Marketing (Subject) / SIM1 (Lesson)

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• International trade All exchanges of goods & services crossing national borders which influence the balance of payment of a country
• Reasons for international trade - Cost differences- Increase in competitiveness- Technology development (new product ideas)- Deregulation- Subsidies- Strategic behaviour of organizations
• What is strategic international marketing? All effort to find and satisfy customers’ needs and wants outside the domestic market in order to achieve a profitable position in the long term
• What is Global Marketing? - Implementing marketing activities across global markets- Find and satisfy global customers- Seek the balance between standardization and adaption- Obtain a long term relationship with these customers- Being better than the competition
• The nine strategic windows model Industry globalism (local, potentially global, global)Preparedness for internationalization (Immature, Adolescent, Mature)1. Stay at home2. Consolidate your export markets3. Enter new business4. Seek niches in international markets5. Consider expansion in international markets6. prepare for globalization7. Prepare for buyout8. Seek global alliance9. Strengthen your global position
• EPRG framework Ethnocentrico Home market is leadingPolycentrico Differentiation based on uniqueness of countriesRegiocentrico The world consists of regionsGeocentrico The world as on market place
• Core global business strategy Transferring global know-how and ‘best practices’ between countries with feedback to HQ
• Glocalization "Think global, act local"
• Forces of global integration - Deregulation- Global customers- Relationship management- Standardized worldwide technology- Worldwide markets- Worldwide communication- Global cost drivers
• Market responsiveness - Cultural differences- Regionalism / Protectionism- Globalization
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• Value Chain - Firm´s activities providing value for the customers and profit for the company
• Internationalization motives Proactive motives- profit and growth goals- managerial urge- unique product- market information- Economies of scale- tax benefits Reactive motives- competitive pressures- domestic market: small & saturated- Overproduction / excess capacity- unsolicited foreign orders- extend sales of seasonal products- psychological distance
• International triggers Internal triggers- Perceptive (aufmerksames) management- specific internal event- Importing as inward (inneres) internationalization External triggers- market demand- competing firms- trade associations- outside experts
• Consequences internationalization - Legal- Organisational- Logistical- Marketing- Technical- Financial- Managerial
• Internationalization barriers - General market risks (market distance, competition, cultural differences)- commercial risks (exchange rate fluctuations, delays, damage of export)- political risks (export policies, government restrictions, exchange controls)
• The Uppsala internationalization model Stage 1: No regular exportsStage 2: Export via independent representativesStage 3: Establishment of foreign sales subsidiaryStage 4: Foreign production / manufacturing units
• Transaction cost analysis (TCA) model If the "friction" between buyer and seller is higher than through an internal hierarchical system, then the firm should internalize
• The network model - Firms are linked with each other based on a certain level of dependency- Willingness to exchange relationships with other players in the network- When entering a network, internationalization processes proceed more quickly
• Born global Companies that think globally the day they were "born"
• "How do firms create and develop competitive advantages in the international market?" 1. Analysis of national competitiveness (Porter´s Diamond -> macro level)2. Competition analysis in an industry(Porter´s 5 forces -> meso level)3. Value chain analysis (micro level)
• Porter´s Diamond - Factor conditions- Demand conditions- Related and supporting industries- Firm strategy structure and rivalry- Government
• Porter´s five forces - Market competitors- Suppliers- Buyers- Substitutes- New entrants
• Value Chain analysis Looking at the firm´s core competence
• Competitive triangle 1. Perceived Value2. Firm related costs
• Blue Ocean Strategy - Environment where products are not yet well defined- Competitors are not structured- Market is relatively unknown- Heat to head competition is avoided
• Political risks - Ownership risk- Operating risk- Transfer riskEffects can be classified into: Import restriction, Exchange, Market and Price controls
• Trade barriers - To protect domestic producers OR to generate revenue- Tariff barriers (direct taxes)- Non-tariff barriers (quotas, embargos, administrative delays, local content requirements)
• Developing Trade Areas NAFTA: North American Free Trade Area (US, Canada, Mexico)Mercosur: Mercado Común del Sur (Brazil, Paraguay, Uruguay, Argentina)APEC: Asian-Pacific Economic Cooperation (23 Asia-pacific nations)ASEAN: Association of Southeast Asian Nations (Thailand, Indonesia, Singapore, Brunei, Malaysia, Philippines)EFTA: European Free Trade AreaEEA: European Economic AreaCEA: economic area: (China, Hong Kong, Taiwan)
• The international market selection process Step 1+2 Defining criteria and segmentsStep 3  Screening of marketsStep 4 micro segmantation (subsegments)- demographic- lifestyles- consumer motivation- buyer behaviour
• Screening of the market Preliminary screeninga) Macro oriented: GNP, population, export restrictionsb) Political risk (BERI index) Business Environment Risk intelligence Fine grained screeninga) Industry level orientedb) Market information: size, growth, distribution, paymentc) import barriersd) Competitione) Product requirements
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• Market expansion strategies Incremental strategy- entering first a single key market in order to build up experience in international operations, and then entering other markets one after the other (waterfall approach) Simultaneous strategy- enter a number of markets simultaneously in order to leverage its core competence and resources rapidly across a broader market base (shower approach)
• Factors that influencing the choice of entry - Internal factors (firm size, international experience, product, service)- External factors (country risk, demand uncertainty, market size and growth, direct and indirect trade barriers, intensity of competition)- desired mode characteristics (risk averse, control, flexibility)- Transaction-specific factors (tacit nature [stillschweigend] of know how)
• Different entry modes - Export modesLow control, low risk, high flexibility- Intermediate modesShared control and risk, split ownership- Hierarchical modesHigh control, high risk, low flexibility
• Export modes Indirect exports (using independent exp. org. in own country for third country)- export buying agent- broker (Makler)- export management company- trading company- piggyback (containers on rail) - Direct exports (sells directly to an importer, agent or distributor located in foreign target market)- Cooperative export (collaborative agreements)
• Intermedia modes - Contract manufacturing (manufacturing is outsourced to an external partner)- Licensing (right to the licensee against payment to manufacture a certain product based on a patent)- Franchising (right to the franchisee against payment to use a total business concept)- Joint Venture (partnership)

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