Transcript Planning for Global Markets - McGraw Hill Higher Education

Chapter 10
Global Marketing
Management
Planning and
Organisation
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-1
Chapter Learning Objectives
• How global marketing management differs
from international marketing management
• The forces that affect the appropriate level
of customisation and standardisation in
global markets
• The increasing importance of international
strategic alliances
• The need for planning to achieve company
goals
• The important factors for each alternative
market-entry strategy
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-2
Global Perspective:
Global Gateways
• Confronted with increasing global competition for
expanding markets, multinational companies are
changing their marketing strategies and altering their
organisational structure.
• A recent study of North American and European
corporations indicated that nearly 75% of the companies
are revamping their business processes.
• The flexibility of a smaller company may enable it to
reflect the demands of global markets and redefine its
programs more quickly than larger multinationals.
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-3
Global Marketing Management
• 1970s – “standardisation versus adaptation”
• 1980s – “global integration versus localisation”
• 1990s – “global integration versus local
responsiveness”
• The trend back toward localisation is caused by the
new efficiencies of customisation made possible by
the Internet and increasingly flexible manufacturing
processes.
• From the marketing perspective customisation is
always best.
• As global markets continue to homogenise and
diversify simultaneously, the best companies will
avoid the trap of focusing on country as the primary
segmentation variable.
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-4
The Nestle Way: Evolution Not
Revolution
• Nestle is the world’s biggest marketer of infant
formula, powdered milk, instant coffee, chocolate,
soups, and mineral water.
• Nestle strategy can be summarised in four points:
– Think and plan long term
– Decentralise
– Stick to what you know
– Adapt to local tastes
• Long-term strategy works for Nestle because the
company relies on local ingredients and markets
products that consumers can afford.
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-5
Benefits of Global Marketing
• When large market segments can be identified,
economies of scale in production and marketing
can be important competitive advantages for global
companies.
• Transfer of experience and know-how across
countries through improved coordination and
integration of marketing activities.
• Marketing globally also ensures that marketers
have access to the toughest customers.
• Diversity of markets served carries with it additional
financial benefits.
• Firms that market globally are able to take
advantage of changing financial circumstances.
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-6
Planning for Global Markets
• 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.
• Planning relates to the formulation of goals and
methods of accomplishing them, so it is both a
process and philosophy.
– Corporate planning – long term focusing on
generalised goals of company.
– Strategic planning – short and long term focusing on
products, capital and research.
– Tactical planning – market planning focusing on
specific actions and resource allocation.
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-7
Planning for Global Markets (cont.)
• Successful planning is evaluating company
objectives, including management’s commitment
and philosophical orientation to international
business.
• Company objectives and resources
– Each new market can require 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.
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-8
Planning for Global Markets (cont.)
• International commitment
– Commitment in terms of:
 Dollars to be invested
 Personnel for managing the international
organisation
 Determination to stay in the market long enough
to realise a return on investments.
– The degree of commitment to an international
marketing cause reflects the extent of a
company’s involvement.
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-9
The Planning Process
• Phase 1: Preliminary Analysis and
Screening – Matching Company and
Country Needs
• Phase 2: Adapting the Marketing Mix to
Target Markets
• Phase 3: Developing the Marketing Plan
• Phase 4: Implementation and Control
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-10
International Planning Process
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-11
Alternative Market-Entry Strategies
•
•
•
An entry strategy into the international market should
reflect on analysis of market characteristics such as:
– Potential sales
– Strategic importance
– Strengths of local resources
– Cultural differences
– Country restrictions
Companies most often begin with modest export
involvement.
A company has four different modes of foreign market
entry from which to select:
– Exporting
– Contractual agreements
– Strategic alliances
– Direct foreign investments
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-12
Alternative Market-Entry
Strategies
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-13
Exporting
•
•
•
•
•
Exporting accounts for some 10% of global economic
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.
The Internet
– Initially, Internet marketing focused on domestic
sales, however, 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.
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-14
Contractual Agreement
• Contractual agreements are long-term,
non - equity association between a
company and another in a foreign market.
• Licensing
– A means of establishing a foothold in
foreign markets without large capital
outlays.
– A favorite strategy for small and mediumsized companies.
– Legitimate means of capitalising on
intellectual property in a foreign market.
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-15
Contractual Agreement (cont.)
• Franchising
– Franchisor provides a standard package of
products, systems, and management
services, and the franchisee provides
market knowledge, capital, and personal
involvement in management.
– Franchising is expected to be the fastestgrowing market-entry strategy.
– Two types of franchise agreements:
 Master franchise – gives the franchisee the
rights to a specific area with the authority to
sell or establish sub franchises.
 Licensing
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-16
Strategic International Alliances
• A strategic international alliance (SIA) is a business
relationship established by two or more companies
to cooperate out of mutual need and 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
• Many companies also are entering SIAs to be in
strategic position to be competitive and to benefit
from the expected growth in the single European
market.
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-17
Strategic International Alliances (cont.)
• International Joint Ventures (IJVs)
– A joint venture is a partnership of two or more
participating companies that have joined forces
to create a separate legal entity.
– Four Characteristics define joint ventures:
 JVs are established, separate, legal entities.
 They acknowledge intent by the partners to
share in the management of the JV.
 They are partnerships between legally
incorporated entities such as companies,
chartered organisations, or governments,
and not between individuals.
 Equity positions are held by each of the
partners.
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-18
Strategic International Alliances (cont.)
• Consortia
– Consortia are similar to joint ventures and
could be classified as such except for two
unique characteristics:
 They typically involve a large number of
participants.
 They frequently operate in a country or
market in which none of the participants is
currently active.
– Consortia are developed to pool financial
and managerial resources and to lessen
risks.
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-19
Direct Foreign Investment
• Factors that have been found to 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
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-20
Organising for Global Competition
• Because organisations need to reflect a wide range of
company-specific characteristics, devising a standard
organisational structure is difficult.
• Companies are usually structured around one of three
alternatives:
– Global product divisions responsible for product sales throughout the
world. Generally experience rapid growth and have broad, diverse
product lines.
– Geographical divisions responsible for all products and functions
within a given geographical area. Work best when close relationship
with government is needed
– A matrix organization consisting of either arrangement with
centralised sales and marketing run by a centralised functional staff,
or a combination of area operations and global product management.
Designed to encourage sharing of experience, resources, expertise,
technology and information sharing among units.
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-21
Organising for Global Competition
(cont.)
• Locus of decision
•
•
– Considerations of where decisions will be made, by
whom, and by which method constitute a major
element of organisational strategy.
Centralised versus decentralised organizations
– An infinite number of organisational patterns fro the
headquarters activities of multinational firms exist,
but most fit into one of three categories:
 Centralised
 Regionalised
 Decentralised
No single traditional organisational plan is adequate for
today’s global enterprise seeking to combine the
economies of scale of a global company with the
flexibility and marketing knowledge of a local company.
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-22
Schematic Marketing Organisation Plan
Combining Product, Geographic, and
Functional Approaches
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-23
Summary
• 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.
• Collaborative relationships, strategic international
alliances, strategic planning, and alternative marketentry strategies are important avenues to global
marketing that must be considered in the planning and
organisation of global marketing management.
Copyright  2009 McGraw-Hill Australia Pty Ltd
PPTs t/a International Marketing by Cateora
Slides prepared by Kate Mizerski, Edith Cowan University
10-24