Chapter 11 - The Asia Pacific region. What you should learn about in chapter 11: The dynamic growth in the region, the importance and slow growth of Japan, the importance of the Bottom-of-the-Pyramid Markets, the diversity across the region, the interrelationships among countries in the region, the diversity within China.
International Marketi ng 14th Edition P h i l i p R C a t e o r a M a r y C G i l l y John L Graham Global Marketing Management: Planning and Organization Chapter 11 McGrawưHill/Irwin InternationalMarketing14/e Copyrightâ2009byTheMcGrawưHillCompanies,Inc.Allrightsreserved What Should You Learn? How global marketing management differs from international marketing management • The increasing importance of international strategic alliances • The need for planning to achieve company goals • The important factors for each alternative market-entry strategy 11-2 Basic Entry Decisions Question: What are the basic entry decisions for firms expanding internationally? • A firm expanding internationally must decide – which markets to enter – when to enter them and on what scale – how to enter them (the choice of entry mode) Global Perspective Global Gateways • Multinational companies – Confronted with increasing global competition for expanding markets – Changing their marketing strategies and altering their organizational structure – Nearly 75% of North American and European corporations are revamping their business processes • Smaller companies – More flexible – May enable them to reflect the demands of global markets and redefine programs more quickly 11-4 Global Marketing Management • 1970s – “standardization versus adaptation” • 1980s – “global integration versus localization” • 1990s – “global integration versus local responsiveness” The fundamental question was whether the global homogenization of consumer tastes allowed global standardization of the marketing mix 11-5 Global Marketing Management • The trend back toward localization – Caused by the new efficiencies of customization – Made possible by the Internet – Increasingly flexible manufacturing processes • From the marketing perspective customization is always best 11-6 Global Marketing Management • Global markets continue to homogenize and diversify simultaneously – Best companies will avoid trap of focusing on country as the primary segmentation variable – Other segmentation variables are more important: climate, language group, media habits, age, or income groups 11-7 The Nestle Way – Evolution Not Revolution • Nestle – world’s biggest marketer of infant formula, powdered milk, instant coffee, chocolate, soups, and mineral water • Nestle strategy – – – – 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 – Markets products that consumers can afford 11-8 Benefits of Global Marketing • When large market segments can be identified – Economies of scale in production and marketing – Important competitive advantages for global companies • Transfer of experience and know-how – Across countries through improved coordination and integration of marketing activities • Marketing globally – Ensures that marketers have access to the toughest customers – Market diversity carries with it additional financial benefits – Firms are able to take advantage of changing financial circumstances 11-9 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 11-10 Selecting an Entry Mode Question: How should a firm choose a specific entry mode? • All entry modes have advantages and disadvantages • The optimal entry mode depends to some degree on the nature of a firm’s core competencies • Core competencies can involve technological know-how management know-how Selecting an Entry Mode • Firms facing strong pressures for cost reductions are likely to pursue some combination of exporting and wholly owned subsidiaries • This will allow the firms to achieve location and scale economies as well as retain some degree of control over worldwide product manufacturing and distribution Greenfield or Acquisition? Question: Should a firm establish a wholly owned subsidiary in a country by building a subsidiary from the ground up (greenfield strategy), or by acquiring an established enterprise in the target market (acquisition strategy)? • The number of cross border acquisitions are increasing • Over the last decade, 50-80 percent of all FDI inflows have been mergers and acquisitions Greenfield or Acquisition? • Acquisitions • – are quick to execute – enable firms to preempt their competitors – can be less risky than green-field ventures Acquisitions fail when – the firm overpays for the assets of the acquired firm – there is a clash between the cultures of the acquiring and acquired firm – attempts to realize synergies by integrating the operations of the acquired and acquiring entities run into roadblocks and take much longer than forecast – there is inadequate pre-acquisition screening Greenfield or Acquisition? Question: How can firms reduce the problems associated with acquisitions? • Firms can reduce the problems associated with acquisitions – through careful screening of the firm to be acquired – by moving rapidly once the firm is acquired to implement an integration plan Greenfield or Acquisition? • Question: Why are greenfield ventures attractive? • Greenfield ventures are attractive because they allow the firm to build the kind of subsidiary company that it wants • However, greenfield ventures – are slower to establish – are risky because they have no proven track record – can be problematic if a competitor enters via acquisition and quickly builds market share Exporting and Improting Question: Who benefits from exporting? • Both large and small firms can benefit from exporting • Firms wishing to export must – identify export opportunities – avoid a host of unanticipated problems associated with doing business in a foreign market – become familiar with the mechanics of export and import financing – learn where to get financing and export credit insurance – learn how to deal with foreign exchange risk What are the benefits of exporting? • The benefits from exporting can be great the rest of the world is a much larger market than the domestic market • Larger firms may be proactive in seeking out new export opportunities, but many smaller firms take a reactive approach to exporting • Many novice exporters have run into significant problems when first trying to business abroad, souring them on following up on subsequent opportunities Improving Export Performance Question: How can exporters improve their performance? • To improve their success, exporters should – acquire more knowledge of foreign market opportunities – consider using an export management company (EMC) – adopt a successful export strategy ► ► ► hire an EMC focus on just few markets enter a foreign market on a small scale Export and Import Financing Question: How can firms deal with the lack of trust that exists in export transactions? • Problems arising from the lack of trust can be solved by using a third party who is trusted by both - normally a reputable bank – Exporters prefer to be paid in advance, while importers prefer to pay after shipment arrives • A letter of credit is attractive because both parties are likely to trust a reputable bank even if they not trust each other Export and Import Financing Question: How is payment actually made in an export transaction? • Most export transactions involve a draft, also called a bill of exchange • A sight draft is payable on presentation to the drawee while a time draft allows for a delay in payment normally 30, 60, 90, or 120 days • The bill of lading is issued to the exporter by the common carrier transporting the merchandise to serve as a receipt, a contract, and a document of title Export Assistance Question: Where can exporters get financing help? • U.S exporters can draw on two forms of governmentbacked assistance to help their export programs they can get financing aid from the Export-Import Bank they can get export credit insurance from the Foreign Credit Insurance Association Countertrade Question: What alternatives exporters have when conventional methods of payment are not an option? • Exporters can use countertrade when conventional means of payment are difficult, costly, or nonexistent • There are five types of countertrade barter counterpurchase offset switch trading compensation or buyback Countertrade • In the 1960s the Soviet Union and the Communist states of Eastern Europe, whose currencies were generally nonconvertible, turned to countertrade to purchase imports • Many developing nations that lacked the foreign exchange reserves required to purchase necessary imports turned to countertrade during the 1980s – There was a notable increase in the volume of countertrade after the Asian financial crisis of 1997 Countertrade • Firms that are unwilling to enter a countertrade agreement may lose an export opportunity to a competitor that is willing to make a countertrade agreement • Countertrade is most attractive to large, diverse multinational enterprises that can use their worldwide network of contacts to dispose of goods acquired in countertrading ... company’s involvement 1 1-1 2 International Planning Process 1 1-1 3 The Planning Process • Phase – Preliminary analysis and screening – Matching Company and Country Needs • Phase – Adapting marketing mix... and innovation Reduced marketing costs Strategic competitive moves Access to additional sources of products and capital 1 1-2 5 Building Strategic Alliances 1 1-2 6 Strategic International Alliances... each alternative market-entry strategy 1 1-2 Basic Entry Decisions Question: What are the basic entry decisions for firms expanding internationally? • A firm expanding internationally must decide