Summary Strategic International Marketing - Q3 2019
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Course
Strategic International Management
Institution
Saxion Hogeschool (Saxion)
Book
Essentials of Global Marketing
Include Chapter 1- 14, exc. 10 & 13. No information left out, which makes it an extensive document, but without all the 'fluff' from the original book. Primarily based on Svend Hollensen’s Essentials of Global Marketing book (2008), slides from the Strategic International Management lectures prov...
Primarily based on Svend Hollensen’s
Essentials of Global Marketing book
(2008), slides from the Strategic
International Management lectures
provided by J.L.G. Engbers and existing
student summaries of past years.
Strategic
International
Marketing
Summary chapters 1 – 14, exc
10 & 13
+Includes brief summaries of payment
terms, incoterms, case studies, and the
Netflix trial exam/answers.
Kathleen Gaillot
1
,Table of Contents
Chapter 1: Global Marketing in the Firm ................................................................................................ 1
1.1 The Process of Developing the Global Marketing Plan ................................................................. 1
1.2 Introduction to Globalization ........................................................................................................ 1
1.3 Development of the Global Marketing Concept ........................................................................... 3
1.4 Forces for ‘Global Integration’ and ‘Market Responsiveness’ ...................................................... 4
1.4.1 Forces for ‘Global Coordination/Integration’ ........................................................................ 5
1.4.2 Forces for ‘Market Responsiveness’ ...................................................................................... 5
1.5 The Value Chain as a Framework for Identifying International Competitive Advantage ............. 5
1.5.1 Internal Linkages .................................................................................................................... 6
1.6 Value Shop and the ‘Service Value Chain’ .................................................................................... 6
1.7 Information Business and the Virtual Value Chain ....................................................................... 8
Chapter 2: Initiation of Internationalization ........................................................................................... 9
2.1 Internationalization Motives......................................................................................................... 9
2.2 Triggers of Export Initiation (Change agents) ............................................................................... 9
2.3 Internationalisation Barriers/Risks ............................................................................................. 10
Chapter 3: Internationalization Theories .............................................................................................. 12
3.1 The Uppsala Internationalization Model .................................................................................... 12
3.2 The Transaction Cost Analysis (TCA) Model................................................................................ 13
3.3 The Network Model .................................................................................................................... 14
3.4 Born Global ................................................................................................................................. 15
Chapter 4: Development of the Firm’s International Competitiveness................................................ 17
4.1 Analysis of National Competitiveness (the Porter Diamond) ..................................................... 18
4.2 Competition Analysis in an Industry ........................................................................................... 18
4.3 Value Chain Analysis ................................................................................................................... 19
4.4 Blue Ocean Strategy and Value Innovation ................................................................................ 22
Chapter 5: The Political and Economic Environment............................................................................ 23
5.1 The Political/Legal Environment ................................................................................................. 23
5.2 The Economic Environment ........................................................................................................ 26
5.3 The European Economic and Monetary Union and the Euro ..................................................... 28
Chapter 6: The Sociocultural environment ........................................................................................... 29
6.1 Layers of Culture ......................................................................................................................... 29
6.2 High- and Low-Context Cultures ................................................................................................. 29
6.3 Elements of Culture .................................................................................................................... 30
6.4 Hofstede’s Original Work on National Cultures (The 4+1 Dimensions Model) .......................... 31
6.5 Managing Cultural Differences ................................................................................................... 32
6.6 The Effects of Cultural Dimensions on Ethical Decision Making ................................................. 32
Chapter 7: The International Market Selection Process ....................................................................... 27
7.1 International Market Selections (IMS): SMEs Versus LSEs ......................................................... 27
7.2 Building a Model for International Market Selection ................................................................. 27
7.2.1 The Market-Screening Model ............................................................................................. 28
7.2.2 Market Characteristics ............................................................................................................. 31
7.3 Market Expansion Strategies ...................................................................................................... 32
7.4 The Global Product/Market Portfolio ......................................................................................... 34
Chapter 8: Some Approaches to the Choice of Entry Mode ................................................................. 35
8.1 The Transaction Cost Approach .................................................................................................. 36
8.2 Factors Influencing the Choice of Entry Mode............................................................................ 37
,Chapter 9: Export, Intermediate and Hierarchical Modes .................................................................... 38
9.1 Export Modes .............................................................................................................................. 38
9.1.1 Indirect Export Mode ........................................................................................................... 39
9.1.2 Direct Export Mode .............................................................................................................. 39
9.1.3 Cooperative Export Mode CEM/Export Marketing Groups ................................................. 41
9.2 Intermediate Modes ................................................................................................................... 42
9.2.1 Contract Manufacturing....................................................................................................... 42
9.2.2 Licensing ............................................................................................................................... 43
9.2.3 Franchising ........................................................................................................................... 44
9.2.4 Management Contracting .................................................................................................... 45
9.3 Hierarchical Modes ..................................................................................................................... 46
9.3.1 Domestic-Based Sales Representative ................................................................................. 46
9.3.2 Resident Sales Representative/Foreign Sales Branch/Foreign Sales Subsidiary ................. 47
9.3.3 Sales and Production Subsidiary .......................................................................................... 47
9.3.4 Transnational Organization .................................................................................................. 49
9.3.5 Establishing Wholly-Owned Subsidiaries – Acquisition or Greenfield ................................. 50
9.3.6 Location/Relocation of HQ ................................................................................................... 50
9.3.7 Foreign Divestment: Withdrawing from a Foreign Market ................................................. 51
9.4 Export Modes Summary.............................................................................................................. 52
Part 4: Designing the Global Marketing Programme ............................................................................ 56
Chapter 11: Product and Pricing Decisions ........................................................................................... 59
11.1 The Dimensions of The International Product Offer ................................................................. 59
11.2 Developing International Service Strategies ............................................................................. 60
11.3 The Product Communication Mix ............................................................................................. 61
11.4 Brand Equity .............................................................................................................................. 62
11.5 Branding Decisions .................................................................................................................... 62
11.6 Implications of The Internet for Collaboration with Customers on Product Decisions ............ 64
11.7 Green Marketing Strategies ...................................................................................................... 65
11.8 Factors Influencing International Pricing Decisions .................................................................. 65
11.9 International Pricing Strategies................................................................................................. 68
Chapter 12: Distribution and Communication Decisions ...................................................................... 73
12.1 External Determinants of Channel Decisions............................................................................ 73
12.2 The Structure of The Channel ................................................................................................... 74
12.3 Managing and Controlling Distribution Channels ..................................................................... 76
12.4 Implications of The Internet for Distribution Decisions ............................................................ 77
12.5 The Communication Process..................................................................................................... 79
12.6 Communication Tools ............................................................................................................... 80
12.6.1 Advertising ......................................................................................................................... 80
12.6.2 Public Relation ................................................................................................................... 81
12.6.3 Sales Promotion ................................................................................................................. 82
12.6.4 Direct Marketing ................................................................................................................ 82
12.6.5 Personal Selling .................................................................................................................. 82
12.7 Implications of The Internet for Communication Decision ....................................................... 83
12.8 Summary ................................................................................................................................... 84
Chapter 14: Organization and Control of the Global Marketing Programme ...................................... 85
14.1 Organization of Global Marketing Activities ............................................................................. 85
14.1.1 Functional Structure .......................................................................................................... 85
14.1.2 International Divisional Structure ...................................................................................... 85
, 14.1.3 Product Divisional Structure .............................................................................................. 86
14.1.4 Geographical Structure ...................................................................................................... 86
14.1.5 Matrix Structure ................................................................................................................. 87
14.2 The Global Account Management (GAM) Organization ........................................................... 87
14.3 Controlling the Global Marketing Programme ......................................................................... 89
14.4 The Global Marketing Budget ................................................................................................... 92
15. Payment Terms ............................................................................................................................... 94
15.1 Debtor Management ................................................................................................................ 94
15.2 Documentary Credit .................................................................................................................. 94
15.3 Choosing Payment Term ........................................................................................................... 94
15.4 Legal Aspects ............................................................................................................................. 94
16. Incoterms ........................................................................................................................................ 95
17. Export Transaction .......................................................................................................................... 96
17.1 Export Sales Quotation ............................................................................................................. 96
17.2 Transport Modes ....................................................................................................................... 96
17.3 Packaging .................................................................................................................................. 96
Articles .................................................................................................................................................. 97
1. How Western Multinationals Can Organize to Win in Emerging Markets ................................... 97
2. Is Your EM-Strategy Local Enough Mckinsey ................................................................................ 97
3. Oxcart to Walmart ........................................................................................................................ 97
4. Unlocking Potential of EM-Cities ................................................................................................ 100
Trial Exam: Netflix ............................................................................................................................... 101
Case ................................................................................................................................................. 101
Questions ........................................................................................................................................ 103
Week Topic
1 Introduction & Theory Ch 1, 2, 3
Extracts from the book (unavailable
2 Ch 4, 5, 6
from the slides) are coloured in dark
3 Ch 7, 8, 9
blue over black.
4 Ch 11, 12
5 Ch 14 and Handout (see BB) Figures with red outlines are
6 Case important to know
7 Backlogs
***Items accompanied by a yellow star are deemed especially important to learn for the exam.
Orange stars should be learned as well. “Should be understood, but not known by heart”
, Part 1: The Decision to
Internationalize
Chapter 1: Global Marketing in the Firm
1.1 The Process of Developing the Global Marketing Plan
Five parts in the process of developing the global marketing plan
The following is an overview of topics covered/to learn:
1. Step 1: The Decision to Internationalize (Ch 1- 4) Part 1: The Decision to
• Glocalization Internationalize
• Reasons for Internationalization
Part 2: Deciding Which
• Inward internationalization
Markets to Enter
• Methods of internationalization
• Transaction Cost Model (TCA) Part 3: Market Entry
• Organic pathway (Uppsala pathway) vs. born global Strategies
• The porter diamonds Part 4: Designing the Global
• Porters 5 forces Marketing Programme
• Value chain analysis
Part 5: Implementing &
2. Step 2: Deciding which Markets to Enter (Ch 5 – 7) Coordinating GMP
• Home / Host country environment
• Barriers Home/host country Part 6: OTHER - Payment
• Economic integration in markets and Incoterms
• Market screening model
• Market characteristics Overall:
• Market competitiveness 1. Do I want to Internationalize? Yes =
• Expansion strategies 2. Decide Which market to enter,
3. Step 3: Market Entry Strategies (Ch 8 – 10) 3. Develop market entry strategy that
• Factors affecting market entry mode decisions will fit the market characteristics,
4. Design a Programme that will support
• Classification of market entry modes
your internationalization process.
• Export/Intermediate/ Hierarchical market entry modes
4. Step 4: Designing the Global Marketing Programme (Ch 11 – 12)
• Degree and elements of standardization
• Branding decisions
• Strategies for pricing
• Distribution Types
• Marketing performance measures (KPI‟s)
5. Step 5: Implementing and Coordinating the Global Marketing Programme (Ch 13 – 14)
• 4P + 3 marketing mix… responsibilities
1.2 Introduction to Globalization
Globalization: Reflects the trend of firms
Emerging Markets (i.e. Indonesia, Brazil): Economic growth -> buying, developing producing and selling
More money to spend. More challenges, barriers, not-so products and services in most countries, and
transparent (corruption), regions of the world.
International Trade: All exchanges of goods and services Internationalization: Doing business in
crossing national borders which influence the balance of many countries of the world, but often
payment of a country. limited to a certain region (e.g. Europe)
1
, Part 1: The Decision to
Internationalize
Consequences of crossing a border:
Taxes, Currency risk / Hedging, Norms / Regulations / Laws (i.e. with regard to quality), Adjust
marketing strategy (marketing mix [product, price, place, promotion]), Cultural differences,
Logistics, Incoterms
Reasons for international trade:
- Cost differences - Technological development - Deregulation
- Subsidies - Strategic behaviour of organisations
Global marketing is defined as 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 does. This implies
that the firm is able to:
- Develop a global marketing strategy based on similarities and differences between markets;
- Exploit the knowledge of the headquarters through worldwide diffusion and adaptations;
- Transfer knowledge and ‘best practices’ from any of its markets and use them in other
international markets.
ANTI-GLOBALISAITON
Black Protectionism Nationalism
Green Protectionism Environmental Issues
Red Protectionism Exploitation of Local Labour Force
Development of an International Marketing Plan: Part IV: Designing the Global Marketing Programme
See Chapters 11-12
Marketing Mix Plan (per country and overall)
Marketing Mix (Activities) Year 1 (t1) Year 2 (t2) Year 3 (t3)
Product - your offering. Features, quality, name, New variant New product Develop new
guarantees, packaging, support services line and services technology /
Product
Price - what you charge your customers for regarding Keep Lower price Stabilize price
delivered products and services. List price, additional skimming
services prices, credit facilities, terms / conditions, price
allowances
Place - how you will promote or create awareness and Selective Expand distr. New int.
interest for your product in the marketplace dist. With new markets
Distributors, wholesalers, retailers, locations, transport partners
Promotion – distribution. Advertising, direct mail, Keep current Development of Personal selling
email, publicity, sales, promotion, personal selling, advertising email campaign
company literature, internet media
Part V: Implementing and Coordinating the Global Marketing Programme
Implementation: To translate the strategy into action (organizing):
- Assemble the 4P-mix for each product/service (SBU)
- Organize the marketing effort
- Who is responsible for the implementation of the activities?
- When will the activities take place?
- Internal marketing plan: Sell the marketing plan inside the organization before going outside.
Are there any internal barriers that should be considered?
2
, Part 1: The Decision to
Internationalize
Cross-border negotiation: The most fundamental gap influencing the SMEs: SME occurs commonly in the EU
negotiation climate between buyer and seller is the cultural distance, and in international organizations. The
represented by differences in communication and negotiation EU categorizes companies with fewer
behaviour, the concepts of time, space and work patterns and the than 50 employees as ‘small’ and those
nature of social norms. The cultural distance can be reduced by cultural with fewer than 250 as ‘medium’. In the
training and market research. EU, SMEs (250 or less employees)
comprise approximately 99% of all firms.
The Nine Strategic Industry Globalism
Windows: Local Potentially Global Global
3. Enter new business 6. Prepare for 9. Strengthen your
Internationalization
Mature
Preparedness for
globalization global position
2. Consolidate your 5. Consider expansion in 8. Seek global alliances
Adolescent export markets international markets
1. Stay at home 4. Seek niches in 7. Prepare for a buyout
Immature
international markets
The Nine Strategic Windows Framework Above is based on two dimensions:
Industry globalism Preparedness for Internationalization
• Firm cannot influence; determined by international • Mainly determined by the firm; dependant on
marketing environment the firm’s ability to carry out strategies in the
• Depends on international competitive structure international marketplace (e.g. language,
within industry managers experience or financial resources)
• Global: many interdependencies between markets, • Stay at home (1) when: mentioned abilities
customers and suppliers, industry dominated by few not there, weak position in home market etc.
large player (e.g. IT, records, movies, aircraft) • Prepare for a buyout: try to increase your net
• Local: multi – domestic market environment, where worth. Relevant to SMEs selling advanced high
markets exist independently (hairdressing, foods tech components to large industrial
and diaries). companies with a global network.
1.3 Development of the Global Marketing Concept
Worldwide-view of a firm’s business activities - EPRG Framework’s four orientations:
1. Ethnocentric 2. Polycentric 3. Regiocentric 4. Geocentric
the home country is superior and Each country is unique and therefore The world consists of (Global)
the needs of the home country are should be targeted in a different way. regions (e.g. Europe The world is
most relevant. Essentially The polycentric enterprise recognizes Asia, the Middle getting smaller
headquarters extends ways of that there are different conditions of East). The firm tried and smaller. The
doing business to its foreign production and marketing in different to integrate and firm may offer
affiliates. Controls are highly locations and tries to adapt to those coordinate its global product
centralized and the organization different conditions in order to marketing concepts but
and technology implemented in maximize profits in each location. The programme within with local
foreign locations will essentially be control with affiliates is highly regions, but not adaption (‘think
the same as in the home country. decentralized and communication across them. global, act
between headquarters and affiliates is local’)
limited.
Communication is more top-down. These seek to organize and integrate
production and marketing on a
regional or global scale.
3
, Part 1: The Decision to
Internationalize
Glocalization: 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)
The Glocalization Framework:
Localization: more
effective (adapting)
Globalization: more
efficient
(standardized)
The Principle of Transferring Knowledge and Learning Across Borders:
1.4 Forces for ‘Global Integration’ and ‘Market Responsiveness’
←The Global Integration/Market Responsiveness Grid
/ The Future Orientation of LSEs and SMEs
SMEs: Small & Medium sized enterprises
Their tendency to decentralize and make local decision
make them more vulnerable to a low degree of
coordination across borders (whereas that is the
strength of LSEs)
LSEs: Large scale enterprises
Think: McDonald’s
Global Integration: Recognizing the similarities
between international markets and integrating them
into the overall global strategy
Market Responsiveness: Responding to each market’s
needs and wants
4
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