Transcript 2. Global Strategy

8. Global Marketing Strategies
Chapter Overview
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Information Technology and Global Competition
Global Strategy
Global Marketing Strategy
R&D, Operations, Marketing Interfaces
Regionalization of Global Marketing Strategy
Competitive Analysis
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Introduction
• On a political map, country borders are clear as ever. But
on a competitive map, financial, trading, and industrial
activities across national boundaries have rendered
those political borders increasingly irrelevant.
• Not only firms that compete internationally but also
those whose primary market is considered domestic will
be affected by competition from around the world.
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1. Information Technology and
Global Competition
• Today, we are observing the emergence of a gross
information product, and it dwarfs the gross domestic
product.
• Electronic Commerce (e-Commerce)
• e-Company
• Faster Product Diffusion
• Global Citizenship
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2. Global Strategy
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Global strategy consists of five conceptualizations:
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Global industry
Competitive industry
Competitive advantage
Hypercompetition
Interdependency
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2. Global Strategy
• Global Industry:
– Those industries where a firm’s competitive position in
one country is affected by its position in other countries.
– The first question that faces managers is the extent of
globalization of their industry.
– Every industry has global or potentially global aspects.
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2. Global Strategy
• Industry Globalization Forces (Exhibit 8-1):
Four forces interact to determine the potential of industry
globalization.
1. Market forces
2. Cost forces
3. Government forces
4. Competition forces
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Exhibit 8-1: Industry Globalization Drivers
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2. Global Strategy
Market Forces
1. Per capita income convergence
2. Rich consumers in emerging markets
3. Revolution in communication technology
4. Organizations behaving as global customers
5. Growth of global and regional channels
6. Establishment of world brands
7. Spread of global and regional media
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2. Global Strategy
– Cost Forces
1. Global economies of scale and scope
2. Steep experience curve
3. Global sourcing efficiencies
4. Favorable logistics
5. Difference in country costs
6. High product development costs
7. Fast-changing technology
8. Shorter product life cycles
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2. Global Strategy
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Government Forces
1. Favorable trade policies
2. Compatible technical standards
3. World Trading Regulations
4. High growth/low labor cost developing countries
5. Deregulation/privatization of industries
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Competitive Forces
1. High exports and imports
2. Competitors from different continents and
countries
3. Interdependent countries
4. Globalized competitors
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2. Global Strategy
• Competitive Structure
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Cost leadership
Product differentiation
Niche strategy
Nature of Competitive Industry Structure (Exhibit 8-2):
»Industry competitors
»Potential entrants
»Bargaining power of suppliers
»Bargaining power of buyers
»Threats of substitute products or services
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Exhibit 8-2: Nature of Competitive Industry
Structure
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2. Global Strategy
• Gaining Competitive Advantage
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Cost Leadership vs Product Differentiation/ Niche
First-mover advantage versus first-mover disadvantage
Competitor-focused approach
Customer-focused approach
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2. Global Strategy
• Hypercompetition:
• Interdependency:
– Interdependency of modern companies
– Example: Global computer industry
– Governments also play a larger role, affecting parts of the
firm’s strategy.
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3. Global Marketing Strategy
• Benefits of Global Marketing:
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Cost Reduction
Improved Products and Program Effectiveness
Enhanced Customer Preference
Increased Competitive Advantage
• Limits to Global Marketing:
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Standardization vs. adaptation issues
Globalization vs. localization
Global integration vs. local responsiveness
Scale vs. sensitivity
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3. Global Marketing Strategy
• Not every element need be standardized to the same
degree (Exhibit 8-3)
• Degree of product standardization varies widely based on
many factors (Exhibit 8-4)
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Exhibit 8-3: Variation in Content and Coverage of
Global Marketing
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Exhibit 8-4: Degree of Standardizability of Products
in World Markets
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4. R&D, Operations and Marketing Interfaces
• R&D/Operations Interface
• Operations/Marketing Interface
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Core Components Standardization
Product Design Families
Universal Products with all Features
Universal Product with Different Positioning
• Marketing/R&D Interface
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Exhibit 8-5: Interfaces among R&D, Manufacturing,
and Marketing
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5. Regionalization of Global
Marketing Strategy
• Regional strategies are the cross-subsidization of market
share battles in pursuit of regional production, branding,
and distribution advantages.
– Issues in regionalization of global marketing strategy:
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Cross-Subsidization of Markets
Identification of Weak Market Segments
Use of “Lead Market” Concept
Marketing Strategies for Emerging Markets
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6. Competitive Analysis
• SWOT (Strengths, Weaknesses, Opportunities, and
Threats) Analysis (See Exhibit 8-6.)
– A SWOT analysis divides the information into two main
categories: internal and external factors.
– Based on SWOT analysis, marketing executives can
construct alternative strategies.
– The aim of any SWOT analysis should be to isolate the key
issues that will be important to the future of the firm and
that will be addressed by subsequent marketing strategy.
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Exhibit 8-6: SWOT Analysis
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