Transcript FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION

THERE IS NO
RIGHT WAY TO
DO
SOMETHING
WRONG.
Somi
BUDAPESTI GAZDASÁGI FŐISKOLA
INTERNATIONAL MARKETING
LECTURE- 8
In English
20th April 2012 – FRIDAY
0940hr –1110hr (E.F. 13-15)
Miklós
(Nicholas)
SOÓS
0630 265 9638
[email protected]
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LECTURE DATES - TIMES - LOCATION
RE: Miklós (Nicholas) SOÓS
1. FEB. 17.
0940-1110 [E.F.13-15]
2. FEB. 24.
0940-1110 [E.F.13-15]
3. MARCH 2.
0940-1110 [E.F.13-15]
4. MARCH 9.
0940-1110 [E.F.13-15]
MARCH 16.
VACATION
MARCH 23.
VACATION
5. MARCH 30.
0940-1110 [E.F.13-15] – re. feb.10
6. APR. 6.
0940-1110 [E.F.13-15] (guest lect?)
7. APR. 13.
0940-1110 [E.F.13-15]
8. APR. 20.
0940-1110 [E.F.13-15]
9. APR. 27.
0940-1110 [E.F.13-15]
10. MAY 4.
0940-1110 [E.F.13-15]
11. MAY 11.
0940-1110 [E.F.13-15]
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CLASS ATTENDANCE
Lectures
No.
%
Lect. 1
16
24
Lect. 2
22
33
Lect. 3
30
45
Lect. 4
30
45
Lect. 5
35
52
Lect. 6
34
51
Lect. 7
34
51
Lect. 8
Lect. 9
Lect. 10
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BGF. INTERNATIONAL MARKETING – MINI TEST 1 - ASSESSMENTS
Markscale %
No.
<45
4
46-50
1
51-55
0
56-60
7
61-65
0
66-70
6
71-75
0
76-80
8
81-85
0
86-90
7
91-95
0
96-100
1
Total no. of students:
Class average :
71%
Lowest score
20%
Highest score:
100%
Class average 2 (67):
39%
34
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MINI TEST 1 - RESULTS
8
7
6
5
4
3
2
1
0
40(-) 4145
4650
5155
5660
6165
6670
7175
7680
8185
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Please ensure that you
personally sign the
attendance sheet every
time you attend a
lecture.
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The visual contents of lectures
will be available internally on
the following site:
K:\Hallgatok\ANGOL\Soós tanár úr
(available internally only)
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SOURCES, REFERENCES – SUGGESTED READINGS
The course is NOT based on any specific textbook. The following are recommended.
International Marketing, Cateora, P. & Graham, J. (2005) 12th edition, McGraw-Hill
Global Marketing, Hollensen, S. (2004) 3rd edition, Prentice Hall
International Marketing Strategy, Doole, I. & Lowe, R (2004) 4th edition Thomson
International Marketing and Export Management, Albaum G, Prentice Hall London
Principles of Marketing, Kotler P et. Al, 2nd European edition, Prentice Hall E. 2003
Principles of Marketing, Jobber D, McGraw-Hill
Principles of Marketing, Brassington F, Financial Times Prentice Hall, 2000
Marketing on the Internet: Principles of online marketing, Strauss J & Raymond
F, Prentice Hall,1999
Internet sites:
www.pmcinc.org/
www.tradeport.org
www.FAS.USDA.gov
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ASSESSMENT METHOD
End of year written examination
60%
Two (2) ‘mini’ exams of 20 min. duration
during unannounced lectures
40%
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Now I would like to introduce you to
our guest lecturer
Juste SIAUCIUNAITE
from Lithuania who will inform us
about her country much of which will
be relevant to to the subject on
International Marketing.
Please welcome Juste.
Lithuania – small but unique!
• The Lithuanian tricolor flag was re-adopted
in 1989, after Lithuania regained its
independence from the Soviet Union. It
was last used in the beginning of the 20th
century, from 1918 to 1940. The yellow
stripe of the Lithuanian flag represents
golden fields of grain, the green
represents a lush countryside, and the red
represents blood spilled in battle for
Lithuania.
• The Lithuanian coat of arms is an ancient
symbol that stands for Lithuania's long
European history. The modern coat of
arms of Lithuania was officially adopted in
in the 1990s, but the coat of arms dates
back to the middle ages. The white rider
(or Vytis) and horse are depicted on a red
background with gold and blue accents.
• Gediminas, the grand duke or prince of
Lithuania in the 13th-14th centuries, was
responsible for founding Lithuania as an
empire. Gediminas is remembered for his
response to the religio-political issues of
the day. Widespread conversion to
Christianity clashed with deeply rooted
paganism, making Gediminas' rule
especially difficult.This statue of
Gediminas is found in the main square in
Vilnius Lithuania.
• This wooden sculpture of Christ can be
found at Lithuania's Hill of Crosses. This
pilgrimage site is a place for Lithuanians
and international travelers to pray or
simply meditate.
• Painted, dyed, and decorated eggs are a
part of the Lithuanian Easter tradition, just
like elsewhere in Eastern Europe. These
Easter eggs are wooden, but Lithuanian
decorated eggs can also be blown
eggshells dyed with natural plant dyes and
patterned using a traditional wax-removal
method.
• Lithuania's economy has long depended
upon what its farmers could produce.
However, Lithuania has often struggled to
keep up with technological farming
advances. Especially in rural Lithuania,
farming may be done much the way it has
been done for centuries. This granary is
one example of the existing rural
Lithuanian agricultural artifacts that are
part of Lithuania's rustic charm.
• Fishing along the coast or along other
waterways has been an important survival
technique for Lithuanians for hundreds of
years. Particularly in Neringa, fishing is still
a way of life. Visitors to Lithuania may
even join fishing tours (both during the
warm months, and during the winter for ice
fishing trips) or enjoy some smoked fish
while they travel along the Baltic coast.
• Lithuania was once apart of the Amber
Road, so it's no wonder that amber is used
so prelevantly through Lithuania. Lithuania
also has amber museums for you to visit.
• Lithuanian traditional costumes feature
long skirts, aprons, vests, and hats for the
women, and long pants, vests or coats,
and boots for the men.
Do’s and dont’s in Lithuania
• DO exchange business cards after introductions.
• DON'T sit until invited to sit down.
• DO expect a Lithuanian to try to protest if you give
them a gift. Explain that it's just a little something
and offer it again until they accept.
• DON'T try to schedule meetings in July and
August, which are common
vacation months.
• DO bring a gift for your hosts, such as chocolates,
liquor, flowers, or fruit.
• DO be aware that you might have to
remove your shoes before entering
Lithuanian home.
• DON'T put your hands in your pockets or
sit with an ankle resting on the
other knee. Both are considered poor
etiquette.
• DO not be late more then 15 minutes.
• DON'T give yellow chrysanthemums, as
they are used for funerals.
• DO wait for a woman to extend her hand
first.
• DO open your gift upon receipt.
• DON'T move to a first name basis until invited to
do so.
• DO finish all the food on your plate.
• DON'T remain seated while greeting someone.
Stand up!
• DO indicate that you are done eating by putting
the fork and knife
parallel across the right side of the plate.
• DON'T make jokes about Lithuanian culture.
Lithuanians are very proud of
their culture, so to make a joke about it would be
in poor taste.
• DO compliment the host and finish everything
served to you.
• DO tip about 10% of the bill. That is customary, but not
obligatory.
• DON'T give a baby gift before a baby is born; it's bad
luck.
• DO give flowers in odd numbers, not even. Even
numbers of flowers are for funeral.
• DON'T smile unless you mean it. In Lithuania, smiling
a lot can be seen
as insincere.
• DO dress conservatively for business occasions. A
suit is acceptable for men, and women should wear
fashionable yet conservative clothes.
• DON'T shake hands or greet someone over a
threshold. Go into the room first, and then exchange
handshakes.
• DO arrive on time. Lateness might indicate that you
don't respect your hosts.
• DO greet people with a handshake, direct
eye contact, and a smile.
• DON'T speak too loudly in public.
• DO arrive on time for appointments.
Punctuality is important.
• DON'T wear t-shirts, shorts, sneakers, or
sweats during business meetings.
• DO accept offers of hospitality and do
reciprocate.
• DO open doors for women, if you are male.
• DON'T point with your finger. Instead, point with
your entire hand.
• DO not pick your nose in public.
• DON‘T drop litter.
• DO maintain eye contact at business meetings.
• DON'T interrupt others while they are speaking.
Wait patiently for them to finish.
• DO not ask a lady her age.
• DON'T try to bring personal relationships into
business. They are kept separate.
• DO remove gum, pencils, cigarettes or anything
else from your mouth while talking on the phone.
Geography
• Climate: With four distinct seasons, the
climate is humid continental, with a
moderating maritime influence from the
Baltic Sea.
• Cities (2011): Capital--Vilnius (pop.
542,932); other cities--Kaunas (336,912);
Klaipeda (177,812); Siauliai (120,969).
Geography
• Area: 65,200 sq. Km
• Nationality: Noun and adjective-Lithuanian(s).
Population (2011): 3,244,601.
Government
• Type: Parliamentary democracy.
Constitution: On October 25, 1992,
Lithuanians ratified a new constitution,
which was officially signed on November 6
that year.
Economy
• GDP (2010): $36 billion.
GDP growth (2010): 1.3%.
GDP growth (2011 forecast): 5%.
Annual inflation rate (September 2011):
4.5%.
Unemployment rate (second quarter of
2011): 15.6%.
• Natural resources: Limestone, clay, sand,
gravel, iron ore, and granite
Neighbours
• The largest and most populous of the
Baltic states, Lithuania is situated on the
eastern shore of the Baltic Sea, in
northeastern Europe. It is bordered by
Latvia to the north, Belarus to the
southeast, Poland to the southwest, and
Kaliningrad, a territory of Russia, to the
west. It has 60 miles of sandy coastline, of
which only 24 miles face the open Baltic
Sea.
• The terrain is marked by numerous small
lakes and swamps, and a mixed forest
zone covers 30% of the country.
According to some geographers,
Lithuania's capital, Vilnius, lies at the
geographical center of Europe.
Language
• The Lithuanian language still retains the
original sound system and morphological
peculiarities of the prototypal IndoEuropean tongue and, therefore, is
fascinating for linguistic study. Between
400 and 600 AD, the Lithuanian and
Latvian languages split from the Eastern
Baltic (Prussian) language group, which
subsequently became extinct.
Economy
• After joining the EU in 2004, Lithuania saw
its economy boom, reaching a record
8.9% GDP growth in 2007.
• Lithuania pegged its national currency--the
litas--to the euro on February 2, 2002 at
the rate of LTL 3.4528 to EUR 1.
Defense
• Lithuania, a member of the North Atlantic
Treaty Organization (NATO) since 2004,
fully endorses the concept of collective
defense.
Foreign relations
• Lithuania became a member of the United
Nations (UN) on September 17, 1991 and
is a signatory to a number of UN
organizations and other international
agreements. Lithuania gained membership
in the World Trade Organization on May
31, 2001.
• Thank you for your attention!
Where we finished
last week.
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FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION
External Factors
Target
Country
Market
Factors
Target
Country
Environ
mental
Factors
Target
Country
Production
Factors
Home
Country
Factors
Foreign
Market
Entry
Mode
Decision
Company
Resource/
Commitment
Factors
Company
Product
Factors
Internal Factors
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FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION
External Factors
Target Country Production Factors
Productive Agents
Economic Infrastructure
• quality
• transport
• quantity
• communication
• material cost
• port facilities
• labor
• energy
Low production costs in the target country encourage some form
of local production as against exporting.
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FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION
External Factors
Target
Country
Market
Factors
Target
Country
Environ
mental
Factors
Target
Country
Production
Factors
Home
Country
Factors
Foreign
Market
Entry
Mode
Decision
Company
Resource/
Commitment
Factors
Company
Product
Factors
Internal Factors
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FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION
External Factors
Home Country Factors
Market,
Production,
Environmental
Big domestic
markets allow
companies to
grow locally,
less likely to
seek foreign
markets
Competitive
Structure
Oligopolistic
(few dominant)
situations allow
cos. to grow
before entry to
foreign marketsusually invest in
production.
High
Production
Cost
Government
Policies
Encourages
entry mode
involving local
production
e.g. licensing,
investment
Tax incentive
for export;
restrictive on
foreign
investment
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FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION
External Factors
Target
Country
Market
Factors
Target
Country
Environ
mental
Factors
Target
Country
Production
Factors
Home
Country
Factors
Foreign
Market
Entry
Mode
Decision
Company
Resource/
Commitment
Factors
Company
Product
Factors
Internal Factors
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FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION
External Factors
Home Country Factors
Market,
Production,
Environmental
Big domestic
markets allow
companies to
grow locally,
less likely to
seek foreign
markets
Competitive
Structure
Oligopolistic
(few dominant)
situations allow
cos. to grow
before entry to
foreign marketsusually invest in
production.
High
Production
Cost
Government
Policies
Encourages
entry mode
involving local
production
e.g. licensing,
investment
Tax incentive
for export;
restrictive on
foreign
investment
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INFLUENCE OF EXTERNAL FACTORS
AN EMPIRICAL VARIFICATION
100 countries studied relating to market entry attractiveness, on
the basis of 59 characteristics. Three clusters: ‘HOT’
Stable Gov.
High mrkt oppty.
High econ. level
Low barriers re:
legal, geocultrl.
Austria, Australia,
Canada, Norway,
Sweden, Switzl.,
N.Z., Japan
‘MODERATE’
Somewhere between
‘HOT’ and ‘COLD’
Latin Amer., Finland,
Ireland, Israel, Hong K.,
Kuwait, Spain, Taiwan
‘COLD’
Opposite to ‘HOT’
countries
Most African c.,
India, Middle East,
Bolivia, Haiti, Peru,
Greece
As companies move from ‘HOT’ to ‘COLD’ countries they depend
increasingly on export entry and decreasingly on investment and local
production. For average ‘HOT’country export = 47.2% of all entry mode. For
average ‘COLD’ country export = 82.6% of entry modes.
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FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION
External Factors
Target
Country
Market
Factors
Target
Country
Environ
mental
Factors
Target
Country
Production
Factors
Home
Country
Factors
Foreign
Market
Entry
Mode
Decision
Company
Resource/
Commitment
Factors
Company
Product
Factors
Internal Factors
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FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION
Internal Factors
Company
Product
Factors
Company
Resource/
Commitment
Factors
How a company responds to external factors in
choosing an entry mode depends on internal factors.
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FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION
Internal Factors
Company Product Factors
Differentiation
Degree
Pre- and PostPurchase Service
Service
Highly differentiated
products with distinct
advantages = price and
other discretion.
Product service
demand close
proximity to
customer
Favors export entry.
Favors subsidiary
and local
production entry
mode
e.g. tourism,
engineering,
advertising,
banking etc..
needs to be
done locally
Technology
Technical
products
more likely
licensing
Low differentiated
products favor local
production entry.
How a company responds to external factors in choosing an entry mode
depends on internal factors.
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FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION
External Factors
Target
Country
Market
Factors
Target
Country
Environ
mental
Factors
Target
Country
Production
Factors
Home
Country
Factors
Foreign
Market
Entry
Mode
Decision
Company
Resource/
Commitment
Factors
Company
Product
Factors
Internal Factors
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FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION
Internal Factors
Company Resource/ Commitment Factors
Management
Capital
Production Skills
Marketing Skills
The more abundant a company’s resources is these factors the more its entry
mode options
Willingness to commit
Resources must be joined by the willingness to commit them to foreign market
development. A high degree of commitment means that managers will select the
entry mode from a wider range of alternatives.
For most companies, international commitment has grown along with
international experience over a lengthy period of time.
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no
Product?
Foreign Market Entry
Decision Process.
A Logical Flow Model
yes
Investigate?
no
yes
Potential?-Prim.res.
no
yes
no
Potential?-Send.res.
Continue
locally
yes
Prim. Re. supports
Send.res.?
no
Redesign
Entry mode
no
yes
Entry mode?
yes
Redesign
Markng
Plan
Delay
entry
no
no
Good Marketing
Plan?
yes
Enter now??
yes
Operations
Redesign
Strategy
no
no
Withdraw
Satisfactory?
yes
yes
24/39
Other Market
Opportunity?
no
Stay with single
market
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DON’T FIND
FAULT, FIND
A REMEDY
Henry Ford
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