INTERNATIONAL MARKETING MANAGEMENT: NATURE & SCOPE By Elisante Ole Gabriel (Tanzania) Chartered Marketer

KEY AREAS TO BE COVERED  Nature and Scope of International Business  International Business Environment  International Markets entry strategies  The Role of World Trade Organisation  Management Tools for International Business  International Payment systems & Risks

NATURE & SCOPE OF IMM  Deriving from the word ‘International’ it suggests that IBM is about managing business between nations.  These nations could be separated by ‘geographical’ or ‘Political’ boundaries.  Think of Tanzania & Malawi Vs Tanzania & Kenya at the scenario when we shall have the EACM (East African Common Market)

Globalization This is a concept considering the whole world as one huge homogeneous market. Globalisation is hinged on a number of assumptions. It is however on two major dimensions: Globalization of productionGlobalization of production Globalization of marketsGlobalization of markets

Competition Consumer Marketing Challenges in country Z Marketing Challenges in country Y Marketing Challenges in country X Place Promotion Price (Controllables) Product Legal Socio Cultural Competition Political Economic Infrastructure Domestic Environmental Challenges (Uncontrollables) Political Overseas Environmental Challenges (Uncontrollables) Legal Logistics Geography Economic Domestic marketing and international marketing decisions

Reasons for entering international markets growth profitability achieving economies of scale Achieving economies of scope (re-usability) risk spread access to imported inputs uniqueness of product or services marketing opportunities due to life cycle spreading R&D cost

Key issues in export growth Developing a proactive approach to international trade Promoting Foreign Direct Investments Promoting Competitiveness Simplification of procedures Encouraging large-scale manufacturers Reducing transaction costs Infrastructure development

Identifying opportunities in international markets Extreme focus product strategy Products-country matrix strategy Growth-share matrix of exports Market focus strategies

MODES OF ENTREING INTERNATIONAL MARKETS This is an institutional mechanism by which a firm makes its products or services available for consumers in international markets. Mode of entry is determined by: - the ability and willingness of the firm to commit resources - the firms’ desire to have a level of control over international operations - the level of risk the firm is willing to take

Modes of international market entry Production in home country Exports: production is carried out in home country and finished goods are shipped to the overseas markets for sale indirect exports: process of selling products to an export intermediary in the company’s home country who in turn sells the products in the overseas markets direct exports: process of selling the firm’s products directly to an importer in the overseas market

Modes (contd) complementary exporting: use of distribution channels of an overseas firm to make the product available in the overseas market provide offshore services: This is to support the overseas clients with the help of information and communication technology

Production in a foreign country contractual entry modes international licensing: process by which a domestic company allows a foreign company to use its intellectual property and specific business skills for a compensation (royalty) international franchising: transfer of intellectual property and other assistance over an extended period of time with greater control compared to licensing Modes (contd)

overseas turnkey projects: conceptualize, design, install, construct, and carry out primary testing of manufacturing facilities or engineering structures for an overseas client organisation types : built and transfer (BT), built, operate, and transfer (BOT), built, operate, own (BOO) international management contracts: a company provides its technical and managerial expertise for a specific duration to an overseas firm Modes (contd)

international strategic alliance: the relationship between two or more firms that cooperate with each other t o achieve common strategic goals but do not form a separate company international contract manufacturing: a contractual arrangement under which a firm’s manufacturing operations are carried out in a foreign countries Modes (contd)

Investment entry modes assembly in overseas markets: refers to exporting various components of the product in completely knocked down (CKD) condition and assembles them overseas international joint ventures: equity participation of two or more firms resulting into formation of a new entity Modes (contd)

Factors for selecting partners for cooperation The alliance partner should have some strength which can be translated into business values for the alliance The alliance partners should be committed to cooperative goals It is preferable that the alliance partner should have multi-cultural business environment

Wholly owned foreign subsidiaries To have complete control and ownership of international operations a firm opts for foreign direct investment through: 1. acquiring a foreign company and all its resources in a foreign market (acquisition) 2. the establishment of production and marketing facilities by a firm on its own from scratch (green field) Factors (contd)

Factors affecting the selection of entry mode External factors Market size Market growth Government regulations Level of competition Level of risk political economic operational Production and shipping costs

Internal factors Company’s objectives availability of company resources level of commitment international experience flexibility Factors affecting the selection of entry mode (contd)

Benefits of IMM  More opportunities  Avenue for learning new concepts and challenges  Possibility of developing a global brand  A room to benefit from economies of scale & scope  Spread of risks … AND  Wider scope for innovation and creativity. Finally