312MKT International Marketing Lecture Nine

Learning objectives Identify other market entry options available to companies seeking to develop new markets Understanding more factors affecting the selection of market entry mode Understanding the relevancy of this process to the charity sector

In Last Week’s Lecture We Looked at:

Market Entry Method The following criteria are necessary to consider when deciding on a market entry method: The company objectives and expectations relating to the size and value of anticipated business. The size and financial resources of the company Its existing foreign market investment The skills abilities and attitudes of the company management towards international marketing (Doole and Lowe, 2012)

Factors for Selecting Foreign Appropriate Market Entry Mode Internal factors Desired mode characteristics Transaction- specific factors External factors Entry mode decision (Hollensen, 2017)

Other Factors/Attributes That Managers Should Consider Also in The Charity Sector

Where Did These Additional Factors Come From?

Defining Marketing in the Valuntary Sector Professor Philip Kotler developed the following definition in the 1970s which has stood the test of time: Marketing is the analysis, planning, implementation, and control of carefully formulated programmes designed to bring about voluntary exchanges of values with target markets to achieve institutional objectives. Marketing involves designing the institution’s offerings to meet the target market’s needs and desires and using effective pricing, communication, and distribution to inform, motivate, and service the markets. (Kotler and Fox, 1985, p. 7) (Source: Bruce, 1998)

Defining Marketing in the Valuntary Sector According to Kotler and Fox understanding customer needs is another important attribute that charity managers should consider when deciding on market entry method (Source: Bruce, 1998)

Factors for Selecting Foreign Appropriate Market Entry Mode Internal factors Desired mode characteristics Transaction- specific factors External factors Entry mode decision (Hollensen, 2017)

The Case of Oxfam Internal Factors: Firm Size Reduced resources Unique capabilities and needed skills International experience Special nature of product/service or offering Desired Mode Characteristics Not risk averse: the decision maker actually takes the risk, yet tries to control its implications with effective internal analysis through innovative management practices

The Case of Oxfam Transaction specific Factors Considering the tacit nature of know-how related to the organization External Factors: Socio-cultural distance between home country and host countries (and between host countries) Country risk

The Case of Oxfam https://www.youtube.com/watch?v=KL4aPGP-Prs 2014 A high-flying company executive goes undercover to ensure his businesses are in good shape. 2014 Oxfam CEO Mark Goldring is worried the charity is over stretched so he goes undercover to investigate whether it is raising the maximum amount of money possible and spending it wisely. When he travels across the world to a frontline disaster zone, he is frustrated by the dangerous conditions his employees are working in and is forced to consider whether Oxfam has more to worry about than just its finances Web-Link: https://www.youtube.com/watch?v=KL4aPGP-Prs

Market Entry Methods and the Levels of Involvement in International Markets Wholly-owned subsidiary Company acquisition Assembly operations Joint Venture Strategic Alliance Licencing Contract manufacture Direct Marketing Franchising Distributors and agents Sales force Trading companies Export management companies Piggyback operations Domestic purchasing Levels of Involvement (Doole and Lowe, 2012)

Market Entry Method Licencing A form of management contract in which the licenser confers to the licencee to use one or more of the following: patent rights, trade-mark rights, copywrites and/or process know-how. In some situations, the licenser may continue to sell essential components or services to the licensee as part of the agreement (Doole and Lowe, 2012)

Market Entry Method Licencing Examples Olympic Games Committee: has been successful in licencing the use of brands characters and themes Simpsons: the most successful licenced TV show www.licensemag.com/license-global/category/2084/article Web-Link: (Doole and Lowe, 2012)

Market Entry Method Advantages of Licencing For Licenser Financial and management commitments can be kept low The high cost of setting up a manufacturing, retailing or marketing subsidiary can be reduced and tariff and non-tariff barriers can be avoided. Therefore it is particularly useful to use where: Direct involvement is not possible Market segments to be targeted are not sufficiently large for full involvement (Doole and Lowe, 2012)

Market Entry Method Advantages of Licencing For Licenser The licensee pays for the licence normally as a percentage of sales and thus, as the sales grow, so does the revenue to the licenser. Considerable control exists as the licencee uses the rights or know-how in an agreed quantity of product, and the licensee markets and purchases products for an agreed fee (Doole and Lowe, 2012)

Market Entry Method Advantages of Licencing For Licensee Relative low outlays. Possible to capitalize on established know-how with little risk and avoid the high research and development cost associated with launching a new product in many markets (Doole and Lowe, 2012)

Market Entry Method Foreign manufacturing strategies with direct investments Company Acquisitions and Mergers Acquisitions: pressure to produce short-term profits means that speed of market entry is essential and this can be achieved by acquiring an existing company in the market. It gives immediate access to a trained labour force, existing customer and supplier contracts, recognized brands, an established distribution network and an immediate source of revenue, e.g. Lenovo's acquisition of IBM’s PC decision. (Doole and Lowe, 2012)

Market Entry Method Foreign manufacturing strategies with direct investments Company Acquisitions and Mergers Disadvantage A company may take over a demotivated labor force, a poor image and reputation, and out-of-date products and processes. Takeover of companies regarded as county’s heritage or key to security can raise considerable national resentment (Doole and Lowe, 2012)

Jaguar and Land Rover Charity Work In Brazil A Creative Approach! Web-Link: https://media.jaguarlandrover.com/en-gb/videos?start=36&brand=corporate

Doole and Lowe: Chapters 5, 7 Hollensen: Chapters 9,10,11,12 and 13 References Doole and Lowe: Chapters 5, 7 & Hollensen: Chapters 9,10,11,12 and 13