INTERNATIONAL MARKETING MANAGEMENT SESSION 3: ESTABLISHING INITIAL ENTRY OBJECTIVES: DEVELOPING COMPETITIVE ADVANTAGE 1

ESTABLISHING INITIAL ENTRY OBJECTIVES 2 THE CORPORATE MISSION STATEMENT ESTABLISHING STRATEGIC GOALS AND OBJECTIVES CHOICE OF COUNTRY(IES) AND ENTRY STRATEGY DEFINING COMPETITIVE ADVANTAGE

THE CORPORATE MISSION STATEMENT 3 G.M. is committed: “to being a global corporation, in every way, in planning, technology, sourcing and manufacturing processes, financing and marketing strategies, and in the products themselves… …to a cleaner environment throughout the world, and is diligently working to ensure that its plants and products contribute to a better environment everywhere.” Unilever: “People – and our understanding of how they’re different, as well as what they have in common, what they need now and what they may want in the future – are at the heart of everything we do. And because we’ve been in so many places for so long, we can truly say we are the multi-local multinational.”

ESTABLISHING GOALS AND OBJECTIVES DEGREE OF INVOLVEMENT IN INTERNATIONAL MARKETS Company Resources Role of Management Attitudes Industry Structure LEVEL OF RISK Macro-Economic Risk Competitive Risks Policy Risk 4

NATIONAL DETERMINANTS OF COMPETITIVE ADVANTAGE 5 Firm strategy, structure, rivalry Related and supporting industries Demand conditions Factor conditions - basic resources - advanced resources macro perspective

6 SOURCES OF COMPETITIVE ADVANTAGE EMPHASIS ON COST SUPERIORITY Losing the game Differentiating Playing the spreadCost Leadership segment focused Narrow Broad Market Coverage tailored broad-based “advanced” “base” Low High EMPHASIS ON SUPERIOR CUSTOMER VALUE High

COST-BASED COMPETITION LEVERAGES Operating Efficiencies Cost Advantages VULNERABILITIES Change in Costs Currency Swings Competition 7

DIFFERENTIATION-BASED COMPETITION LEVERAGES: Strong Brand Image Quality Innovation VULNERABILITIES Changes in Customer Tastes Competing Products and Services 8

BROAD-BASED ADVANTAGES: Targets Large Market Economies of Scale and Scope Meets Competition LIMITATIONS Spreads Resources Less Focused 9

FOCUSED ADVANTAGES: Targeted Effort Clearly Defined Image LIMITATIONS: Limited Market Coverage Risk Not Diversified 10

SKILLS AND CAPABILITIES BASIS FOR LONG-RUN SUSTAINABLE COMPETITIVE ADVANTAGE R&D Production Marketing Logistics - Adapt to Market Dynamics and Strategy 11

SUMMARY Importance of establishing objectives to guide allocation of resources and effort to international markets Role of risk in establishing objectives Competitive advantage based on resources, skills and capabilities Initially try to leverage domestic advantage in international markets 12