1. Global Marketing Management: Planning and Organization

2.  Global marketing management  Benefits of Global Marketing  International Planning Process  Market-entry Strategies  The important factors for each alternative market-entry strategy 11-2

3.  Multinational companies  Confronted with increasing global competition for expanding markets  Changing their marketing strategies and altering their organizational structure  Nearly 75% of North American and European corporations are smarten up their business processes  Smaller companies  More flexible  May enable them to reflect the demands of global markets and redefine programs more quickly 11-3

4.  1970s – “standardization versus adaptation”  1980s – “global integration versus localization”  1990s – “global integration versus local responsiveness”  Example of new “mass customization” by Dell.  Risk involves with global standardization (e.g., Barbie Doll, Coca-cola). 11-4

5.  The trend back toward localization  Caused by the new efficiencies of customization  Made possible by the Internet  Increasingly flexible manufacturing processes  From the marketing perspective customization is always best  Global markets continue to homogenize and diversify simultaneously  Best companies will avoid trap of focusing on country as the primary segmentation variable. Other segmentation may work better (e.g., lifestyle) 11-5

6.  Nestle – world’s biggest marketer of infant formula, powdered milk, instant coffee, chocolate, soups, and mineral water  8500 products produced in 489 factories in 193 countries  Nestle strategy  Think and plan long term  Decentralize  Stick to what you know  Adapt to local tastes  Long-term strategy works for Nestle  Because the company relies on local ingredients  Markets products that consumers can afford 11-6

7.  When large market segments can be identified  Economies of scale in production and marketing  Important competitive advantages for global companies  Transfer of experience and know-how  Across countries through improved coordination and integration of marketing activities  Marketing globally  Ensures that marketers have access to the toughest customers  Market diversity carries with it additional financial benefits  Firms are able to take advantage of changing financial circumstances 11-7

8.  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 11-8

9.  Planning is both a process and philosophy  Relates to the formulation of goals and methods of accomplishing them ▪ Corporate planning ▪ Strategic planning ▪ Tactical planning  Company objectives and resources  Each new market requires ▪ 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 11-9

10.  International commitment  Commitment in terms of ▪ Dollars to be invested ▪ Personnel for managing the international organization ▪ Determination 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 11-10

11. Exhibit 11.1 11-11

12. What product, which market, and how?  Phase 1 – Preliminary analysis and screening  Matching Company and Country Needs.(SWOT and PESTEL analyses)  Phase 2 – Adapting marketing mix to target markets (e.g., KFC)  Phase 3 – Developing the marketing plan  Phase 4 – Implementation and control 11-12

13.  An entry strategy into international market should reflect on analysis  Market characteristics ▪ Potential sales ▪ Strategic importance ▪ Strengths of local resources ▪ Cultural differences ▪ Country restrictions  Company capabilities and characteristics ▪ Degree of near-market knowledge ▪ Marketing involvement ▪ Management commitment 11-13

14. Exhibit 11.2 11-14

15.  Companies most often begin with modest export involvement  A company has four different modes of foreign market entry  Exporting  Contractual agreements  Strategic alliances  Direct foreign investments 11-15

16.  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  Customers include Wal-Mart and Sears 11-16

17.  The Internet  Initially, Internet marketing focused on domestic sales  A surprisingly large number of companies started receiving orders from customers in other countries, ▪ Resulting in the concept of international Internet marketing (IIM)  Direct sales  Particularly for high technology and big ticket industrial products 11-17

18.  Contractual agreements  Long-term,  Nonequity association between a company and another in a foreign market  Contractual agreement (e.g., transfer of technology, processes, trademarks, human skills)  Licensing  A means of establishing a foothold in foreign markets without large capital outlays.  Patent, trademark rights, and the right to use technological processes.  A favorite strategy for small and medium-sized companies 11-18

19.  Franchising  A rapid growing form of licensing. Franchiser provides a standard package of products, systems, and management services  Franchise provides market knowledge, capital, and personal involvement in management  Expected to be the fastest-growing market-entry strategy as it provides an attractive form of corporate organization for companies wishing to expand quickly with low capital investment.  (e.g., KFC, McDonalds) 11-19

20.  A strategic international alliance (SIA)  A business relationship established by two or more companies to cooperate out of mutual need  To share risk in achieving a common objective  SIAs 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 markets  Access to new technology  More efficient production and innovation  Reduced marketing costs  Strategic competitive moves  Access to additional sources of products and capital  (e.g., in airline industry One world Alliance consists of British Airways, Japan Airlines etc.) 11-20

21.  International joint ventures (IJVs)  A partnership of two or more participating companies that have joined forces to create a separate legal entity  (e.g., merge with foreign company in order to gain better access in the new market)  Consortia  Similar to joint ventures and could be classified as such except for two unique characteristics ▪ Typically involve a large number of participants ▪ Frequently operate in a country or market in which none of the participants is currently active 11-21

22.  Factors that influence the structure and performance of direct investments  Timing  The growing complexity and contingencies of contracts  Transaction cost structures  Technology transfer  Degree of product differentiation  The previous experiences and cultural diversity of acquired firms  Advertising and reputation barriers 11-22

23.  Devising a standard organizational structure is difficult  Because organizations need to reflect a wide range of company-specific characteristics  Companies are usually structured around one of three alternatives  Global product divisions responsible for product sales throughout world  Geographical divisions responsible for all products and functions within a given geographical area  A 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 11-23

24. Exhibit 11.4 11-24

25.  To keep abreast of the competition and maintain a viable position for increasingly competitive markets, a global perspective is necessary  Cost containment, customer satisfaction, and a greater number of players mean that every opportunity to refine international business practices must be examined in light of company goals 11-25

26.  Important avenues to global marketing that must be implemented in the planning and organization of global marketing management  Collaborative relationships  Strategic international alliances  Strategic planning  Alternative market-entry strategies 11-26