5-Int Mktg Strategies

7/31/2019 5-Int Mktg Strategies

1/28

International marketing strategies

Market entry strategies

International Marketing

1


2/28

Why internationalise?

(and why globalise?)

Proactive and reactive motives ofinternationalisation

Competition in the global markets

Benefits of global orientation Economies of scale

Transfer of experience

Uniform global image

control and coordination

2


3/28

Global Motivators

PROACTIVE (want)Profit advantageUnique products

Technological advantageExclusive informationTax benefitEconomies of scale

REACTIVE (need)Competitive pressuresOverproduction

Declining domestic salesExcess capacitySaturated domestic marketsProximity to customers andparts

Motivators for International Business

3


4/28

Why Go Global?

Earn additional profits

Leverage a unique product or technological

advantage

Possess exclusive market information

Saturated domestic markets

Excess capacity

Utilize economies of scale

4


5/28

Factors influencing international marketing strategy

5


6/28

Strategic planning

Making things happen

Strategic planning is a systematise way ofrelating to the future. It is an attempt tomanage the effects of external, uncontrollablefactors on the firms strengths, weaknesses,objectives and goals to attain a desired end.

Further, it is a commitment of resources to acountry market to achieve specific goals.

6


7/28

Activities and planning process of international

marketing

Decide whether tointernationalise

Assess international marketopportunities

Consider how to enter themarket

Design the international mix

Implementing the mix

Preliminary analysis andscreening: matching

company/country

Adapting the marketing mixto target markets

Developing the marketingplan

Implementation and control

7


8/28

Identify the various ways of enteringthe global marketplace

8


9/28

Risk Levels for Global Entry

Lowrisk/lowreturn

Highrisk/high

return

Risk

Return

Export Licensing

ContractManu-

facturing

Joint

Venture

DirectInvest-

ment

4 9


10/28

Entering the Global Marketplace

LicensingLegal process allowing use of

manufacturing/patents/knowledge.

ContractManufacturing

Private-label manufacturing by aforeign company

Joint Venture

Domestic firm buys/joins a foreign

company to create new entity.

ExportSell domestically produced

products to buyers in other countries.

Direct InvestmentActive ownership of a foreign

company/manufacturing facility.

10


11/28


12/28

International Market Entry

1. Exporting

2. Licencing & Franchising

3. Joint Venture

4. Merger & Acquisition

12


13/28

Exporting-is appropriate if

1. The volume of foreign business is not large enoughto justify production in the foreign market.

2. Cost of production in foreign market is high.

3. There are political or other risks investment in

foreign country.4. Foreign investment is not favoured by foreign

country concerned.

5. Licencing or contract manufacturing is not a better

alternative.

13


14/28

Contd..

Exporting is attractive than other modes particularlywhen underutilised capacity existseven when thereis no excess capacity, expansion of existing facilitymay sometimes be easier & less costly then the

setting up production facilities abroad. Govt. provides incentives for estabilishing facilities

for export production.

Ways of exporting can be both direct & indirect.

14


15/28

Licensing & Franchising

Under a licensing agreement, one firm permitsanother to use its intellectual property forcompensation designated as royalty.

The recipient firm is licensee.

The property licensed might include patents,trademarks, copyrights, technology, technical knowhow or specific business skills. Licensing may be

called as export of intangibles.

15


16/28

Assessment of Licensing

1. No capital investment or detailed involvement withforeign customers is required.

2. Licensing provides a means by which foreign marketcan be tested without major involvement of capital.

3. Licensors can make milions of dollars with littleeffort, while licensees can produce a brand orproduct that consumers will recognise immediately.

4. A special form of licensee is trademark licensing,which has become a substantial source of worldwide

revenue for cos that can trade on well known names& characters.

16


17/28

Franchising

1. Franchising is granting of right by a parent co. toanother, independent entity to do business, inprescribed manner.

2. Right can take form of selling franchisors products,using its name, production & marketing techniques.

3. Major form of franchising are manufacturerretailersystem (such as car dealership), manufacturer-wholesaler system(such as soft drinkcos) & servicefirm retailer systems (fast food outlets).

17


18/28

Contd..

4. Firms must be able to offer unique products orunique selling proposition.

5. Problem can be foreign govt interventions.

As an entry strategy in requires neither capitalinvestment nor knowledge & marketing strength inforeign markets.

18


19/28

Joint Venture A JV can be defined as participation of 2 or more

countries in an enterprise in which each partycontributes assets, has some equity & shares risk.

In some JV each partner contribution typicallyconsisting of funds, technology, plant or labor also

vary. The key to JV is the sharing of common business

objective, which makes the arrangement more than acustomer-vendor relationship but less than anoutright acquisition.

19


20/28

Joint Venture

One major commercial reason to participate in JV isthe desire to minimize the risk of exposing long terminvestment capital, while at the same timemaximizing the leverage on the capital invested.

JV may be the only way in which a firm can

profitably participate in a particular market. NUMMINew United Motor Manufacturing Inc

GMBenefited from technology & Mgt approachesprovided by its Japanese market.

Toyota - Needed direct access to US market.

20


21/28

JV are not necessarily meant to be permanent. They aremeant to serve specific objectives within a period of time &once the objectives are achieved the continuation depends onthe reassessment of the situation by partners.

A JV can succeed only if both partners have somethingdefinite to offer to the advantage of the other & reap definiteadvantages & have mutual trust & respect.

21


22/28

22


23/28

M & A

M&A have been very important market entrystrategy as well as expansion strategy.

Several Industries such as automobiles,pharmaceuticals, banking telecom have undergone aglobal restructuring as a result of cross borderM&As.

23


24/28

Advantages of M & A

1. It provides instant access to markets & distribution.

2. Imp objective is to obtain access to new technologyor a patent right.

3. M&A also has the advantage of reducingcompetition.

24


25/28

Problems of M & A

1. Evaluation of case for Acquisition

2. Cost of acquisition may be unrealistic high.

3. Financial crunch

4. Cultural clash

5. Employees unsecurity

6. Integration problems

25


26/28

Strategic Alliance

1. This strategy seeks to enhance long term competitiveadvantage of firm by forming alliance with itscompetitors, existing or potential in critical areasinstead of competing with each other.

2. A US pharmaceutical firm may use the salespromotion & distribution infrastructure of a Japanesepharmaceutical firm to sell its products in Japan.

26


27/28

Strategic alliance which enables companies to increaseresource productivity & profitability by avoiding unnecessaryfragmentation of resources & duplication of investment &effort are growing in popularity & are very conspicious insuch industries as pharmaceuticals, compute etc. which arecharacterised by high fixed costs in R & D & manufacturing&/or high & fast changing technology.

27


28/28

28

Type of Entry Characteristics

Exporting High cost, low control

Licensing Low cost, low risk, little control, low returns

Strategic alliances Shared costs, shared resources, shared risks,problems of integration

Acquisition Quick access to new market, high cost, complex

negotiations, problems of merging with domesticoperations

New wholly owned

subsidiaryComplex, often costly, time consuming, high risk,maximum control, potential above-average returns

Global Market Entry: Choice of

Entry Mode

Documents

5-Int Mktg Strategies