Transcript Chapter 8

The International Marketing Plan
and Entry Mode Selection
Dana-Nicoleta Lascu
Chapter 8
Copyright Atomic Dog Publishing, 2002
Chapter Objectives
• Develop a general understanding of international
marketing strategies at the different levels of the
international organization and provide insights into the
international marketing planning process of selected
companies
• Offer an understanding of company entry mode
selection and the risks involved at each level
• Describe different types of strategic alliances involving
international companies
Copyright Atomic Dog Publishing, 2002
Developing an International
Marketing Strategy
Developing and maintaining a
strategic fit between international
company objectives,
competencies and resources,
and the challenges presented by
its international markets.
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Levels of Strategic Planning
Corporate
Division
Business Unit
Product Level
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Levels of Strategic Planning,
continued
Corporate
• Strategic plan allocates resources and establishes
objectives for the whole enterprise worldwide
• Has long-term focus
• Involves the highest levels of management
• Involves international target market selection
Copyright Atomic Dog Publishing, 2002
Levels of Strategic Planning,
continued
Division
• Strategic plan allocates resources to each business
unit based on division goals and objectives
• Portfolio analysis is used to decide which brands to
harvest, invest in, or divest
• Has longer-term focus
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Levels of Strategic Planning,
continued
Business Unit
• Planning involves decisions on which consumer
segments to target in each country and how to
target them
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Levels of Strategic Planning,
continued
Product Level
• A marketing plan is developed at product level,
product line level, or at brand level
• Has shorter-term focus
• Involves the marketing department
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Developing the International
Marketing Plan
• Develop strategies for the target market
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Product mix
Distribution
Promotion mix
Pricing
• Plan international marketing programs
• Manage the international marketing effort:
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Organize
Implement
Control
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Deciding on the International
Entry Mode
• Indirect Exporting
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Company uses home country intermediaries, who in turn sell
product overseas
Lowest risk, lowest control
Companies can use cooperative exporting, also known as
piggybacking and mother-henning
- Involves using the distribution system of exporters with
established systems for selling abroad who agree to handle the
export function of a non-competing company on a contractual
basis
• Direct Exporting

Own in-house exporting department handles the exporting
function
Copyright Atomic Dog Publishing, 2002
Selecting the International
Entry Mode, continued
• Licensing
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Licensor offers know-how, shares technology, and shares
brand name with licensee
Licensee pays royalties
Lower-risk entry mode; limits exposure to economic,
financial, and political instability
Permits the company access to markets that may be closed
or that may have high entry barriers
DOWNSIDE: Can produce competitor in the licensee
Copyright Atomic Dog Publishing, 2002
Selecting the International
Entry Mode, continued
• Franchising
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Franchisor gives franchisee right to use brand name,
trademarks and business know-how
Less risk, higher level of control
Very rapid market penetration
DOWNSIDE: Can create future competitors who understand
the operations of the franchise
Copyright Atomic Dog Publishing, 2002
Selecting the International
Entry Mode, continued
• Joint Venture

Preferred entry mode of governments of developing countries
- Help develop local expertise
- If production is exported, helps with country’s balance
of trade
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Foreign company and local company establish a jointlyowned new company
Parties share capital, equity, labor
70% of all joint ventures break up within 3.5 years
DOWNSIDE: Joint-venture partners can turn into viable
competitors; and 70% of all joint ventures break up
within 3.5 years.
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Selecting the International
Entry Mode, continued
• Consortia
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Involve three or more companies
Monopoly effect
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Allowed
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- where expensive R&D is involved
- in underserved markets
- in markets where the government and/or the
marketplace can control its activity
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Selecting the International
Entry Mode, continued
• Wholly Owned Subsidiaries
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Can be developed by the company –
greenfielding – or can be purchased (acquisition
or merger)
Involve long-term market commitment
High cost
High control of operations
Greatest level of risk
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Selecting the International
Entry Mode, continued
• Branch Offices
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Entities are part of the international company, rather
than a new company (as in the case of the subsidiary)
Involves substantial investment
sales office
showroom
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Engages in a full spectrum of marketing activity
High level of control
Copyright Atomic Dog Publishing, 2002
International Strategic Alliances
• Typically, the term refers to nonequity alliances;
for example:
• Manufacturing
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Contract manufacturing, engineering, technological, and
research and development alliances
• Marketing
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One firm handles marketing for another, or some aspect of the
marketing process
• Distribution
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One firm handles the distribution for another, or some aspect of
the distribution process
Copyright Atomic Dog Publishing, 2002
Chapter Summary
• Addressed marketing strategies involved at
different levels of the international organization
• Provided insights into the international marketing
planning process
• Offered an understanding of company entry mode
selection decision and the risks and control level
associated with each level
• Described different types of entry modes and the
risks and control level associated with each
Copyright Atomic Dog Publishing, 2002