a broad range of market or industry segments whereas differentiation focus

and cost focus strategies are confined to a narrow segment. When we consider the idea of

sustainability of competitive advantage here, many of these advantages are only

temporary and can easily be copied.

The sources of competitive advantage are the skills and resources of the company.

Analysing these factors can lead to the definition of the company`s core competences.

These are the skills and resources at which the company excels and can be used to

develop new products and markets.

To many readers, the term “global marketing strategy” probably suggests a company

represented everywhere and pursuing more or less the same marketing strategy.

However, global marketing strategies are not to be equated with global standardization,

although they may be the same in some situations. A global marketing strategy represents

the application of a common set of strategic marketing principles across most world

markets. It may include but does not require similarity in products or in marketing

processes. A company that pursues a global marketing strategy looks at the world market

as a whole rather than at markets on a country-by-country basis which is more typical for

multinational firms. Globalization deals with the integration of the many country

strategies and the subordination of these country strategies to one global framework. As a

result, it is conceivable that one company may have a globalized approach to its




                                            13
marketing strategy but leave the details for many parts of the marketing plan to local

subsidiaries.

Few companies will want to globalize all of their marketing operations. The difficulty

then is to determine which marketing operations eleme nts will gain from globalization.

Such a modular approach to globalization is likely to yield greater return than a total

globalization of a company`s marketing strategy.

To a large extent, international firms operating as multi-domestic firms have organized

their businesses around countries or geographic regions. Although some key strategic

decisions with respect to products and technology are made at the central or head office,

the initiative of implementing marketing strategies is left largely to local-country

subsidiaries. As a result, profit and loss responsibility tends to reside in each individual

country. At the extreme, this leads to an organization that runs many different businesses

in a number countries-therefore the term multi-domestic. Each subsidiary represents a

separate business that must be run profitably. Multinational corporations tend to be

represented in a large number of countries and the world`s principal trading regions.

Many of today`s large internationally active firms may be classified as pursuing multi-

domestic strategies. Companies might globalize production or "back office" operations

while maintain multiple local brands. Economic conditions, changes in consumer

attitudes and behavior and the rise of generic brands have all contributed to a decline in

brand loyalty. More consumers have been selecting products from among manufacturers`

brands, distributors` brands and generic products. Often a coupon, price special or a

desire for variety will influence the purchase decision.




                                             14
Regional marketing strategies focusing on Europe, Asia or Latin America represent a

halfway point between multi-domestic and truly global strategy types. Conceptually, they

are not global because the coordination takes place across one single region only, w ith

pan-European strategies standing out as the first real regional marketing strategies created

because of the run up to the European Union integration.

The marketing research surveys study and analyze various factors within foreign markets

and their importance to the decision about which foreign markets to enter. These factors

include: economic- financial factors, political- legal factors, cultural factors, demographic

factors and trade agreements. (economic integration) (See appendix 1)

Integrated Global Business Strategies:            Looking at global business strategies,

companies have several choices to make: first, the global focus strategy and second, the

global business unit.

Formulating Global Focus Strategies: Geographic extension is one of two key

dimensions in the strategy of an international company. The second dimension is

concerned with the range of a firm`s product and service offerings. To what extent should

a company become a supplier of a wide range of products aimed at several or many

market segments? Should a company become the global specialist in a certain area by

satisfying one or a small number of target segments, doing this in most major markets

around the world?

Even some of the largest companies can not pursue all available initiatives. Re sources for

most companies are limited, often requiring a tradeoff between product expansion and

geographic expansion strategies. Resolving this question is necessary to achieve a

concentration of resources and efforts in areas where they will bring the most return. We




                                             15
can distinguish between two models: on the one hand, we have the broad-based firm

marketing a wide range of products to many different customer groups, both domestic

and overseas; on the other hand, we have the narrowly-based firm marketing a limited

range of products to a homogenous customer group around the world. Both types of

companies can be successful in their respective markets.

Creating Global Business Units: Many firms have come to realize that a strong global

presence in one given product was becoming a strategic requirement. Since traditional

multinational firms often competing through a multi-domestic strategy have realized the

weakness of their unfocused patterns of global coverage, they have begun to assemble

business units that have a better global focus. Many are striving to change their business

to reflect more a coherent market position whereby a business consists of strong units in

major markets. Avoiding globally unfocused strategies, international firms have either

retrenched to become regional specialists or changed their business focus to adopt global

niche strategies, selective globalization or complete globalization.

A strategy of complete globalization is selected by firms that essentially globalize all of

their business units. Selective globalization is adopted by firms that globalize several or

many businesses but also exit from others because financial resources may be limited.

Global niche strategies are selected by firms that focus on one or very few businesses

worldwide and exit from others to make up for a lack of resources. In general, companies

with a narrow product or business focus but globally marketed perform better than firms

with a broad product line. Since the establishment of strong global marketing positions

requires substantial resources, many firms have begun to adopt the narrow focus model

by spinning off business no longer viewed as part of the company`s core operations.




                                             16
Global Marketing Strategies:

A global marketing strategy that totally globalizes all marketing activities is not always

achievable or desirable (differentiated globalization). In the early phases of development,

global marketing strategies were assumed to be of one type only, offering the same

marketing strategy across the globe. As marketers gained more experience, many other

types of global marketing strategies became apparent. Some of those were much less

complicated and exposed a smaller aspect of a marketing strategy to globalization. A

more common approach is for a company to globalize its product strategy (product lines,

product designs and brand         names) and      localize distribution and     marketing

communication.

Integrated Global Marketing Strategy: When a company pursues an integrated global

marketing strategy, most elements of the marketing strategy have been globalized.

Globalization includes not only the product but also the communications strategy, pricing

and distribution as well as such strategic elements as segmentation and positioning. Such

a strategy may be advisable for companies that face completely globalized customers

along the lines. It also assumes that the way a given industry works is highly similar

everywhere, thus allowing a company to unfold its strategy along similar paths in country

by country. One company that fits the description of an integrated global marketing

strategy to a large degree is CocaCola. That company has achieved a coherent, consistent

and integrated global marketing strategy that covers almost all elements of its marketing

program from segmentation to positioning, branding, distribution, bottling, advertising

and more.




                                            17
Reality tells us that completely integrated global marketing strategies will continue to be

the exception. However, there are many other types of partially globalized marketing

strategies; each may be tailored to specific industry and competitive circumstances.

Global Product Category Strategy: Possibly the least integrated type of global marketing

strategy is the global product category strategy. Leverage is gained from competing in the

same category country after country and may come in the form of product technology or

development costs. Selecting the form of global product category implies that the

company while staying within that category will consider targeting different segments in

each category or varying the product, advertising and branding according to local market

requirements. Companies competing in the multi-domestic mode are frequently applying

the global category strategy and leveraging knowledge across markets witho ut pursuing

standardization. That strategy works best if there are significant differences across

markets and when few segments are present in market after market. Several traditional

multinational players who had for decades pursued a multi-domestic marketing approach-

tailoring marketing strategies to local market conditions and assigning management to

local management teams- have been moving toward the global category strategy. Among

them are Nestle, Unilever and Procter&Gamble, three large international consumer goods

companies doing business in food and household goods.

Global Segment Strategy: A company that decides to target the same segment in many

countries is following a global segment strategy. The company may develop an

understanding of its customer base and leverage that experience around the world. In both

consumer and industrial industries significant knowledge is accumulated when a

company gains in-depth understanding of a niche or segment. A pure global segment




                                            18
strategy will even allow for different products, brands or advertising although some

standardization is expected. The choices may consist of competing always in the upper or

middle segment of a given consumer market or for a particular technical application in an

industrial segment. Segment strategies are relatively new to global marketing.

Global Marketing Mix Element Strategies: These strategies pursue globalization along

individual marketing mix elements such as pricing, distribution, place, promotion,

communications or product. They are partially globalized strategies that allow a company

that customize other aspects of its marketing strategy. Although various types of

strategies may apply, the most important ones are global product strategies, global

advertising strategies and global branding strategies. Typically companies globalize those

marketing mix elements that are subject to particularly strong global logic forces. A

company facing strong global purchasing logic may globalize its account management

practices or its pricing strategy. Another firm facing strong global information logic will

find it important to globalize its communications strategy.

Global Product Strategy: Pursuing a global product strategy implies that a company has

largely globalized its product offering. Although the product may not need to be

completely standardized worldwide, key aspects or modules may in fact be globalized.

Global product strategies require that product use conditions, expected features and

required product functions be largely identical so that few variations or changes are

needed. Companies pursuing a global product strategy are interested in leveraging the

fact that all investments for producing and developing a given product have already been

made. Global strategies will yield more volume, which will make the original investment

easier to justify.




                                            19
Global Branding Strategies: Global branding strategies consist of using the same brand

name or logo worldwide. Companies want to leverage the creation of such brand names

across many markets, because the launching of new brands requires a considerable

marketing investment. Global branding strategies tend to be advisable if the target

customers travel across country borders and will be exposed to products elsewhere.

Global branding strategies also become important if target customers are exposed to

advertising worldwide. This is often the case for industrial marketing customers who may

read industry and trade journals from other countries. Increasingly, global branding has

become important also for consumer products where cross-border advertising through

international TV channels has become common. Even in some markets such as Eastern

Europe, many consumers had become aware of brands offered in Western Europe before

the liberalization of the economies in the early 1990s. Global branding allows a company

to take advantage of such existing goodwill. Companies pursuing global branding

strategies may include luxury product marketers who typically face a large fixed

investment for the worldwide promotion of a product.

Global Advertising Strategy: Globalized advertising is generally associated with the use

of the same brand name across the world. However, a company may want to use different

brand names partly for historic purposes. Many global firms have made acquisitions in

other countries resulting in a number of local brands. These local brands have their own

distinctive market and a company may find it counterproductive to change those names.

Instead, the company may want to leverage a certain theme or advertising approach that

may have been developed as a result of some global customer research. Global

advertising themes are most advisable when a firm may market to customers seeking




                                           20
similar benefits across the world. Once the purchasing reason has been determined as

similar, a common theme may be created to address it.

Composite Global Marketing Strategy: The above descriptions of the various global

marketing models give the distinct impression that companies might be using one or the

other generic strategy exclusively. Reality shows, however, that few companies

consistently adhere to only one single strategy. More often companies adopt several

generic global strategies and run them in parallel. A company might for one part of its

business follow a global brand strategy while at the same time running local brands in

other parts. Many firms are a mixture of different approaches, thus the term composite.

Competitive Global Marketing Strategies:

Two types of approaches emerge as of particular interest to us. First, there are a number

of heated global marketing duels in which two firms compete with each other across the

entire global chessboard. The second, game pits a global company versus a local

company- a situation frequently faced in many markets.

One of the longest running battles in global competition is the fight for market dominance

between CocaCola and PepsiCo, the world`s largest soft drink companies.

Global firms are able to leverage their experience and market position in one market for

the benefit of another. Consequently, the global firm is often a more potent competitor for

a local company.

Although global firms have superior resources, they often become inflexible after several

successful market entries and tend to stay with standard approac hes when flexibility is

called for. In general, the global firms` strongest local competitors are those who watch

global firms carefully and learn from their moves in other countries. With some global




                                            21
firms requiring several years before a product is introduced in all markets, local

competitors in some markets can take advantage of such advance notice by building

defenses or launching a preemptive attack on the same segment.

3) Global Market Entry Strategies:

Exporting as an Entry Strategy:

Exporting represents the least commitment on the part of the firm entering a foreign

market (See appendix 2). Exporting to a foreign market is a strategy many companies

follow for at least some of their markets. Since many countries do not offer a large

enough opportunity to justify local production, exporting allows a company to centrally

manufacture its products for several markets and therefore to obtain economies of scale.

Furthermore, since exports add volume to an already existing production operation

located elsewhere, the marginal profitability of such exports tends to be high.

A firm has two basic options for carrying out its export operations. The form of exporting

can be directly under the firm`s control or indirect and outside the firm`s control. It can

contact foreign markets through a domestically located (in the exporter`s country of

operation) intermediary-an approach called indirect exporting. Alternatively, it can use an

intermediary located in the foreign market-an approach termed direct exporting.

Indirect Exporting: Indirect exporting includes dealing through export management

companies of foreign agents, merchants or distributors. Several types of intermediaries

located in the domestic market are ready to assist a manufacturer in contacting

international markets or buyers. The major advantage for managers using a domestic

intermediary lies in that individual`s knowledge of foreign market conditions.

Particularly, for companies with little or no experience in exporting, the use of a domestic




                                            22
intermediary provides the exporter with readily available expertise. The most common

types of intermediaries are brokers, combination export and manufacturers` export

agents. Group selling activities can also help individual manufacturers in their export

operations.

Direct Exporting: Direct exporting includes setting up an export department within the

firm or having the firm`s sales force sell directly to foreign customers or marketing

intermediaries. A company engages in direct exporting when it exports through

intermediaries located in the foreign markets. Under direct exporting, an exporter must

deal with a large number of foreign contacts, possibly one or more for each country the

company plans to enter. Although a direct exporting operation requires a larger degre e of

expertise, this method of market entry does provide the company with a greater degree of

control over its distribution channels than would indirect exporting. The exporter may

select from two major types of intermediaries: agents and merchants. Also, the exporting

company may establish its own sales subsidiary as an alternative to independent

intermediaries. Successful direct exporting depends on the viability of relationship built

up between the exporting firm and the local distributor or importer. By building the

relationship well, the exporter saves considerable investment costs.

The independent distributor earns a margin on the selling price of the products. Although

the independent distributor does not represent a direct cost to the exporter, the margin the

distributor earns represents an opportunity that is lost to the exporter. By switching to a

sales subsidiary to carry out the distributor`s tasks, the exporter can earn the same

margin. With increasing volume, the incentive to start a sales subs idiary grows. On the

other hand, if the anticipated sales volume is small, the independent distributor will be




                                            23
more efficient since sales are channeled through a distributor who is maintaining the

necessary staff for several product lines. The lack of control frequently causes exporters

to shift from an independent distributor to wholly owned sales subsidiaries.

Many companies export directly to their own sales subsidiaries abroad, sidestepping

independent intermediaries. The sales subsidiary assumes the role of the independent

distributor by stocking the company's products and/or services, sometimes jointly

advertising and promoting the products, selling to buyers and assuming the credit risk.

The sales subsidiary offers the manufacturer full control of se lling operations in a foreign

market. Such control may be important if the company`s products require the use of

special marketing skills such as advertising or selling. The exporter finds it possible to

transfer or export not only the product but also the entire marketing program that often

makes the product a success.

The operation of a subsidiary adds a new dimension to a company`s international

marketing operation. It requires the commitment of capital in a foreign country, primarily

for the financing of account receivables and inventory. Also, the operation of a sales

subsidiary entails a number of general administrative expenses that are essentially fixed

in nature. As a result, a commitment to a sales subsidiary should not be made without

careful evaluation of all the costs involved.

Foreign Production as an Entry Strategy:

Many companies realize that to open a new market and serve local customers better,

exporting into that market is not a sufficiently strong commitment to realize strong local

presence. As a result, these companies look for ways to strengthen their base by entering

into one of several ways to manufacture.




                                                24
Licensing: Licensing is similar to contract manufacturing, as the foreign licensee

receives specifications for producing products locally, but the licensor generally receives

a set fee or royalty rather than finished products. Licensing may offer the foreign firm

access to brands, trademarks, trade secrets or patents associated with products

manufactured. Under licensing, a company assigns the right to a patent (which protects a

product, technology or process) or a trademark (which protects a product name) to

another company for a fee or royalty. Using licensing as a method of market entry, a

company can gain market presence without an equity (capital) investment. The foreign

company, or licensee gains the right to commercially exploit the patent or trademark on

either an exclusive (the exclusive right to a certain geographic region) or an unrestricted

basis. Due to advantages of low risk and low investment, licensing is a particularly

attractive mode for small and medium-sized firms. Licensing also is an effective mode

for testing the future viability of more active involvement with a foreign partner.

Licenses are signed for a variety of time periods. Depending on the investment needed to

enter the market, the foreign licensee may insist on a longer licensing period to pay off

the initial investment. Typically, the licensee will make all necessary capital investments

(machinery, inventory and so forth) and market the products in the assigned sales

territories, which may consist of one or several countries. Licensing agreements are

subject to negotiation and tend to vary considerably from company to company and from

industry to industry.

Companies use licensing for a number of reasons. For one, a company may not have the

knowledge or the time to engage more actively in international marketing. The market

potential of the target country may also be too small to support a manufacturing




                                             25
operation. A licensee has the advantage of adding the licensed product`s volume to an

ongoing operation thereby reducing the need for a large investment in new fixed assets. A

company with limited resources can gain advantage by having a foreign partner market

its products by signing a licensing contract. Licensing not only saves capital because no

additional investment is necessary but also allows scarce managerial resources to be

concentrated on more lucrative markets. Also, some smaller companies with a product in

high demand may not be able to satisfy demand unless licenses are granted to other

companies with sufficient manufacturing capacity.

In some countries where the political or economic situation appears uncertain, a licensing

agreement will avoid the potential risk associated with investments in fixed facilities.

Representing an export of technology rather than goods (as in exporting) or capital,

licensing is an attractive mode in markets where political and economic uncertainties

make a greater involvement risky. Both commercial and political risks are absorbed by

the licensee. In other countries governments favor the granting of licenses to independent

local manufacturers as a means of building up an independent local industry. In such

cases, a foreign manufacturer may prefer to team up with capable licensee despite a large

market size, because other forms of entry may not be possible.

A major disadvantage of licensing is the company`s substantial dependence on the local

licensee to produce revenues and thus royalties usually paid as a percentage on sale

volume only. Once a license is granted, royalties are paid only if the licensee is capable

of performing an effective marketing job. Since the local company`s marketing skills

may be less developed, revenues from licensing may suffer accordingly.




                                           26
Another disadvantage is the resulting uncertainty of product quality. A foreign

company`s image may suffer if a local licensee markets a product of substandard quality.

Ensuring a uniform quality requires additio nal resources from the licenser that may

reduce the profitability of the licensing activity.

Thus, the producer loses some control in certain situations. The risk of losing control of

intellectual property and/or technological advantages can also be mentioned as another

disadvantage of licensing.

Another potential problem is that the licensee may adapt the licensed product and

compete head on with the licensor. The possibility of nurturing a potential competitor is

viewed by many companies as a disadvantage of licensing. With licenses usually limited

to a specific time period, a company has to guard against the situation in which the

licensee will use the same technology independently after the license has expired and

therefore turn into a competitor.

Although there is a great variation according to industry, licensing fees in general are

substantially lower than the profits that can be made by exporting or local manufacturing.

Depending on the product, licensing fees may range anywhere between 1 percent a nd 20

percent of sales, with 3 to 5 percent being more typical for industrial products.

Conceptually, licensing should be pursued as an entry strategy if the amount of the

licensing fees exceeds the incremental revenues of any other entry strategy such as

exporting or local manufacturing. A thorough investigation of the market potential is

required to estimate potential revenues from any one of the entry strategies under

consideration.




                                               27
Franchising: Franchising is a special form of licensing in which the fra nchiser makes a

total marketing program available including the brand name, logo, products and method

of operation. Usually the franchise agreement is more comprehensive than a regular

licensing agreement in as much as the total operation of the franchisee is prescribed. It

differs from licensing principally in the depth and scope of quality controls placed on all

phases of the franchisee`s operation. The franchise concept is expanding rapidly beyond

its traditional businesses (such as service stations, restaurants and real-estate brokers) to

include less traditional formats such as travel agencies, used car dealers, the video

industry and professional and health improvement services. About 80 percent of all

McDonald`s restaurants are franchised and as of 1999 the firm operated about 24,500

stores in 116 countries.

Local Manufacturing: A common and widely practiced form of market entry is the local

manufacturing of a company`s products. Many companies find it to their advantage to

manufacture locally instead of supplying the particular market with products made

elsewhere. Numerous factors such as local costs, market size, tariffs, laws and political

considerations may affect a choice to manufacture locally. The actual type of local

production depends on the arrangements made; it may be contract manufacturing,

assembly or fully integrated production. Since local production represents a greater

commitment to a market than other entry strategies, it deserves considerable attention

before a final decision is made.

Under contract manufacturing, a company arranges to have its products manufactured by

an independent local company on a contractual basis. This is an entry mode in which a

firm contracts with a foreign firm to manufacture parts or finished products or to




                                             28
assemble parts into finished products. The manufacturer`s responsibility is restricted to

production. Afterward, products are turned over to the international company which

usually assumes the marketing responsibilities for sales, promotion and distribution. In a

way, the international company rents the production capacity of the local firm to avoid

establishing its own plant or to circumvent barriers set up to prevent the import of its

products. Contract manufacturing differs from licensing with respect to the legal

relationship of the firms involved. The local producer manufactures based on orders from

the international firm but the international firm gives virtually no commitment beyond the

placement of orders. Typically, the contracting firm supplies co mplete product

specifications to the foreign firm, sets production volume and guarantees purchase.

Lower labor costs abroad are the major incentive for using this entry mode.

Typically, contract manufacturing is chosen for countries with a low-volume market

potential combined with high tariff protection. In such situations, local production

appears advantageous to avoid the high tariffs, but the local market does not support the

volume necessary to justify the building of a single plant. These conditions t end to exist

in the smaller countries in Central America, Africa and Asia. Of course, whether an

international company avails itself of this method of entry also depends on its products.

Usually, contract manufacturing is employed where the production technology involved

is widely available and where the marketing effort is of crucial importance in the success

of the product.

By moving to an assembly operation, the international firm locates a portion of the

manufacturing process in the foreign country. Typ ically, assembly consists only of the

last stages of manufacturing and depends on the ready supply of components or




                                            29
manufactured parts to be shipped in from another country. Assembly usually involves

heavy use of labor rather than extensive investment in c apital outlays or equipment.

Motor vehicle manufacturers and electronics industries have made extensive use of

assembly operations in numerous countries.

Often, companies want to take advantage of lower wage costs by shifting the labor-

intensive operation to the foreign market; this results in a lower final price of the

products. In many cases, however, the local government forces the setting up of assembly

operations either by banning the import of fully assembled products or by charging

excessive tariffs on imports. As a defensive move, foreign companies begin assembly

operations to protect their markets. However, successful assembly operations require

dependable access to imported parts. This is often not guaranteed and in countries with

chronic foreign exchange problems, supply interruptions can occur.

To establish a fully integrated local production unit represents the greatest commitment a

company can make for a foreign market. Since building a plant involves a substantial

outlay in capital, companies only do so where demand appears assured. International

companies may have any number of reasons for establishing factories in foreign

countries. Often, the primary reason is to take advantage of lower costs in a country, thus

providing a better basis for competing with local firms or other foreign companies

already present. Also, high transportation costs and tariffs may make imported goods

uncompetitive.

Some companies want to build a plant to gain new business and customers. Such an

aggressive strategy is based on the fact that local production represents a strong

commitment and is often the only way to convince clients to switch suppliers. Local




                                             30
production is of particular importance in industrial markets where service and reliability

of supply are main factors in the choice of product or supplier.

Many times, companies establish production abroad not to enter new markets but to

protect what they have already gained through exporting. Changing economic or political

factors may make such a move necessary. The Japanese car manufacturers who had been

subject to an import limitation of assembled cars imported from Japan, began to build

factories in United States in the 1980s to protect their market share. As mentioned above,

Japanese manufacturers` reasons for the local production were partly political as the

United States imposed import targets for several years. Also, with the value of the yen

increasing to one hundred yen per US dollar, exports from Japan became uneconomical

compared with local production. Thus, to defend market positions, Japanese car

companies instituted a longer-term strategy of making cars in the region where they are

sold.

Moving with an established customer can also be a reason for setting up plants abroad. In

many industries, important suppliers want to keep a relationship by establishing plants

near customer locations; when customers build new plants elsewhere, suppliers move too.

Another reason can also be shifting production abroad to save costs.

Ownership Strategies:

Companies entering foreign markets have to decide on more than the most suitable entry

strategy. They also need to arrange ownership, either as a wholly owned subsidiary, in a

joint venture, or more recently in strategic alliance.

Joint Ventures: In a joint venture, an investing firm owns roughly 25 to 75 percent of a

foreign firm, allowing the investing firm to affect management decisions of the foreign




                                              31
firm. Under a joint venture (JV) arrangement, the foreign company invites an outside

partner to share stock ownership in the new unit. The particular participation of the

partners may vary, with some companies accepting either a minority or majority position.

In most cases, international firms prefer wholly owned subsidiaries for reasons of control;

once a joint venture partner secures part of the operation, the international firm can no

longer function independently, which sometimes lead to inefficiencies and disputes over

responsibility for the venture. If an international firm has strictly defined operating

procedures, such as for budgeting, planning and marketing, getting the JV company to

accept the same methods of operation may be difficult. Problems may also arise when the

JV partner wants to maximize dividend payout instead of reinvestment or when the

capital of the JV has to be increased and one side is unable to raise the required funds.

Experience has shown that JVs can be successful if the partners share the same goals with

one partner accepting primary responsibility for operations matters. Despite the potential

for problems, joint ventures are common because they offer important advantages to the

foreign firm. By bringing in a partner the company can share the risk for a new venture.

Furthermore, the JV partner may have important skills or contacts of value to the

international firm. Sometimes, the partner may be an important customer who is willing

to contract for a portion of the new unit`s output in return for an equity participation. In

other cases, the partner may represent important local business interes ts with excellent

contacts to the government. A firm with advanced product technology may also gain

market access through the JV route by teaming up with companies that are prepared to

distribute its products. Many international firms have entered Japan, China and Eastern

Europe with JVs. But, not all joint ventures are successful and fulfill their partners`




                                            32
expectations. Despite the difficulties involved, it is apparent that the future will bring

many more joint ventures. Successful international and globa l firms will have to develop

the skills and experience to manage JVs successfully often in different and difficult

environmental circumstances. And in many markets, the only viable access to be gained

will be through JVs.

Strategic Alliances: A more recent phenomenon is the development of a range of

strategic alliances. Alliances are different from traditional joint ventures in which two

partners contribute a fixed amount of resources and the venture develops on its own. In

an alliance, two entire firms pool their resources directly in a collaboration that goes

beyond the limits of a joint venture. Although a new entity may be formed, it is not a

requirement. Sometimes, the alliance is supported by some equity acquisition of one or

both of the partners. In an alliance, each partner brings a particular skill or resource-

usually they are complementary-and by joining forces, each expects to profit from the

other`s experience. Typically, alliances involve either distribution access, technology

transfers or production technology with each partner contributing a different element to

the venture. Alliances can be in the forms of technology-based alliances, production-

based alliances or distribution-based alliances.

Although many alliances have been forged in a large number of industries, the evidence

is not yet in as to whether these alliances will actually become successful business

ventures. Experience suggests that alliances with two equal partners are more difficult to

manage than those with a dominant partner. In particular, it is important to recognize that

the needs and aspirations of partners may change over the life of an alliance and do so in

divergent ways. Predicting what the goals and incentives of the various parties will be




                                             33
under various circumstances is a critical part of effective planning. Furthermore, many

observers question the value of entering alliances with technological competitors, such as

between western and Japanese firms. The challenge in making an alliance work lies in the

creation of multiple layers of connections or webs that reach across the partner

organizations. Eventually such connections will result in the creation of new

organizations out of the cooperating parts of the partners. In that sense, alliances may

very well be just an intermediate stage until a new company can be formed or until the

dominant partner assumes control.

Entering Markets Through Mergers and Acquisitions: Although international firms

have always made acquisitions, the need to enter markets more quickly than thro ugh

building a base from scratch or entering some type of collaboration has made the

acquisition route extremely attractive. This trend has probably been aided by the opening

of many financial markets, making the acquisition of publicly traded companies much

easier. Most recently even unfriendly takeovers in foreign markets are now possible.

Nevertheless, international mergers and acquisitions are difficult to make work.

A major advantage of acquisitions is that they can quickly position a firm in a new

business. By purchasing an existing player, a firm does not have to take the time to

establish its presence or develop for itself the resources it does not already possess. This

can be particularly important when the critical resources are difficult to imitate or

accumulate. Acquiring an existing firm also takes a potential competitor out of the

market. Despite these advantages, acquisitions can have serious drawbacks. First and

foremost, acquisitions can be a very expensive way to enter a market. In addition to the

likelihood of overbidding, acquisitions pose a number of other challenges. Most targets




                                            34
contain bundles of assets and capabilities, only some of which are of interest to the

acquirer. Disposing of unwanted assets or maintaining them in the portfolio is often done

at significant cost, either in real terms or in management time. Although these obstacles

are serious, a number of acquisitions fail on another account: the post acquisition

integration process fails. Integrating an acquired company into a corporation is probably

one of the most challenging tasks confronting top management.

Preparing An Entry Strategy Analysis:

Of course, assembling accurate data is the cornerstone of any entry strategy analysis. The

necessary sales projections have to be supplemented with detailed cost data and financial

need projections on assets (managerial, financial, etc. resources). The data need to be

assembled for all entry strategies under consideration. Financial data are collected not

only on the proposed venture but also on its anticipated impact on the existing operations

of the international firm. The combination of the two sets of financial data results in

incremental financial data incorporating the net overall benefit of the proposed move for

the total company structure.

For best results, the analyst must take a long-term view of the situation. Asset

requirements, costs and sales have to be evaluated over the planning horizon of the

proposed venture, typically three to five years for an average company. Furthermore, a

thorough sensitivity analysis must be incorporated. Such an analysis may consists of

assuming several scenarios of international risk factors that may adversely affect the

success of the proposed venture. The financial data can be adjusted to reflect each new

set of circumstances. One scenario may include a 20 percent devaluation in the host

country, combined with currency control and difficulty of receiving new supplies from




                                           35
foreign plants. Another situation may assume a change in political leade rship to a group

less friendly to foreign investments. With the help of a sensitivity analysis approach, a

company can quickly spot the key variables in the environment that will determine the

outcome of the proposed market entry. The international company then has the

opportunity to further add to its information on such key variables or at least to closely

monitor their development. It is assumed that any company approaching a new market is

looking for profitability and growth. Consequently, the entry strategy must support these

goals. Each project has to be analyzed for the expected sales level, costs and asset levels

that will eventually determine profitability. Sales, costs and assets levels have to be

estimated before. Also, profitability has to be estimated (past sales analysis, market test

method). In order to do this, assessing international risk factors, maintaining flexibility

and assessing total company impact are required. Market research that focuses on buying

patterns, customer segmentation on ability to pay especially in developing countries, etc.

(survey of buyers` intentions, composite of sales force opinion, expert opinion) (SWOT

Analysis-strenghts, weaknesses, opportunities, threats)

Entry Strategy Configuration:

In reality, most entry strategies consist of a combination of different formats. We refer to

the process of deciding on the best possible entry strategy mix as entry strategy

configuration.

Rarely do companies employ a single entry mode per country. A company may open up a

subsidiary that produces some products locally and imports others to round out its

product line. The same foreign subsidiary may even export to other foreign subsidiaries,

combining exporting, importing and local manufacturing into one unit. Furthermore,




                                            36
many international firms grant licenses for patents and trademarks to foreign operations,

even when they are fully owned. This is done for additional protection or to make the

transfer of profits easier. In many cases, companies have bundled such entry forms into a

single legal unit, in effect layering several entry strategy options on top of each other.

Bundling of entry strategies is the process of providing just one legal unit in a given

country or market. In other words, the foreign company sets up a single company in one

country and uses that company as a legal umbrella for all its entry activities. However,

such strategies have become less typical-particularly in larger markets, many firms have

begun to unbundle their operations.

When a company unbundles, it essentially divides its operations in a country into

different companies. The local manufacturing plant may be incorporated separately from

the sales subsidiary. When this occurs, companies may select different ownership

strategies, for instance, allowing a JV in one operation while keeping full ownership in

another part. Such unbundling becomes possible in the larger markets such as the United

States, Germany and Japan. It also allows the company to run several companies or

product lines in parallel. Global firms granting global mandates to their product divisions

will find that each division will need to develop its own entry strategy for key markets.

Portal or E-Business Entry Strategies: The technological revolution of the Internet with

its wide range of connected and networked computers has given rise to the virtual entry

strategy. Using electronic means, primarily web pages, e- mail, file transfer and related

communications tools, firms have begun to enter markets without ever touching down. A

company that establishes a server on the Internet and opens up a web page can be

connected from anywhere in the world. Consumers and industrial buyers who use modern




                                              37
Internet browsers, such as Netscape, can search for products, services or companies and

in many instances even make purchases online. Whatever the forecasts, most experts

agree that the opportunity for Internet-based commerce will be huge. The Internet will

eliminate some of the hurdles that plagued smaller firms from competing beyond their

borders. Given the low cost of the Internet, it is very likely that many more established

firms will use the Internet as the first point of contact for countries where they do not yet

have a major base. However, there are many challenges to would-be Internet-based

global marketers. One of the biggest is language. The second big challenge is the

fulfillment side of the e-business. Here, we are dealing with completing a sale, shipping,

collecting funds and providing after-sales service to customers all over the world.

Exit Strategies:

Circumstances may make companies want to leave a country or market. Other than the

failure to achieve marketing objectives, there may be political, economic or legal reasons

for a company to want to dissolve or sell an operation (management myopia).

International companies have to be aware of the high costs attached to the liquidation of

foreign operations; substantial amounts of severance pay may have to be paid to

employees and any loss of credibility in other markets can hurt future prospects.

Sometimes, an international firm may need to withdraw from a market to consolidate its

operations. This may mean a consolidation of factories from many to fewer such plants.

Production consolidation when not combined with an actual market withdrawal is not

really what we are concerned with here. Rather, our concern is a company`s actual

abandoning its plan to serve a certain market or country. This is differentiation between




                                             38
production withdrawal or consolidation and brand withdrawal. A firm can consolidate

production elsewhere while retaining a strong brand and marketing presence.

Changing political situations have at times forced companies to leave markets. Changing

government regulations can at times pose problems, prompting some companies to leave

a country. Exit strategies can also be the result of negative reactions in a firm`s home

market.

Several of the markets left by international firms over the past decades have changed in

attractiveness, making companies reverse their exit decisions and ente r those markets a

second time.

Summary:

Global marketing is the process of focusing an organization`s resources on the selection

and exploitation of global market opportunities consistent with and supportive of its short

and long-term strategic objectives and goals.

In this paper, I tried to analyze the ways a company competes in global environment by

using different tactics. Those tactics differ in a way a company’s capabilities and

willingness permit. A company must be careful in using those tactics before globalizing

its operations. Because sometimes those tactics may fail and result in loss of profit or

even closure of the company.

I suggest to reader to obtain additional information about this subject. For example, they

may contact my organization, Undersecretariat of Foreign Trade, closest Chambers of

Commerce or any other public or private organization located in Turkey or abroad. They

may also use any library or internet resources.




                                            39
Ozet: (Turkce)

Global pazarlama, bir orgutun kaynaklarinin onun kisa ve uzun donemli stratejik

hedefleriyle uyumlu ve destekleyici global pazar firsatlarinin secimi ve kullanimina

odaklanmasi surecidir.

Bu calismada, bir sirketin global cevrede farkli taktikleri kullanarak rekabet etme

yollarini analiz etmeye calistim. Bu taktikler, bir sirketin yetenek ve istekliliginin izin

verdigi bir yolla degisir. Bir sirket, faaliyetlerini globallestirmeden once bu taktikleri

kullanmada dikkatli olmalidir. Cunku, bazen bu taktikler basarisiz olabilir ve kar kaybi

veya sirketin kapanmasiyla bile sonuclanabilir.

Okuyucuya bu konu hakkinda ilave bilgi bulmasini oneriyorum. Ornegin, onlar benim

kurumum Dis Ticaret Mustesarligiyla, en yakin Ticaret Odasiyla, veya herhangi diger

Turkiye`de veya yurtdisinda yerlesik kamu veya ozel kurumla temasa gecebilirler. Onlar

herhangi kutuphane veya internet kaynaklarini da kullanabilirler.




                                            40
4) Appendices:

Appendix 1:

Economic-Financial Factors:

      Amount of foreign debt carried

      Income distribution within the market

      Amount of foreign investment already in the market

      Natural resource base

      Inflation rate

Political-Legal Factors:

      Role of government in business activities (free or not free markets)

      Stability of government

      Barriers to international trade (whether or not favorable trade policies)

      Laws and regulations affecting the marketing mix (marketing regulations)

      Laws and regulations affecting business activities (acceptance of foreign

       investment, etc.)

      Stability of the workforce

      Political relations with trading partner

Cultural Factors:

      Style of business within the market

      Attitudes toward bribes and questionable payments

      Language, race and nationalities, geographic divisions

      Role of institutions, religious groups, educational system, mass media, family



                                             41
      Sociocultural (social interaction, hierarchies, interdependence, etc.)

Demographic Factors:

      Number of organizations within the market

      Size and quality of workforce

      Population size and growth rate

      Composition of house holds

      Geographic distribution and density of population

Trade Agreements (blocks):

      WTO

      EU

      NAFTA

      APEC

      MERCOSUR

      CIS




                                            42
Appendix 2:

Entry modes into international markets:



Exporting

Contract Manufacturing

Licensing                                      Increasing involvement by the firm

Joint Venturing

Wholly Owned Subsidiaries




                                          43
5) References:

   1) Collis, Montgomery, Corporate Strategy, A Resource-Based Approach- 1998

   2) David Jobber, Principles and Practice of Marketing-

   3) David J. Reibstein, Marketing, Concepts, Strategies and Decisions-

   4) Jeannet, Jean-Pierre, Global Marketing Strategies- 5th edition, 2001

   5) Joel R. Evans, Barry Berman, Marketing-

   6) Philip Kotler, Ronald E. Turner, Marketing Management- seventh edition, 1993

   7) Subhash C. Jain, International Marketing Management- 5th edition, 1996

   8) Theodore Levitt, Harvard Business Review, The Globa lization of Markets-May-

      June 1983

   9) Theodore Levitt, Harvard Business Review, Marketing Myopia-September-

      October 1975

   10) Thomas C. Kinnear, Kenneth L. Bernhardt, Principles of Marketing-

   11) David Gertner, Ph.D., International Marketing Management (IMM) Course Slides

      and Notes, Thunderbird, The American Graduate School of International

      Management- Summer 2001




                                          44

								
To top