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, Summary Global Marketing – Hollensen (G-Cluster)
1.2 The process of developing the global marketing plan
Part 1: The decision whether to internationalize (1-4)
Part 2: Deciding which markets to enter (5-8)
Part 3: Market entry strategies (9-13)
Part 4: Designing the global marketing programme (14-17)
Part 5: Implementing and coordinating the global marketing programme (18-19)
1.3 Comparison of the global marketing & management style of SMEs & LSEs
LSEs large scale enterprises (more than 250 employees)
SMEs small and medium-sized enterprises (fewer than 50 and 250 employees)
Resources:
Financial;
Business education/specialist expertise.
LSEs SMEs
Resources Many resources Limited resources
Internalization of resources (personnel, Externalization of resources
financing, market knowledge) (outsourcing of resources)
Organization Formal/hierarchical Informal
Independent of one person The owner usually had the power to
control a total organization
Risk-taking Mainly risk-averse Sometimes risk-taking risk-averse
Focus on long-term opportunities Focus on the short-term
Flexibility Low High
Take advantage of economies of scale Yes Only limited
and of scope
Use of information sources Databases, external consultancy, Internal sources, face-to-face
internet communication
Formation of strategy/decision-making process (LSEs)
As is seen in the figure, the realized strategy (the observable
output of an organization’s activity) is a result of the mix between
the intended (planned) strategy and the emergent (not planned)
strategy.
On the other hand, the SME is characterized by the
entrepreneurial decision-making model. Here more drastic
changes in strategy are possible because decision-making is
intuitive, loose and unstructured.
Economies of scale and economies of scope
Economies of scale accumulated volume in production, resulting in lower cost price per unit.
The benefits of economies of scale appear in different ways:
Reducing operating costs per unit and spreading fixed costs over a larger volume due to experience curve effects;
Pooling global purchasing gives the opportunity to concentrate global purchasing power over supplies;
A larger scale gives the global player the opportunity to build centres of excellence for the development of specific
technologies or products.
Economies of scope
Economies of scope reusing a resource from one business/country in additional businesses/countries.
The challenge in capturing the economies of scope at a global level lies in being responsive to the tension between two
conflicting needs: the need of central coordination of most marketing mix elements, and the need for local autonomy in the
actual delivery of products and services.
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,1.4 Should the company internationalize at all?
Globalization reflects the trend of firms buying, developing, producing and selling 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 (e.g. Europe).
Preparedness for internationalization
This dimension is mainly determined by the firm. The degree
of preparedness is dependent on the firm’s ability to carry out
strategies in the international marketplace, the actual skills in
international business operations.
1.5 Development of the ‘global marketing’ concept
Basically ‘global marketing’ consist of finding and satisfied
global customer needs better than the competition, and
coordinating marketing activities within the constraints of the
global environment.
This world view of a firm’s business activities can be described
according the EPRG framework, the four orientations of which
are summarized as follows:
1. Ethnocentric: the home country is superior and the
needs of the home country are most relevant;
2. Polycentric (multidomestic): each country is unique and should therefore be targeted in a different way;
3. Regiocentric: the world consists of regions (Europe, Asia etc);
4. Geocentric (global): the world is getting smaller and
smaller. The firm may offer global concepts.
Global marketing 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.
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).
This global marketing strategy strives to achieve the slogan
‘think globally, act locally’ (glocalization) through dynamic
interdependence between headquarters and subsidiaries.
1.6 Forces for global integration and market responsiveness
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.
In the figure is assumed that SMEs and LSEs are learning for each other.
The consequence of both movements may be an action-oriented approach,
where firms use the strengths of both orientations.
Forces for ‘global coordination/integration’
In the shift towards integrated global marketing, greater importance will be
attached to transnational similarities for target marks across national
borders and less on cross-national differences.
The major drives for this shift are as follows:
Removal of trade barriers (deregulation);
Global accounts/customers;
Relationship management/network organization;
Standardized worldwide technology;
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, Worldwide markets;
‘Global village’;
Worldwide communication;
Global cost drivers.
Forces for ‘market responsiveness’
There are as follows:
Cultural differences;
Regionalism/protectionism;
Deglobalization trend.
Deglobalization moving away from the globalization trend and regarding each market as special, with its own economy,
culture and religion.
1.7 The value chain as a framework for identifying international competitive advantage
Value chain a categorization of the firm’s activities providing value
for the customers and profit for the company.
The value chain shown provides a systematic means of displaying and
categorizing activities. The activities performed by a firm in any
industry can be grouped into the nine generic categories shown. At
each stage of the chain there exist an opportunity to contribute
positively to the firm’s competitive strategy by performing some
activity or process in a way that is better than from other
competitors.
The Porter concept of the value chain
Porter’s original value chain displays total value and consists of value activities and margin. Value activities are the physically and
technologically distinct activities that a firm performs. It creates a product valuable to its buyers. Competitive advantage is a
function of either providing comparable buyer value more efficiently than competitors.
Primary activities activities involved in the physical creation of the product, its scale and transfer to the buyer, as well as after-
sales assistance.
Support activities support the primary activities and each other by providing purchased inputs, technology, human resources.
Primary activities
1. Inbound logistics: the activities concerned with receiving, storing and distributing the inputs of the product/service;
2. Operations: the transformation of these various inputs into the final product or service (machining, packaging);
3. Outbound logistics: the collection, storage and distribution to the customers;
4. Marketing and sales: these provide the means whereby consumers are made aware of the product and purchase it;
5. Service: these are all the activities that enhance or maintain the value of a product service.
Support activities
1. Procurement: this refers to the process of
acquiring the various resource inputs to the
primary activities;
2. Technology development: the know-how;
3. Human resource management: important area
that transcends all primary activities (recruiting,
training);
4. Infrastructure: the systems of planning, finance,
quality control, etc.
In understanding the competitive advantage of an
organization, the strategic importance of the following
types of linkage should be analysed in order to assess how
the contribute to cost reduction or value added.
There are two kinds of linkage:
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