Transcript INTERNATIONAL BUSINESS MANAGEMENT (IBM): BUS 600

INTERNATIONAL MARKETING
MANAGEMENT:
NATURE & SCOPE
By
Elisante Ole Gabriel (Tanzania)
Chartered Marketer
[email protected], www.olegabriel.com
+255-784-455-499
KEY AREAS TO BE COVERED
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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
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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)
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3
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 production
• Globalization of markets
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Domestic marketing and international marketing decisions
Overseas Environmental
Challenges (Uncontrollables)
Marketing
Challenges
in country Y
Domestic Environmental
Challenges
(Uncontrollables)
Economic
Economic
Political
Legal
(Controllables)
Product
Marketing
Challenges
in country X
Place
Consumer
Price
Socio
Cultural
Political
Marketing
Challenges
in country Z
Competition
Promotion
Competition
Geography
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Legal
Infrastructure
Logistics
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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
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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
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Identifying opportunities in international
markets
•
Extreme focus product strategy
•
Products-country matrix strategy
•
Growth-share matrix of exports
•
Market focus strategies
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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
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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
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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
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Modes (contd)
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
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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
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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
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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
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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
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Factors
(contd)
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)
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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
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Factors affecting the selection of entry
mode
(contd)
Internal factors
• Company’s objectives
• availability of company resources
• level of commitment
• international experience
• flexibility
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Finally
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.
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