Lecture notes
International Marketing
- Institution
- Brunel University (BU)
Extensive and detailed Summary of all lecture notes essential for coursework and end of year exam. For reference I received a First Class.
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Lecture 3: SME and InternationalisationInternational Niche Marketing Strategies for Small and Medium Sized Enterprises
Barriers to internationalization
• Shortage of working capital to finance exports
• Inadequate knowledge of overseas markets
• Inability to contact overseas customers including finding the right partner
• Lack of managerial time, skills and knowledge
Risk factors for SMEs:
SME’s have little influence over environmental change and recession
Can extend themselves financially by growing too quickly
Niche marketing: The firm must:
have good information about the segment needs
have clear understanding of the important segmentation criteria
understand the value of the product niche to the targeted segment
provide high levels of service
carry out small scale innovations
seek cost efficiency in the supply chain
maintain a separate focus
- E.g., by being content to remain relatively small
concentrate on profit rather than market share
evaluate and apply appropriate market entry and marketing mix strategies to build
market share in each country they wish to become involved in
Supply chain internationalization:
Outsourcing= When someone else does the work for us/ occurs when a business moves its
production overseas. However, there has also been some instances of re-shoring where
production has been moved back to the UK. This may be because of:
Problems maintaining quality abroad.
Problems with delivery from overseas. Local production may be more flexible to
demand.
A desire to create jobs locally.
Reasons for outsourcing
Shares risks with other company/ firms reluctant to take risks in non-core areas
company will share some of the responsibility for completing the tasks that are
assigned to them.
Improves company focus:
, By outsourcing less important tasks, you increase the company's focus on tasks
that are deemed more vital.
Reducing capital requirements of business
Managing difficulty of developing quickly
Improving flexibility
Economies of scale of suppliers = EOS occur when unit costs fall as a business
expands.
Economies of scale can occur due to:
- Purchasing economies (Bulk Buying)
- Technological economies (Large operations occur to encourage efficiency)
- Financial Economies (Businesses can attain loans at lower interests due to
risk being lower)
- Managerial Economies (Managers become experts, enabling better decision
making thus increasing efficiency and lowering unit costs)
Expertise of business support service providers
Downsizing may leave management resources stretched and unfocused
Disadvantages of outsourcing
Loss of know-how
Costs of managing outsourced supplies
Threats to security
If employees watch their co-workers get replaced by contractors, they could worry
that they will be replaced by outsourcing next. This could crush morale and
productivity.
Standards could differ:
When you outsource a task, you are trusting the contractor to live up to your idea
of quality. If you and the contractor differ on standards, you could get a very
different product or service than you had in mind. If you outsource to a different
country, you need to ensure that their regulatory standards are similar to those in
your home country.
Communication issues could arise:
When you outsource work, checking in on the people performing that work
becomes more difficult. You cannot just walk across the office; you will have to
write an email or make a phone call and hope the contractor is available at that
moment. If you are outsourcing to another country, you may have to consider time
differences and language barriers, as well.
,Mckinsey 7S Framework: They identified seven internal elements of an organization that
need to align for it to be successful.
The model is useful to incorporate when:
Wanting to improve the performance of your organization.
Determining the best way to implement a proposed strategy.
The framework can be used to examine the likely effects of future changes in the
organization, or to align departments and processes during a merger or
acquisition.
The model categorizes the seven elements as either "hard" or "soft":
Hard Elements:
Strategy= this is your organization's plan for building and maintaining a
competitive advantage over its competitors.
- What is our strategy?
- How do we intend to achieve our objectives?
- How do we deal with competitive pressure?
- How are changes in customer demands dealt with?
- How is strategy adjusted for environmental issues?
Structure= this how your company is organized (that is, how departments and
teams are structured, including who reports to whom).
- How is the company/team divided?
- What is the hierarchy?
- How do the various departments coordinate activities?
- How do the team members organize and align themselves?
, -Is decision making and controlling centralized or decentralized? Is this as it
should be, given what we're doing?
- Where are the lines of communication? Explicit and implicit?
Systems= the daily activities and procedures that staff use to get the job done.
- How is the company/team divided?
- What is the hierarchy?
- How do the various departments coordinate activities?
- How do the team members organize and align themselves?
- Is decision making and controlling centralized or decentralized? Is this as it
should be, given what we're doing?
- Where are the lines of communication? Explicit and implicit?
Soft Elements:
Shared Values= these are the core values of the organization, as shown in its
corporate culture and general work ethic. They were called "superordinate goals"
when the model was first developed.
- What are the core values?
- What is the corporate/team culture?
- How strong are the values?
- What are the fundamental values that the company/team was built on?
Skills= the actual skills and competencies of the organization's employees.
- What are the core values?
- What is the corporate/team culture?
- How strong are the values?
- What are the fundamental values that the company/team was built on?
Style= the style of leadership adopted.
- What are the core values?
- What is the corporate/team culture?
- How strong are the values?
- What are the fundamental values that the company/team was built on?
Staff= the employees and their general capabilities.
- What are the core values?
- What is the corporate/team culture?
- How strong are the values?
- What are the fundamental values that the company/team was built on?
, Ansoff Growth Matrix: This is one way the strategic direction of a business can be
analysed. It considers a firm’s strategy in terms of the products it offers and the markets in
which it operates in.
Market Penetration:
Developing strategies to boost sales and its market share of existing products in existing
markets. This involves little risk in terms of decision making because the products and
markets are familiar.
Market Development:
Offering existing products but targeting new market segments. The business knows this type
of product already but needs to ensure that what it has been offering matches the needs of the
new target market. This is a risk and its dangerous because existing markets may react.
New Product Development:
New Product for existing customers. The business may be responding to changes in customer
requirements; however, this can take time. Businesses may also want to broaden their
portfolio and invest in new product development if the sales of existing products are in
decline.
Diversification:
New Products to new customers groups. High level of risk is involved is involved since both
products and markets are unfamiliar to businesses. High levels of uncertainty is also
involved. However, it can also reduce risk as the business may be less vulnerable (exposed to
be attacked).
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