Transcript International Marketing

International Business
Strategy
1.
Developing Core
Business Strategies
2. Internationalization
Of Core Strategies
3. Globalization
Country A
Country B
Country N
International Marketing
Dimensions
I.
II.
III.
IV.
V.
Controllable vs. Uncontrollable
Standardization vs. Differentiation
(Customization)
Mode of Involvement (Function of
firm’s size, skills, demand, control
and risk issues)
HQ vs. Subsidiary
The Emergence of Trading Blocks
The Global Industry
Demand
Cost Drivers
Market Drivers
Industry
Globalization
Potential
Competitive
Drivers
Government/
Public Policy
Drivers
The Spectrum of International
Marketing Involvement
•Franchising
•Licensing (Licensee Name)
Licensing (Licensor Name)
Joint
Venture
Inactive
Exporting
Proactive
Exporting
Turnkey
Contract
Less
Involvement
Strategic
Alliance
Management
Contract
Direct
Investment
More
Involvement
Contractual
Relations/Arrangements
OLI – Dunning Framework
and Entry Mode Choice

All firms select their entry mode strategies
by CONSIDERING 3 VARIABLES:

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
Ownership advantages which are less concerned with
control/risk issues as related to inter-firm relationships
Location advantages which are concerned with the
resources commitment issue, as related to the
availability and cost of resources
Internalization advantages which are primarily
concerned with reducing transaction and coordination
costs.
OLI – Dunning Framework
and Entry Mode Choice
Data suggest that the ability to
differentiate products is more
important to firms in determining entry
mode choice than the strength of
contractual risk.
 Also – investment risk is more
important than market potential when
assessing an entry mode.

OLI – Dunning Framework
and Entry Mode Choice

Recent trend 
Non equity modes
• Modes that are becoming increasingly popular
among service firms for organizing overseas
ventures/operations. These entry modes are
essentially contractual and include leasing,
licensing, franchising, and management service
contracts.

Note: Entry to a large extent is driven by the
strategic objectives spelled out in the
company’s global mission
Licensing
A contractual transaction whereby the
firm – the licensor – offers some
proprietary assets to the foreign
company – the licensee – in exchange
for royalty fees
 Assets: trademarks, technology knowhow, production processes, and
patents.
 Royalties: typically between 1-15%

Franchising


The franchisor gives the franchisee the right
to use the franchisor’s trade names,
trademarks, business models, and/or knowhow in a given territory for a given time
period, normally 10 years.
A “package” to the franchisee might include
the marketing plan, operating manuals,
training and quality monitoring.
Entry Decisions: Strategic
Parameters
Input
Processes
Output
A strategic plan including:
Mode of entry (risks
control, legal issues)
 Operational and
implementation programs


Motivation(s) for entry

Inventory of own resource
Inventory of competitors’
resources


Market intelligence

IP protection
Decision rules for
site(s) selection
Market Stage
Infancy Developing
1.
2.
3.


Customers
Product Introduction
Distribution
Price
Competitive Strategies
(Types of after market)
Mature
Decision Criteria for Country
Selection

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Market Size and Growth
Risk (Political & Economic; Internal & External)
Government Regulations
Competitive Environment
Local Infrastructure
Country Classification

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Platform – gathering intelligence and establish a
network (Singapore, Hong Kong)
Emerging Market – Vietnam, Kazakhstan
Growth Markets – The Czech Republic, China, Brazil
Maturing Markets – Japan, Germany