Transcript ch01 Hollensen - Warsaw School of Economics

Svend Hollensen
GLOBAL MARKETING
4th Edition
Lecture by Ewa Baranowska-Prokop, Ph.D.
2 Global marketing in the firm
Learning objectives
Characterize and compare the
management style in SMEs and LSEs
Identify drivers for global integration and
market responsiveness
Explain the role of global marketing in the
firm from a holistic perspective
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Figure 1.1
Nine strategic windows
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EPRG framework
of business activities
Ethnocentric
Polycentric
Geocentric
Regiocentric
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What is this?
The firm’s commitment to coordinate its
marketing activities across national
boundaries in order to find and satisfy
global customer needs better than the
competition is known as ______.
Global marketing
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What is this?
What term refers to the development
and selling of products or services
intended for the global market, but
adapted to suit local culture and
behaviour (think globally, act locally)?
Glocalization
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Figure 1.2 Knowledge transfer
Core global business strategy
(HQ)
Country
A
Country
B
Country
C
Country
D
Feedback
Feedback
Internationalizing the strategy
Transferring global know-how and ‘best practices’
between countries with feedback to HQ
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Figure 1.3
Convergence of orientation
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LSEs and SMEs
Resources
Formation of strategy/
decision making
processes
Organization
Risk taking
Flexibility
Economies of scale
and scope
Use of information
sources
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Figure 1.4
Intended and emergent strategy
Realized
strategy
Unrealized
strategy
Source: Mintzberg, 1987, p. 14. Copyright © 1987 by the Regents of the University of California. Reprinted from the California
Management Review, Vol. 30, No. 1. By permission of the Regents.
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Figure 1.5 Incremental change
and strategic drift
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What is this?
When accumulated volume in
production results in lower cost price
per unit, _____ occur.
Economies of scale
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Finding economies of scale
 Reducing operating costs per unit and spreading
fixed costs over larger volume due to
‘experience curve effects’
 Pooling global purchasing gives the opportunity
to concentrate global purchasing power over
suppliers
 Building of centres of excellence by using larger
scale and focusing talent in one location
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What is this?
When resources can be reused
from one business/country in
additional business/countries, _____
occur.
Economies of scope
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Global coordination
Global
integration
Market
responsiveness
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Figure 1.7 Global integration/
market responsiveness grid
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Forces for global
coordination/ integration
Removal of trade
barriers
Global customers
Relationship
management
Standardized
worldwide technology
Worldwide markets
Global village
Worldwide
communication
Global cost drivers
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Forces for
market responsiveness
Cultural differences
Regionalism/ protectionism
Deglobalization trend
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Internationalization theories
Learning objectives
Analyse and compare the three theories
explaining a firm’s internationalization
process
Explain the most important determinants
for the internationalization process of
SMEs
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Historic development of
internationalization
 Traditional marketing
approach
 ‘Life cycle’ concept
for international trade
 The Uppsala
Internationalization
model
Internationalization/
transaction cost
approach
Dunning’s eclectic
approach
The network approach
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The Uppsala
internationalization model
Stage 1: no regular export activities
(sporadic export)
Stage 2: Export via independent
representatives (export modes)
Stage 3: Establishment of a foreign sales
subsidiary
Stage 4: Foreign production/manufacturing
units
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Figure 3.1 An incremental
approach to internationalization
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Exceptions to the
use of incremental steps
towards market commitment
Firms with large resources can take larger
internationalization steps
When market conditions are stable and
homogeneous, relevant market knowledge can be
gained in ways other than experience
When the firm has considerable experience from
markets with similar conditions, it may be able to
generalize this experience to any market
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What is this?
What term refers to differences in
language, culture and political
system, which disturb the flow
between the firm and the market?
Psychic distance
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Figure 3.2 Dimensions of
internationalization
Foreign operation
methods
Sales objects
Markets
Organizational
capacity
Organizational
structure
Personnel
Finance
Source: Welch and Loustarinen, 1988. Reproduced with permission from The Braybrooke Press Ltd.
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Figure 3.3 Internationalization
pattern of the firm as
a sum of target country patterns
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Foundation of the transaction
cost analysis (TCA) model
Firm will tend to expand until the cost of
organizing an extra transaction within the
firm will become equal to the cost of
carrying out the same transaction by means
of an exchange on the open market
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What is this?
The friction between buyer and
seller, which is explained by
opportunistic behaviour is called
_____.
Transaction costs
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What is this?
What term is used to describe
behaviour that is characterised by
self-interest with guile and includes
methods of misleading, distortion,
disguise, and confusion?
Opportunistic behaviour
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Transaction cost analysis
framework
Cost minimization explains structural
decisions
Firms internalize (vertically integrate) to
reduce transaction costs
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Figure 3.4
Principles of the TCA Model
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Cost elements
of the TCA model
Ex ante costs
Search costs
Contracting costs
Ex post costs
Monitoring costs
Enforcement costs
Transaction costs = ex ante costs (search + contracting costs)
+ ex post costs (monitoring + enforcement costs)
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What is this?
When firms do business using an
importer, agent, or distributor it is
called _____.
Externalization
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What is this?
When firms implement a global
marketing strategy using their own
subsidiaries, it is called _____.
Internalization
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Limitations of the
TCA framework
Narrow assumptions of human nature
Excluding ‘internal’ transaction costs
Relevance of ‘intermediate forms’ for
SMEs
Importance of ‘production cost’ is
understated
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The network model
The relationships of a firm in a domestic
network can be used as bridges to other
networks in other countries
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Figure 3.5 An example of
an international network
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Figure 3.6 Four cases of
internationalization of a firm
Degree of internationalization of the market
Low
High
Low
The early starter
The late starter
High
The lonely
international
The international
among others
Degree of
internationalization
of the firm
Source: Johanson and Mattson, 1988 p. 298. Reprinted by permission of Thomson Publishing Services.
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Personal factors in
Internationalization
Positive perceptions of global environment
Entrepreneurial orientation
Innovativeness
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Internationalization
preparation
Conducting international market research
Committing resources to support venture
Adapting products to target foreign markets
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What is this?
What term refers to a firm that from
its ‘birth’ globalizes rapidly without
any preceding long term
internationalization period?
Born global
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Characteristics of
born globals
SMEs with less than 500 employees
Annual sales under $100million
Reliance on cutting-edge technology
Managed by entrepreneurial visionaries
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Figure 3.7
‘Organic’ versus ‘born global’
External environment
Managers’
mindset
Internal environment
Decision to internationalize
Organic
pathway
Home market
Born global
pathway
Home market
Export market A
Export market A
Export market N
Export market N
Source: Adapted from Âijö et al. (2005), p. 6.
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Factors supporting
born globals
Role of niche markets
Advances in process/technology
production
Flexibility of SMEs/born globals
Global networks
Advances and speed in information
technology
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Figure 3.8 Models of
economic efficiency
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Case study 1
Should Vermont Teddy Bear go abroad?
What kind of difficulties would VTB meet if it were to
internationalize its business?
In what part of the world should the company start its
internationalization?
How should the company penetrate the foreign markets?
How would the communication mix in the chosen
countries differ from the US market?
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