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Global Marketing summary
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All the chapters needed for the Global Marketing Exam in year 2 of the International Business and Management/Languages studies
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CHAPTER 1SME and LSE's
-differences etc.
-table 1
-figure 1.6, p. 18
Glocal
No value chain!
Chapter 1.
Globalization: Reflects the trend of firms buying, selling and distributing products and services in
most countries and regions of the world.
Internationalization: Doing business in many countries of the world, but often limited to a certain
region.
International expansion provides new and potentially more profitable markets , helps increase the
company’s competitiveness and easier access to new product ideas, manufacturing innovations and
the latest technology
Internationalization is only going to be successful if the company’s prepared in advance.
The degree of preparedness depends on the company’s ability to carry out their strategies and skills(
financial resources ,language, cultural sensitivity etc.) in the international market place
Whether go abroad or not fiq 1.1
SME: Occurs commonly in the EU and in international organizations. The EU categorizes companies
with fewer than 50 employees as ‘small’, and those with fewer than 250 as ‘medium’. In the EU,
SMEs (250 employees and less).
Global marketing: the firms commitment to coordinate it marketing activities across national
boundaries in order to find and satisfy global customer need better than the competition.
The firm needs to be able to:
Develop a global marketing strategy, based on similarities and differences between markets;
Exploit the knowledge of the headquarters (home organization) through worldwide diffusion
(learning) and adaptations;
Transfer knowledge and ‘best practices’ from any of its markets and use them in other
international markets.
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.)
LSEs : According to the EU definition this is firms with more than 250 employees. Though LSEs
account for less than 1% of companies, almost one third of all jobs are provided by LSEs.
Table 1.1 the characteristics of LSEs and SMEs
Resources
-Financial : A well-documented characteristic of SMEs is the lack of financial resources due to a
limited equity base.
-Business education/specialist expertise: Contrary to LSEs, a characteristic of SME managers is their
limited formal business education. Specialists are hired because managers are most likely a technical
or craft expert and not trained in major business disciplines.
LSEs are more structured precisely to achieve an optimal direction for the organisation. They will be
risk averse because they aim for long-term opportunities.
SMEs have more drastic changes in the strategy because decision making is intuitive, loos and
structures. Risk taking in SMEs can occur in situations where the survival of the company may be
under threat. Because of shorter communication lines between the company and its customers, they
,can react in a quicker and more flexible way to customer needs.
Logical incremtalism: continual adjustments in strategy proceed flexibly and experimentally.
Strategic drift: The difference between environmental change and strategic change.
Economies of scale: Accumulated (gesommeerde) volume in production, resulting in lower cost price
per unit.
The benefits can appear in:
Reducing operating costs per unit and spreading fixed costs over lager volume due to
‘experience curve effects’.
Pooling global purchasing gives the opportunity to concentrate global purchasing power over
suppliers.
A larger scale gives the global player the opportunity to build centres of excellence for
development of specific technologies or products.
Economies of scope : Reusing a recourse from one business/country in additional business/countries.
The challenge in capturing the economies of scope at a global level lies in being responsive to the
tension between 2 conflicting needs: the need for central coordination of most marketing mix
elements, and the need for local autonomy in the actual delivery of products and services.
Global integration: Recognizing the similarities between international markets and integrating them
into the overall global strategy.
CHAPTER 2
Motives
Barriers, p. 61
CHAPTER 2. Initiation of Internationalization.
Internationalization = when a firm expands its R&D, productions, selling and other business activities
in to international markets.
Pre-internationalization = when managers use information to achieve enough relevant knowledge to
initiate internationalization.
Proactive motives = stimuli to attempt strategy change, based on the firms interest in exploiting
unique competences for example: market possibilities or a special technological knowledge. Reactive
motives = a firm reacts to pressure or threats in its home or foreing markets and adjust to
them by changing its activities over time.
Proactive motives: Reactive motives:
- Profit and growth goals Domestic market: small and saturated
- Managerial urge Competitive pressures
- Technology competence/ unique product Overproduction/ excess capacity
- Foreign market opportunities/ market information Unsolicited foreign
orders(ongevraagd)
- Economies of scale Extend sales of seasonal products
- Tax benefits Proximity to inter. customers
2.2 Reasons for Proactive motives
Proft and growth goals
Make management wanting to do export so company can grow. Short term profit is especially
important for SME´s (small scale enterprise)that are at a stage of initial interest in exporting. In real
life profitability is always less than they aspect especially in start up operations.
Managerial Urge
Is when managers having the drive and enthusiasm to do global marketing activities.
In SME’s export decisions the decisions can be made by only one person. In LSE’s (large scale
enterprise) a whole management team.
Technology competence/ unique product
,When a company developed a unique competences (product) in its domestic market, the possibility
of spreading unique assets to over seas markets may be very high because the opportunity costs of
exploiting these assets in other markets will be very low. One issue to consider is how long such a
product or technoligival advantage willl copntinue.
Foreign market opportunities/ market information
South-east Asia is very attractive for Overseas market, because of the economical succes. Eastern
Europe is attractive, because of theire new foun political freedom and desires to develop trade and
economic realtionsships in western Europe, America and Japan.
Specialised marketing knowledge about (foreign customers, marketplaces or market situations that is
not widely shared) or acces to information can distinguish an exportinf firm from its competitors.
Economies of scale – learning curve
By doubling the output production costs can be reduces to 30%. This can lead a company for trying
to have more market share as a primary objective.
Tax benefits
Tax benefits allow the firm either to offer its products to a lower cost in foreign markets or to
accumulate a higher profit. A disadvantage is that the WTO (World trade organization) punish foreing
producers for selling their products on local markets at very low prices.
Reason for Reactive motives
Competitive pressures
When a firm is afraid of losing market share or foreign markets permanantly to domestic
competitors.
Quick entry may result in quick withdrawal, once a firm recognizes thats its preparation was not
good.
Domestic market: small and saturated
Because of a small home market potential. Done by industrial products and producers of specialized
consumers goods that have few customers located throuhout the world. Also US car companies
entered international markets.
Overproduction/ excess capacity
If a firms domestic sales are below expectation. A firm can do price cutting or or starting export sales
via short term price cuts. Most countires dont want temporary export. Exess capacity is going abroad
an do production for a lower price.
Unsolicited foreign orders
Is when there are enquiries from overseas. These enquiries can results from advertising in world
wide papers or throug exhibitions.
Extend sales of seasonal products
When there is a off season in a domestic country it doesn’t firms can go to overseas countries where
it is not. Example the weather season are different.
Proximity to international customers/ psychological distance
Because of speaking same languages,. US sees England psycholigically closer then Mexico.Firms from
Europe become almost automatically onternational marketers beacuse the neihbours are so close.
But not always because there are a lot of cultural differences.
Fact. Bigger firms have more proactive motives to export.
2.4 Internationalization barriers/ risk
- Insufficient finances and knowledge
- Lack of: foreign market conections, export commitment, capital to finance expansion into
foreign markets, productive capacity to dedicate to foreign markets and foreign channels
distribution.
- Management emphasis onh developing domestic markets.
- Costs escalation due to high export manufacturing, distribution and financing expenditures.
- Inadequate information on potential foreign customers and competition are key barriers
facing active and prospective(aankomende) exporters
When small firms are only focus on local market it is a reason for not exporting any of their prodcuts.
, CHAPTER 4
Porter's diamond
Porter's five forces
4.4 -> do not need to know
4.8 -> need to know
Chapter 4 Development of the firm’s international competitiveness
Michael E. Porter: The competitive advantage of nations.
Competitive advantage ultimately results from an effective combination of national circumstances
and company strategy. It is up to the company to seize the opportunity. The home base of a company
is an important determinant of a firm’s strengths and weaknesses relative to foreign rivals.
Understanding the home base of foreign competitors is essential in analysing them. It also shapes
their future strategies.
Hiermee wordt bedoeld date en bedrijf zijn zwaktes en sterktes haalt uit het gebied, land waar hij zij is
begonnen. Vanuit hier kan het bedrijf met deze sterktes doorgroeien en zo kunnen concurrenten dus
ook beoordeelt worden.
Porter describes a concentration of firms within a certain industry as industrial clusters. Where every
firm has a network of relations to other firms in the industry and customers, suppliers and
competitors. These industrial clusters may go worldwide, but they will usually have their starting
point and location in a certain country or region.
Er wordt hiermee bedoeld dat er soms clusters van dezelfde industrieën bij elkaar zitten die elkaar
kunnen helpen op de markt, maar elkaar ook tegen kunnen houden. En dan vooral kleine bedrijven
kunnen niet op tegen deze zogenaamd clusters.
Porters diamond: The characteristics of the ‘home base’ play a central role in explaining the
international competitiveness of the firm (the explaining elements consist of factor conditions,
demand conditions, related and supporting industries, firms strategy) structure and rivalry, chance
and government.
o Factor conditions: climate, physical infrastructure, natural resources, educational system,
human resources, technological infrastructure and capital. In this connection it is important
to mention that the most enduring competitive advantages for nations are created by those
factors that have the least degree of mobility. Factors with low mobility create the ground for
international competitiveness. For example capital is the most mobile of the factors of
production.
Dus een land is goed voor internationale concurrentie als hij factoren heft die andere landen
niet hebben en die ook minder snel naar andere landen toe zouden kunnen gaan. Bijvoorbeeld
infrastructuur is moeilijk snel goed te maken.
o Demand conditions: There exist an interaction between scale economies, transportation
costs and the size of the home market. When scale economies limit the number of
production locations, the size of a market will be an important determinant of its
attractiveness. The composition of demand also plays an important role. A products
fundamental or core design nearly always reflects home market needs. The sophistication of
the buyer is also important. The price inelasticity of government encouraged firms to
develop technically advanced products without worrying too much about costs.
Bijvoorbeeld de US government was de eerste koper van de chips and zorgde voor subsidies
voor bedrijven die deze chips verder zouden ontwikkelen.
o Related and supporting industries: In part, the advantage of clustering come from a
reduction in the transportation costs for intermediate goods. Coordination of technology is
also eased by geographic proximity. In the semiconductor industry, the strength of the
electronics industry in Japan (which by the semiconductors) is a strong incentive (prikkeling)
to the location of semiconductors in the same area. It should be notes that clustering is not
independent of scale economies.
o Firms strategy, structure and rivalry: The powerful and positive effect that domestic
competition has on the ability to compete in the global marketplace. Furthermore the
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