1. Why Go International? 1. Exploiting market potential and growth
2. Gaining scale and scope returns at home
3. Learning from a leading market
4. Pressuring competitors
5. Diversifying markets
6. Learning how to do business abroad 5 5 5

2. International Business Philosophies
Multinational Mentality
Focused on marketing to different countries with local adaptation of products and promotions; production localized and technology less advanced
Global Mentality
Involves more standardization of products and integration across countries; driven by strong foreign competition and growing homogenization of world markets 3 3 3

3. Rationale for “Global” Mentality
Customers & Common customer needs, global
Markets: customers, global channels, transferable
marketing, leading markets
Competition: Common competitors using global strategies
Cost Savings: Scale economies, scope economies, sourcing advantages, avoidance of duplication
Government Favorable trade policies, acceptance of foreign
Policies: investment, compatible technical standards, common marketing regulations 4 4 4

4. Multidomestic vs. Global Markets: Key Differences3 3

5. Major Benefits from Global Business
CAPITALIZING ON THE GROWTH POTENTIAL OF THE FOREIGN MARKET AND NEIGHBORING COUNTRIES.
TRANSFERRING COMPETITIVE INFORMATION AND NEW PRODUCTS FROM THOSE MARKETS TO OTHER MARKETS.
STRETCHING AND BUILDING UP THE FIRM’S MARKETING CAPABILITY.

6. Global vs. Multinational Marketing Mentality
CENTRALIZED AND
STANDARD
DECENTRALIZED AND
CUSTOMIZED
R & D, DESIGN
LIMITD LOCATAIONS
MANY LOCATIONS
MANUFACTURING
CENTRALIZED AND
INTEGRATED
INDEPENDENT LOCAL
COUNTRY MANAGERS
MANAGEMENT
SALES & MKTG
IN-COUNTRY OR REGION
SEGMENTS
CUSTOMER
GLOBAL SEGMENTS
AFTER-SALES
SERVICE
LOCAL-SUBCONTRACTED
LOCAL-COMPANY
HANDLED
INTERNATIONAL
MARKET ENTRY
WHOLLY-OWNED OR J.V.
LOCAL MANUFACTURING
EXPORTING-LICENSING

7. CUSTOMERS & MARKET REQUIREMENTS
GLOBAL
MNC
HYBRID
CONSUMER
ELECTRONCS
DETERGENTS
TELECOMM
SONY,
DAEWOO
& THE EAST
KAO
& THE EAST
NEC
Fujitsu & the East
GLOBAL
P& G,
UNILEVER
& THE WEST
PHILIPS, RCA
AND THE
WEST
ITT & the West
CORPORATE MENTALITY
MNC
ERICSSON
Think Global Act Local
Not Applicable
Not Applicable
HYBRID

8. UPSTREAM ACTIVITIES MANUFACTURING DOWNSTREAM ACTIVITIES LOCAL
IDEA GENERATION
UPSTREAM
ACTIVITIES
R & D
DESIGN
MANUFACTURING
MANAGEMENT
MARKETING & SALES
DOWNSTREAM
ACTIVITIES
CUSTOMER
AFTER SALES
CUSTOMER CARE
LOCAL
ACTIVITIES

9. Global vs. Multinational Corporate Structures

10. Ingredients for International Success Does the Company Have what it Takes to Succeed in International Markets: The Internal Corporate Audit
Capital To:
Cross Subsidize International Product & Market Expansion
Attack Competitors Profit Centers Worldwide if Needed
Product Core Competency: Important & Different Attribute
Risk Taking & First Mover Advantage
International Market Knowledge and Ethnocentrism
Cross-Culturally Competent Management and Human Resources
International Distribution Network
Corporate Structure & International Marketing Mentality
Long-Term vs.. Short Term Orientation, Human Resources
Global vs.. Multinational Mentality

11. MACROECONOMIC ENVIRONMENT
Size
GDP, GNP, Trade
Population
Growth Rates
Affordability
Per Capita GDP or GNP
Personal Income
PPP-measures
Corporate Capabilities & Objectives
Develop The List Of Most Economically Optimum Countries & Regions
Need
Economic Need
social Need
Maslow’s Concept
Engel’s Law

12. Cultural Need Satisfaction Priority
Percentage of Income Left for
Higher Levels of Needs in USA:
Super
Needs
Esteem:
Ownership:
Direction of Priorities
Safety Needs:
Basic Needs:

13. MICROECONOMIC ENVIRONMENT
Product
New
Differentiated
Existing
Demand
Exists & Is Satisfied
Exists & Is Unsatisfied
Is Expected To Emerge
Corporate Capabilities & Objectives
Determine The Actual & Desired Product Positioning In Foreign Markets
Competition
Highly Competitive
Niche Competition
Non-Existent

14. Demand Structure in the Foreign Market
Microeconomic Environment
Demand Structure in the Foreign Market
Satisfied
Needs
Unsatisfied
Needs
Emerging
Needs
CDMA-Wireless
Telephones in
Chine
Vaccine for
Common Cold
New To Them
or New To All
Innovative Companies
Modified for
Them-
Differentiated
High Cash Companies
Your Product
Common or
“Me Too”
Chinese
Shoes
In USA
Chinese
High-Tech
In Vietnam

15. Types of Political & Financial Risks
Multinational Corporations
Global Companies
Mature Markets
Emerging Economies
Citizens Actions
Government Intervention
Economic Rationale
Political Reasons
Do Not
Worry!
Long-Term
Domestication
Nationalization/
Expropriation
Confiscation or
Seizure of Assets + +
Regulation of MNC
NOW WORRY!!!

16. Corporate Safety Factors
Low High
Low
High
Natural Time Trend
R & D

17. Political, Economics & the Time Factors
Democracy
USA
Sweden
Russia89
Capitalism
Time
Time 0
Socialism
Russia89
Peru
Cuba
Non-Democracy

18. HIGH POLITICAL/FINANCIAL RISK
RISK-RETURN TRADE OFF
HIGH POLITICAL/FINANCIAL RISK
DIRECT/INDIRECT
EXPORTING
LICENSING
JOINT VENTURE
LOW
HIGH RETURN
FDI
LET ME KNOW WHEN YOU FIND THEM!!!
LOW

19. Attributes of High vs. Low Context Cultures

20. Hofstede’s Dimensions
INDIVIDUALISM VS COLLECTIVISM
HIGH/LOW POWER DISTANCE
MASCULINE VS FEMININE
WEAK/STRONG UNCERTAINTY AVOIDANCE
CONFUCIANIST DYNAMICS
(LONG RUN ORIENTATION)

21. Power Distance and Individualism Scales
Small
Large
ARG Argentina BRA Brazil CHL Chile COL Columbia GRE Greece HOK Hong Kong IND India IRA Iran JAP Japan MEX Mexico PAK Pakistan PER Peru PHI Philippines POR Portugal SIN Singapore TAI Taiwan THA Thailand TUR Turkey VEN Venezuela YUG Yugoslavia 12
PAK
•COL
•VEN
Collectivist
•TAI
•PER
•THA
•SIN
•CHL
•POR
•HOK
•YUG
•MEX 30
•PHI
•GRE
•TUR
•BRA
•IRA
Individualism
•ARG
•JAP
•IND 50
+11
+28
+44
+64
+77
+94
Small power distance collectivist
Large power distance collectivist

22. Power Distance and Individualism Scales
Small
Large
AUL Australia AUT Austria BEL Belgium CAN Canada DEN Denmark FIN Finland FRA France GER Germany GBR Great Britain IRE Ireland ISR Israel ITA Italy NET Netherlands NZL New Zealand NOR Norway SAF South Africa SPA Spain SWE Sweden SWI Switzerland USA United States 53
•AUT
•SPA
•ISR
•FIN
Individualist
•SAF
•GER
•NOR
•SWI
•FRA 71
•IRE
•SWE
•DEN
•BEL
•NZL
•CAN
•ITA
Individualism
•NET
•GBR
AUL •
USA • 91
+11
+28
+44
+64
+77
+94
Small power distance individualist
Large power distance individualist

23. Uncertainty Avoidance and Masculinity Scales
Weak
Masculinity
Feminine
Masculine 8
AUL Australia CAN Canada DEN Denmark FIN Finland GBR Great Britain HOK Hong Kong IND India IRE Ireland NET Netherlands NZL New Zealand NOR Norway PHI Philippines SIN Singapore SAF South Africa SWE Sweden SWI Switzerland USA United States
•SIN
Uncertainty Avoidance
•HOK
•DEN 32
•SWE
GBR•
•IRE
•IND
USA•
•PHI
Strong
•NOR
•CAN
•NZL
•SAF
•NET
•AUL
FIN • 56
+23
+44
+59
+77
+95
Weak uncertainty avoidance/feminine
Weak uncertainty avoidance /masculine

24. Uncertainty Avoidance and Masculinity Scale
Weak
Masculinity
ARG Argentina AUT Austria BEL Belgium BRA Brazil CHL Chile COL Columbia FRA France GER Germany GRE Greece IRA Iran ISR Israel ITA Italy JAP Japan MEX Mexico PAK Pakistan PER Peru POR Portugal SPA Spain SWI Switzerland TAI Taiwan THA Thailand TUR Turkey VEN Venezuela YUG Yugoslavia
Feminine
Masculine 59
•FIN
SWI•
•IRA
•GER
THA•
TAI•
•PAK
•AUT
BRA•
Uncertainty Avoidance
ITA•
ISR•
•VEN
•SPA 84
FRA•
COL•
TUR•
CHL•
•MEX
•ARG
•PER
YUG•
•BEL
Strong
JAP•
•POR
•GRE
112
+23
+44
+59
+77
+95
Strong uncertainty avoidance/feminine
Strong uncertainty avoidance/masculine

25. Market Attractiveness
Low
Medium
High
Competition
High
Low Risk
Med.
Low
Low
Med.
High Risk
High

26. International Brand Strategy
Global Brand Manager’s Objective: Global Brand Dominance
Kleenex, Coke, Hoover, Band Aid, Lee, Jeep, Evian)
Branding
Standard brand name (imac, Tabasco) or use of company name (IBM, Honda)
Brand Name Adaptation (Tide vs.. Ariel)
Different Names (Lexus vs.. Toyota)
Private Branding
Walmart (worldwide)
Sears (in NAFTA)

27. GLOBAL PRODUCT POSITIONING
THERE ARE THREE PSYCHOLOGICALLY DIFFERENT EFFECTS ON BUYERS WHEN A GLOBALLY STANDARDIZED PRODUCT OR SERVICE IS INTRODUCED ON A LOCAL MARKET:
1. CUSTOMERS’ EXISTING PERCEPTUAL MAPS OF THE PRODUCT CATEGORY REMAIN INTACT BUT THE NEW BRAND TARGETS ONE UNTAPPED SEGMENT.
2. THE PRODUCT SPACE IS ALTERED, BY ADDING DIMENSIONS OR EXTENDING END-POINTS.
3. BUYER PREFERENCES ARE CHANGED.
IN PRACTICE, ALL THREE PROCESSES ARE OFTEN AT WORK SIMULTANEOUSLY.

28. BRAND IMAGE
MISPOSITIONED PRODUCTS CAN BE ATTRACTIVE TO POTENTIAL CUSTOMERS BECAUSE OF BRAND IMAGE AND STATUS. GLOBAL BRANDS OFTEN DO BETTER THAN LOCAL BRANDS THAT MAY BE BETTER SUITED TO CUSTOMER NEEDS FOR THAT AND OTHER REASONS:
CONSPICUOUS CONSUMPTION -- LET EVERYONE SEE WHAT YOU BUY AND HOW MUCH YOU BUY.
LOWER PERCEIVED RISK.

29. COUNTRY OF ORIGIN
WHERE A PRODUCT OR BRAND COMES FROM OFTEN COUNTS A GREAT DEAL WITH CONSUMERS.
COUNTRY-OF-ORIGIN EFFECT DEALS WITH QUALITY PERCEPTIONS OF PRODUCTS. THIS EFFECT DIFFERS BY PRODUCT CATEGORY. ALSO, THE QUALITY LEVEL AT WHICH A COUNTRY PRODUCES IS FACTORED IN.
COUNTRY-OF-ORIGIN BIAS CUSTOMERS TEND TO OVERSTATE THE POSITIVE AND NEGATIVES OF PRODUCT ATTRIBUTES ANDTHIS CAN CAUSE A BIAS TOWARDS PRODUCTS FROM A GIVEN COUNTRY.

30. LOWER PRICE
THROUGH A REDUCED PRICE, A CUSTOMER CAN BE INDUCED TO BUY A MISPOSITIONED BRAND BECAUSE THEY FEEL THAT THEY ARE GETTING A “GOOD DEAL.”
HOWEVER, THIS CAN BACKFIRE ON THE MARKETER, SINCE THE PRICE PAID GRADUALLY LOSES SALIENCE, WHILE THE PRODUCT STAYS. MARKETER BECOMES VULNERABLE TO LOWER-COST MANUFACTURERES ENTERING THE MARKET (Japanese products vs. Koreans).

31. International Price Escalation Effects (in $U.S.)3 3 3

32. Price quotes (Ex-Factory or Ex-Work) Exchange rates
Export Pricing Issues
Price quotes (Ex-Factory or Ex-Work)
Exchange rates
Method of payment (Cash, LOC, Countertrade…)
Government regulations (Walmart-Germany)
To whom you sell (Government vs. Private Sector).
Consumer affordability (per capita income).
Competition (domestic or global).
Country of origin and local consumer perception. 7 7 7

33. Transfer Pricing GM USA (Producing cars) Opel division European Union
A C Delco
USA
(Battery, stereo,
auto parts)
Transfer Pricing
Vietnam
(export)
GM-JV in
Shenyang, China
Export pricing

34. The Hamburger Standard9 9 9

35. *Prices may vary locally †Purchasing power parity; local price divided by price in the United States **Against dollar ‡Average of New York, Chicago, San Francisco and Atlanta ‡‡Dollars per pound §Market rate 10 10 10

36. East-West Distribution Mentality
Large
Wholesaler
Medium
Wholesaler
Small
Wholesaler
Manufacturer
Retailer
Import House
End Buyer
Cost 25%-50% higher for consumers in Japan
East: Japan- Basic Marketing Objective: Relationship-permanency-pay per existence
Wholesaler
Retailer
End Buyer
Manufacturer
West: USA- Basic Marketing Objective: Efficiency-Pay Per Performance

37. Japanese Import Distribution Alternatives - Distribution Route of Italian Spaghetti
Japanese Conventional Route
Producer
Small wholesaler
Processing and packing plant
Import agent
Primary wholesaler
Intermediary wholesaler
Retail price: 170yen/300g package
Retailer
US-Style Restructured Route
Producer
Importing company A/C
Processing and packing plant
Depots Distribution Wholesalers Distribution centers
Retailer
Retail price: 128yen/300g package
Savings: 25% 3 3

38. Size and Number of Retail Outlets in Selected Countries7 7

39. East-West International Distribution Mentality
Efficient
Manufacturer
Large
Wholesaler
Medium
Wholesaler
Small
Wholesaler
Retailer
Inefficient Domestic Distribution Network
Efficient
Global
Distributors
(e.g. JTCs)
Import House
End Buyer
EAST (e. g. JAPAN)
Expensive
Global
Distributors
(e.g. EMCs)
WEST (e. g. USA
Inefficient
Manufacturer
Wholesaler
Retailer
End Buyer
Efficient Domestic Distribution Network

40. East-West Distribution Mentality
Large
Wholesaler
Medium
Wholesaler
Small
Wholesaler
Manufacturer
Retailer
Commission Structure (PPP-loyalty)
JIT (small apt. small retailers)
Multiple Visits Per Day to Retailer by Small Wholesaler
Return Policy- 2-way Channel
Credit Extension- 150 days at low interest (0.06% now)
Employment Buffer-economics environment
Natural Import Barrier-trade policy
Cultural, Political-Legal
End Buyer
Wholesaler
Retailer
End Buyer
Manufacturer

41. Determinants of Choice of Channel
1. Product Requirements (Perishable lettuce, sensitive apples, fine china, scratched cars, beer without freshness, moldy cakes,...)
2. Logistic Feasibility (Equipment by DHL, autos by air, faxes of newsletters, freezer railroad cars, shock-absorbent packaging, vacuum-packed,...)
3. Demand Factors (Importance of speed for repairs, timing of raw materials for inventory, customers’ need for immediate gratification, quality standards of middleman and final user,...)
4. Competitive Factors (How fast is fast? How good is good? What are the alternatives for the buyer? Strategic importance of the market?)
5. Middlemen Resources (Storage capability? Credit or consignment or cash? Motivating with fast delivery? Just-in-time system? Promised supplies? Ability to support the marketing effort?)
6. Own Resources (Financial, manpower, production capacity) 10 10

42. Seiko’s Authorized and Unauthorized Channels of Distribution
Europe
Hong Kong
Japan
North America
Importer
Importer
Importer
Distributors
Distributors
Distributors
Distributors
Retailers
Retailers
Retailers
Retailers
Broken arrows denote the flow of Seiko watches through unauthorized channels of distribution. Solid arrows denote the flow of Seiko watches through authorized channels of distribution. 8 8

43. Advertising Intensity in Selected Countries2 2

44. Media Usage in Various Countries3 3

45. Components of Global Advertising Strategy
Message (content) and Creative (form- the way the message gets across)
Media (radio, TV, outdoor, print, point of purchase, cinema. internet)
Target Audience (cross-cultural, provincial, demographic)
Product Nature (industrial.consumer, durable, non-durable)
Corporate Mentality (global, multinational)
Advertising Objective (awareness, understanding, interest, purchase) 4 4

46. International Communications Process
Awareness Understanding Interest Purchase
Producer/ marketer/ advertiser Sets objectives and advertising budget(s) worldwide
Advertising agency Develops the message (Cultural Encoding) and selects the media
Mass Media Carries the message (Available & Acceptable Media In Each Country)
Target Market Receives the message and interprets its content from media/ peers (Cultural Decoding)
Marketing coordination and control
Generate feedback on effects
Recipients Think & feel (Cognition & Emotion); act & react to the message (hierarchy of effects)
Revisit Ads & Objectives
Results Vs. Ad Objectives 6 6

47. International Product Life Cycle
$ Sales
$ Trade
IPLC
Net Revenue
From Trade
For the First
Mover Nation
PLC
Country
Monopoly Over the
Industry
Individual
Monopoly Over The
Technology
Company
Monopoly
Over The
Product
Exports=Imports Line
Time