International Marketing Summary

Outline:
I. Introduction:
1. Aspects of IM.
2. IM entry strategies.
3. International trade theories & commercial policies.
4. International organizations & economic blocks.
II. Environment
1. Economic enironment.
2. !"lt"ral enironment
3. #olitical$ legal enironment
III. Strategies
1. %lobal mkt. strategies.
2. International mkt. strategies.
3. International promotion strategies.
I. Introduction:
1. Aspects of IM.
Why go international?
Mkt. sat"ration.
!o"ntry trade deficit.
Intensie foreign competition.
Emergence of ne& mkts.
%lobalization of mkts.
'pport"nities ia foreign aid programs.
'ther reasons (achieing eco. 'f scale needs a large mkt.) decreasing labor cost*+
Stages of IM involvement:
Domestic, (operating e-cl"siely in a certain mkt.+.
Regional exporter.
Exporter: (operating from a central office in the home co"ntry+.
International: (operating regionally in some&hat a"tonomo"s &ay) i.e. &ith
independent s"bsidiaries+
International to lo!al "transient stage#, (operating &ith independent s"bsidiaries
&hile home region is still the 1ry base for many f"nctions+.
lo!al: (operating as a highly decentralized org. across a broad range of co"ntries+
Management attit$%e:
Ethnocentric "international#, (home co"ntry oriented+. e.g. .tarb"cks.
&olycentric "multinational#: (host co"ntry oriented+ e.g. #&% and /enkel.
Subsidi
ary
Home
country
Home
country
Regiocentric: (coordination & integration on regional basis+.
eocentric "global#: (&orld&ide oriented+
a+ %lobal mkt. segmentation, e.g. /.0! 1Local world bank2
b+ 3ational mkt. segmentation, e.g. Mc4onald5s.
Home
country
'. IM entry strategies.
1. Exporting:
It re6"ires minim"m capital (lo& risk+ & is easy to intake. It5s a good &ay to gain
international e-perience.
It5s diided into,
2. Contractual agreements
It is a long term agreement &hereby technology and kno&7ho& are transferred from the 1
st
party to the 2
nd
party &itho"t any inestment in the tangible assets by the 1
st
party.
Types of contractual agreements:
Man"fact"ring agreements.
8icensing.
9ranchising.
:"rnkey agreements. (e.g.
0': pro;ects+
Mgmt. contracts.
2. !ontract"al
agreements
1. E-porting 3. <oint
ent"res
4. (94I+ 9oreign
direct inestment
=. .trategic
alliances
Causal Active
:he firm is chasing
opport"nities aro"nd
the &orld (no formal
plan for e-port+.
Indirect Direct
(:hro"gh an agent+
1
st

party
2
nd

party
Know-how
Fees
. !oint ventures:
It is a long term partnership bet&een t&o or more companies sharing e6"ity and
risk &ith the p"rpose of making profits in a target mkt. It represents a higher risk
alternatie than licensing beca"se it re6"ires ario"s leels of direct inestment.
". #oreign direct investment $ &holly o&ned s"bsidiaries %:
It is a 1>>? o&nership by the international firm in a foreign mkt. (for firms &ith
man"fact"ring facilities+. It can be applied in t&o forms,
Ac6"isition) or %reen field (beginning from
scratch+.
&. Strategic alliances $ &in7&in relationship %:
It coers a &ide range of "s"ally non7e6"ity partnership agreements bet&een a
no. of firms in a no. of mkts. (It5s as a marriage &ith a p"rpose@ once the p"rpose
is achieed the alliance dissoles+. Its types are,
Alliance &ith e6"ity (e.g. .ony A Ericson+
Alliance &ith non7e6"ity (e.g. Mc4onald5s A !oca7!ola A 4isney
(. International tra%e theories ) commercial policies.
T'eory of comparative adv. $ Mr. 0ertil 'hlin %:
1Een if a co"ntry is able to prod"ce all its goods at lo&er costs than another
co"ntry can) trade still benefits both co"ntries based on *+M&ARA,I-E not
absol"te costs2.
T'eory of competitive adv. $ Mr. M. #orter %:
13ational prosperity is created not inherited. It doesn5t gro& o"t of a co"ntry5s
nat"ral reso"rces) its labor force as classical economists indicate2.
Determinants of national competitive a%v.:
9actor conditions (land) labor) enterprises) capital*+
4emand conditions.
Belated & s"pporting ind"stries.
9irm strategy) str"ct"re & rialry.
*atalysts of national competitive a%v.:
%oernment.
Incidence of chance.
.. International organi/ations ) economic !loc0s.
(roduct Customs la)or capital 'armoni*ation
1,A
(9ree :rade
Areas+ C free
moement of goods.
D - - - -
*2
(!"stom Enion+
C same tariff
D D - - -
*M
(!ommon Mkts.+
C goods F labor F
capital
D D D D -
E2
(Economic
Enion+ C all F
harmonization
D D D D D
&2 D D D D D
(#olitical Enion+
C merge of nations
(e.g. Egypt & .yria
in si-ties+
II. Environment
1. Economic environment.
'. *$lt$ral environment
Most imp. notes,
/igh conte-t lang"ages (as Arabic+ s. lo& conte-t lang"ages (as English+
and effect of lang"age on behaior especially in b"siness relations.
Mono7chronic c"lt"res (as 0ritish people+ s. #oly7chronic c"lt"res (as
Arabs+.
/ofestede 47dimensions of c"lt"ral al"es (&&&.geert7hofestede.com+
(. &olitical3 legal environment
+o, )ig is t'e m-t.. $/-t. si*e% 0'at is t'e m-t. li-e. $/-t. nature%
Population:
- Size
- Growth rate.
- Distribution
(age &
density)
+
Income:
- Distribution.
- Per capita
- GNI
+ost country
environment
T'e
international
environment
+ome country
environment
- Nature o the econo!y.
- Nature o econo!ic
acti"ities.
- Inrastructure.
- #rbanization.
- $ther di!ensions (in%ation&
ro'e o go"ern!ent.()
III. Strategies
1. lo!al m0t. strategies "GLOBALIZATION#.
'. International m0t. strategies.
International (roduct (olicy:
a% #actors favoring product standardi*ation:
/igh costs of adaptation.
Ind"strial prod"cts ("niform in the &hole &orld+
!onergence & similar tastes in dierse co"ntry mkts.
#redominant "se in "rban enironments.
Mkting to predominantly similar co"ntries.
!entralized mgmt. & operating ia e-ports.
!o"ntry of origin is rep"table.
Economies of scale.
.tandardized prod"cts mkted by competitors.
)% #actors favoring product adaptation:
4ifferentiation in tech. stds.
!ons"mer & personal "se prod"cts.
Gariation in cons"mer needs.
Gariation in conditions of "se.
Gariation in ability to b"y$ diff. in income leels.
.trong c"lt"ral diff.
Enironment ind"ced adaptation (e.g. the infl"ence of go.+
Adaptation strategy s"ccessf"lly "sed by competitors.
!ompany history & operations.
E-tent of "rbanization.
A perspective on )randing:
a% 1ocal )rands:
Adv. Disadv.
Meaningf"l names /igher mkt. costs
8ocal identity /igher inentory costs
H"ick mkt. penetration by ac6"iring local
brands.
8oss of economies of scale.
Gariation of 6ty. & 6"ality across mkts. Is
allo&ed
4iff"sed image.
)% International )rands:
Adv. Disadv.
Ma-imizing mkting efficiency Mkt. homogeneity ass"med.
Bed"ction of ads. costs (promotion for only
one name+
#ossibility of negatie connotation
Elimination of brand conf"sion. H"ality & 6ty. consistency re6"ired
Ad. for c"lt"re free prod"cts
8ess deeloped co"ntries (8!4+ opposition &
resentment.
Ad. for prestigio"s prod"cts
Easy identification and recognition for
international brands.
Eniform &orld&ide image.
(. International promotion strategies.
Constraints on international adv.:
8ang"age & c"lt"re.
Bole of ad. in society.
%o. controls of the host
co"ntry.
Media aailability.
Agency aailability.
!ompetition.