Presentation on theme: "Chapter Learning Objectives"— Presentation transcript:
1 Chapter Learning Objectives How global marketing management differs from international marketing managementThe increasing importance of international strategic alliancesThe need for planning to achieve company goalsThe important factors for each alternative market-entry strategy
2 The Nestle Way: Evolution Not Revolution Nestle is the world’s biggest marketer of infant formula, powdered milk, instant coffee, chocolate, soups, and mineral water.Nestle strategy can be summarized in four points:Think and plan long termDecentralizeStick to what you knowAdapt to local tastesLong-term strategy works for Nestle because the company relies on local ingredients and markets products that consumers can afford.
3 Benefits of Global Marketing When large market segments can be identified, economies of scale in production and marketing can be important competitive advantages for global companies.Transfer of experience and know-how across countries through improved coordination and integration of marketing activities.Marketing globally also ensures that marketers have access to the toughest customers.Diversity of markets served carries with it additional financial benefits.Firms that market globally are able to take advantage of changing financial circumstances.
4 Planning for Global Markets Planning is the job of making things happen that might not otherwise occur.Planning allows for rapid growth of the international function, changing markets, increasing competition, and the turbulent challenges of different national markets.Planning relates to the formulation of goals and methods of accomplishing them, so it is both a process and philosophy.Corporate planningStrategic planningTactical planningSuccessful planning is evaluating company objectives, including management’s commitment and philosophical orientation to international business.
5 Planning for Global Markets (cont’d) Company objectives and resourcesEach new market can require a complete evaluation, including existing commitments, relative to the parent company’s objectives and resources.Defining objectives clarifies the orientation of the domestic and international divisions, permitting consistent policies.International commitmentCommitment in terms of:Dollars to be investedPersonnel for managing the international organizationDetermination to stay in the market long enough to realize a return in investments.The degree of commitment to an international marketing cause reflects the extend to a company’s involvement
6 The Planning ProcessPhase 1: Preliminary Analysis and Screening – Matching Company and Country Needs.Phase 2: Adapting the Marketing Mix to Target Markets.Phase 3: Developing the Marketing PlanPhase 4: Implementation and Control
7 International Planning Process Insert Exhibit 11.1
8 Alternative Market-Entry Strategies An entry strategy into the international market should reflect on analysis of market characteristics such as:Potential salesStrategic importanceStrengths of local resourcesCultural differencesCountry restrictionsCompanies most often begin with modest export involvement.A company has four different modes of foreign market entry from which to select:ExportingContractual agreementsStrategic alliancesDirect foreign investments
9 Exporting Exporting accounts for some 10% of global activity. Direct exporting - the company sells to a customer in another country.Indirect exporting – the company sells to a buyer (importer or distribution) in the home country, who in turn exports the product.The InternetInitially, Internet marketing focused on domestic sales, however, a surprisingly large number of companies started receiving orders from customers in other countries, resulting in the concept of international Internet marketing (IIM).Direct salesParticularly for high technology and big ticket industrial products.
10 Contractual Agreement Contractual agreements are long-term, nonequity association between a company and another in a foreign market.LicensingA means of establishing a foothold in foreign markets without large capital outlays.A favorite strategy for small and medium-sized companies.Legitimate means of capitalizing on intellectual property in a foreign market.
11 Contractual Agreement (continued) FranchisingFranchiser provides a standard package of products, systems, and management services, and the franchise provides market knowledge, capital, and personal involvement in management.Despite temporary setbacks, franchising is still expected to be the fastest-growing market-entry strategy.Two types of franchise agreements:Master franchise – gives the franchisee the rights to a specific area with the authority to sell or establish subfranchises.Licensing
12 Strategic International Alliances A strategic international alliance (SIA) is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objectiveSIAs are sought as a way to shore up weaknesses and increase competitive strengths.Firms enter SIAs for several reasons:Opportunities for rapid expansion into new marketsAccess to new technologyMore efficient production and innovationReduced marketing costsStrategic competitive movesAccess to additional sources of products and capitalMany companies also are entering SIAs to be in strategic position to be competitive and to benefit from the expected growth in the single European market.
13 Strategic International Alliances (continued) International Joint VenturesA joint venture is a partnership of two or more participating companies that have joined forces to create a separate legal entity.Four Characteristics define joint ventures:JVs are established, separate, legal entitiesThe acknowledged intent by the partners to share in the management of the JVThere are partnerships between legally incorporated entities such as companies, chartered organizations, or governments, and not between individualsEquity positions are held by each of the partners
14 Strategic International Alliances (continued) ConsortiaConsortia are similar to joint ventures and could be classified as such except for two unique characteristics:They typically involve a large number of participantsThey frequently operate in a country or market in which none of the participants is currently active.Consortia are developed to pool financial and managerial resources and to lessen risks.
15 Direct Foreign Investment Factors that have been found to influence the structure and performance of direct investments:TimingThe growing complexity and contingencies of contractsTransaction cost structuresTechnology transferDegree of product differentiationThe previous experiences and cultural diversity of acquired firmsAdvertising and reputation barriers
16 Organizing for Global Competition Because organizations need to reflect a wide range of company-specific characteristics, devising a standard organizational structure is difficult.Companies are usually structured around one of three alternatives:Global product divisions responsible for product sales throughout the worldGeographical divisions responsible for all products and functions within a given geographical areaA matrix organization consisting of either of these arrangements with centralized sales and marketing run by a centralized functional staff, or a combination of area operations and global product management
17 Organizing for Global Competition (cont’d) Locus of decisionConsiderations of where decisions will be made, by whom, and by which method constitute a major element of organizational strategy.Centralized versus decentralized organizationsAn infinite number of organizational patterns fro the headquarters activities of multinational firms exist, but most fit into one of three categories:CentralizedRegionalizedDecentralizedNo single traditional organizational plan is adequate for today’s global enterprise seeking to combine the economies of scale of a global company with the flexibility and marketing knowledge of a local company.
18 Schematic Marketing Organization Plan Combining Product, Geographic, and Functional Approaches Insert Exhibit 11.4