Summary Strategic International Marketing
Chapter 1 – Global marketing in the firm
See pages 5-9 for the process of developing the global marketing plan. The purpose of this plan is to
create sustainable competitive advantages in the global marketplace. The models include:
1. Benchmarking – competence profile
2. SWOT-analysis
3. Estimation of total market
4. Segmentation
5. The ‘nine strategic windows’ model
6. Competitor analysis
7. Marketing objectives
8. Entry mode strategy
9. Development of the marketing mix
10. Implementation
11. Cross-border negotiation
12. Marketing budget
13. Organization of global marketing activities
14. Marketing control
1.1 Should a company internationalize at all?
International expansion (1) provides new and potentially more profitable markets; (2) helps increase
the firm’s competitiveness and (3) facilitates access to new product ideas, manufacturing innovations
and the latest technology. However, internationalization is unlikely to be successful unless the firm
prepares in advance. Globalization reflects the trend of firms buying, developing, producing, and
selling products and services in most countries and regions in the world.
Industry globalism – The firm can’t influence the degree of industry globalism, as it is determined by
the international marketing environment. Here the strategic behavior of firms depends on the inter-
national competitive structure within an industry. When the degree of industry globalism is high,
there are many interdependencies between markets, customers and suppliers, and the industry is
dominated by a few powerful players (global, PCs). Whereas the other end (local, papers) represents
a multidomestic market environment, where markets exist independently from each other.
Preparedness for internationalization – The dimension is determined by the firm. The degree of
preparedness is dependent on the firm’s ability to carry out strategies in the international
marketplace, i.e. the actual skills in international business operations (language, experience,
resources). The well-prepared company (mature) has a good basis for dominating the international
markets and consequently it would gain higher market shares. 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’.
1.2 Development of the ‘global marketing’ concept
‘Global marketing’ consists of finding and satisfying global customer needs better than the
competition, and of coordinating marketing activities within the constraints of the global
environment. The four orientations of the EPRG framework are:
1. Ethnocentric: the home country is superior and the needs of the home country are most
relevant. Headquarters extends ways of doing business to its foreign affiliates. Controls are
highly centralized and the organization and technology implemented in foreign locations will
be the same as in the home country.
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, 2. Polycentric (multidomestic): each country is unique and therefore should be targeted in a
different way. The polycentric enterprise recognizes that there are different conditions of
production and marketing in different locations and tries to adapt to these conditions in
order to maximize profit in each location. The control is highly decentralized and
communication between headquarters and affiliates is limited.
3. Regiocentric: the world consists of regions (Europe, Asia…). The firm tries to integrate and
coordinate its marketing programme within regions, but not across them.
4. Geocentric (global): the world is getting smaller. The firm may offer global product concepts
but with local adaptation (think global, act local).
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. 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 learning and adaptations.
• Transfer knowledge and ‘best practices’ from
any of its markets and use them in other
international markets.
The global marketing strategy from this image strives to achieve the slogan ‘think globally but act
locally’ (‘glocalization’ framework), through dynamic interdependence between headquarters and
subsidiaries. A key element in knowledge management is the continuous learning from experiences.
The aim of knowledge management is to keep track of valuable capabilities used in one market that
could be used elsewhere, so that firms can continually update their knowledge. (1) The lack of
personal relationships, (2) the absence of trust, and (3) ‘cultural distance’, all conspire to create
resistance, frictions and misunderstandings in cross-cultural knowledge management. The principle
of transferring knowledge and learning across borders is shown in the image. With globalization
becoming a centrepiece in the business strategy of many firms,
the ability to manage the ‘global knowledge engine’ to achieve a
competitve edge in today’s knowledge-intensive economy is one
of the keys to sustainable competitiveness. But in the context of
global marketing the management of knowledge is the facto a
cross-cultral activity, whose key task is to foster and continually
upgrade collaborative cross-cultural learning.
1.3 Forces for ‘global integration’
The figure assumes that SME’s and LSEs are learning from each
other. The consequence of both movements may be an action-oriented
approach, where firms use the strengths of both orientations. SMEs have
traditionally been strong on ‘high degree of responsiveness’, but their
tendency to decentralization and local decision making has made them more
vulnerable to a low degree of coordination across borders. The glocal
strategy approach reflects the aspirations of a global integrated strategy,
while recognizing the importance of local adaptations. Glocalization tries to
optimize the balance between standardization and adaptation of the firm’s
international marketing activities. Global integration is recognizing the
similarities between international markets and integrating them into the
overall global strategy. Market responsiveness is responding to each market’s needs and wants.
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,In the shift towards integrated global marketing, greater importance will be attached to
transnational similarities for target markets across national borders and less to cross-national
differences. The major drivers for this shift are as follows:
• Removal of trade barriers (deregulation): Removal of both tariff (import taxes), and non-
tariff (safety regulations), which have constituted barriers to trade across national
boundaries. This deregulation has an impact on globalization since it reduces the time, costs
and complexity involved in trading across boundaries.
• Global accounts/customers: As customers become global and rationalize their procurement
activities, they demand suppliers provide them with global services to meet their unique
global needs (global delivery of products, assured supply and service systems, uniform
characteristics and global pricing.)
• Relationship management/network organization: The firm will rely on a network to use, f.e.
customer and supplier relationships to pre-empt competition. Business alliances and
network relationships help to reduce market uncertainties. However, networked
organizations need more coordination and communication.
• Standardized worldwide technology: The desire for gaining scale and scope in production is
so high that worldwide availability of products and services should escalate. As a
consequence, we may witness more homogeneity in the demand and usage of consumer
electronics across nations.
• Worldwide markets: The concept of ‘diffusions of innovations’ from the home country to the
rest of the world tends to be replaced by the concept of worldwide markets. Worldwide
markets are likely to develop because they can rely on world demographics.
• ‘Global village’: This refers to the phenomenon in which the world’s population shares
commonly recognized cultural symbols. The consequence of this is that similar products and
services can be sold to similar groups of customers in almost any country in the world.
• Worldwide communication: New Internet-based ‘low-cost’ communication methods ease
communication and trade across different parts of the world. As a result, customers within
national markets are able to buy similar products and services across the world.
• Global cost drivers: There are categorized as ‘economies of scale- or scope’.
1.4 Forces for ‘market responsiveness’
• Cultural differences: Cultural differences often pose major difficulties in international
negotiations and marketing management. This reflects differences in personal values and the
assumptions people make about how businesses are organized.
• Regionalism/protectionism: Regionalism is grouping of countries into regional lusters based
on geographic proximity. These clusters (EU, NAFTA) have formed trading blocs, which may
represent a significant blockage to globalization. In this case, trade barriers that are removed
from individual countries are simply reproduced for a regional and a set of countries. There-
fore, one may argue that regionalism results in a situation where protectionism reappears.
• Deglobalization trend: Deglobalizaiton is moving away from the globalization trends and
regarding each market as special, with its own economy, culture and religion.
1.5 The value chain as a framework for identifying international competitive advantage
The value chain provides a systematic means of displaying and categorizing firm’s activities. At each
stage of the value chain there is an opportunity to contribute positively to the firm’s competitive
strategy by performing some activity or process better, and so provide some uniqueness or
advantage. If a firm attains such a competitive advantage, which is sustainable, defensible, profitable
and valued by the market, it may earn high rates of return. Value is the amount that buyers are
willing to pay for what a firm provides them with (perceived value). The value chain includes both
cost and value drivers. Drivers are the underlying structural factors that explain why the cost/value
generated by a firm’s activities differs from its rivals. Changing the activity drivers forms the basis for
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, successfully positioning the firm as low cost or differentiator relative to its rivals. Creating value for
buyers that exceeds the cost of creating the product is the goal of any generic strategy. The value
chain displays total value and consists of value activities and margin.
Margin is the difference between total value (price)and the collective cost of performing the
activities. Competitive advantage is a function of either providing comparable buyer value more
efficiently than competitors (lower costs), or performing activities at comparable cost but in unique
ways that create more customer value. A value net includes the activities implemented by all firms
involved in the production of a good or service, starting from the basic raw materials to those
engaged in the delivery of the product to the final customers.
1.5.1 The Porter concept of the value chain
Primary activities are activities involved in the physical creation of the products, its sale and transfer
to the buyer, as well as after-sales assistance. Support activities support the primary activities.
Primary activities are:
1. Inbound logistics: The activities concerned with receiving, storing and distributing the inputs
to the product/service. Includes materials handling, stock control, transport…
2. Operations: The transformation of these various inputs into the final product/service,
includes machining, packaging, assembly, testing…
3. Outbound logistics: The collection, storage and distribution of the product to customers. For
tangible goods this would involve warehousing, material handling, transport, etc. For services
it may be concerned with arrangements for bringing customers to the services (location).
4. Marketing and sales: Here, customers are made aware of the product/service. This would
include sales administration, advertising, selling, etc. in public services, communication
networks that help users access a particular service are often important.
5. Services: All the activities that enhance or maintain the value of a product/service. This is to
minimize potential problems related to product use, and maximize the value of the
consumer experience. After-sales service consists of: (1) the installation and start-up of the
purchased product, (2) the provision of spare parts, (3) the provision of repair services, (4)
technical advice, (5) provision and support of warranties.
Support activities are:
1. Procurement: Refers to the process of acquiring the
various resource inputs to the primary activities.
2. Technology development: All value activities have a
‘technology’. The key technologies may be concerned
directly with the product (R&D, design), or with
processes (process development), or with particular
resource (raw materials improvement)
3. Human resource management: This is an important area
that transcends all primary activities. it is concerned with the activities involved in recruiting,
training, developing and rewarding people within the organizations.
4. Infrastructure: The systems of planning, finance, quality control, etc., are crucially important
to an organizations’ strategic capability in all primary activities. infrastructure also consists of
the structures and routines of the organization that sustain its culture.
Although value activities are the building blocks of competitive advantage, the value chain is not a
collection of independent activities, but a system of interdependent activities. In understanding the
competitive advantage, the strategic importance of the following types of linkage should be analyzed
in order to assess how they contribute to cost reduction or value added. The two kinds of linkage are:
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