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Chapter 12 Global Marketing Strategies Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 12-1

Global Marketing Strategies


Globalization

Grant Thornton study: 56% of CEOs at medium-sized companies see globalization as an opportunity

Since 1948 the value of world merchandise exports has risen from $58 billion to $12.5 trillion

Emerging market economies are growing faster than mature markets

China, India, Russia, Mexico, Brazil


Why “Go Global?”

Offset sales declines in the domestic market

Increase sales and profits

Extend products’ life cycles

Lower manufacturing costs

Lower the cost of products


Why “Go Global?”

Improve competitive position

Raise quality levels

Become more customer-oriented

Increase chances of success


Questions to Consider Before Going Global

1. Is there a profitable market in which our company has the potential to be successful over the long run? (see Table 12.1)

2. Do we have and are we willing to commit adequate resources of time, people, and capital to a global campaign?

3. Are domestic pressures forcing our company to consider global opportunities?


Questions to Consider Before Going Global

4. Do we understand the cultural differences, history, economics, values, opportunities, and risks of conducting business in the country we are considering?

5. Is there a viable exit strategy for our company if conditions change or the new venture does not succeed?

6. Can we afford not to go global?

Nine Strategies for Going Global Creating a Web site

Relying on trade intermediaries

Creating joint ventures

Foreign licensing

International franchising

Counter-trading and bartering

Exporting

Establishing international locations

Importing and outsourcing



Strategies For "Going Global"

Creating a Web site


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Internet Users Worldwide


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Internet Penetration Rate by World Region


Creating a Web site


Strategies for "Going Global"


Trade Intermediaries

Export Management Companies (EMCs)

Export Trading Companies (ETCs)

Manufacturer’s Export Agents (MEAs)

Export merchants

Resident buying offices

Foreign distributors


Joint ventures

Creating a Web site




Joint Ventures

Domestic joint venture – two or more U.S. companies form an alliance for the purpose of exporting their goods and services abroad

Foreign joint venture – a domestic firm forms an alliance with a company in the target nation Most important ingredient: Choosing the right

partner

Another key to success: Establishing common objectives


Foreign licensing


Creating a Web site


Joint ventures



Steps to International Franchising Success

1. Identify the country or countries that are best suited to the business concept

2. Generate leads for potential franchisee

3. Select quality candidates

4. Structure the franchise deal

Direct franchising

Area development

Master franchising



Exporting

Creating a Web site


Joint ventures

Foreign licensing




Exporting

Small companies account for 90.7% of all companies involved in exporting, but…

They generate just 21% of U.S. export sales

More than 250,000 U.S. companies now export; twice as many are capable of exporting but are not doing so

Source: NSBA/SBEA Small Business Exporting Survey, 2010.

Small Business Exporting Survey, 2010

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Source: Elizabeth Clark, Small and Medium-Sized Exporting Companies: A Statistical Handbook, International Trade Administration, Office of Trade and Industry Information (Washington, DC: 2005), p. 19.

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Number of Countries to Which Small Businesses Export



Steps to Successful Exporting

1. Recognize that even the tiniest companies and least experienced entrepreneurs have the potential to export

2. Analyze your product or service

3. Analyze your commitment

4. Research markets and pick your target


5. Develop a distribution strategy

6. Find your customer U.S. Department of Commerce

International Trade Administration

7. Find financing for export sales SBA, EX-IM Bank, OPIC, and others

8. Ship your goods

9. Collect your money

(Continued)

Steps to Successful Exporting

How a Letter of Credit Works

$

Foreign buyer agrees to buy products;

seller agrees to ship goods if buyer

arranges a letter of credit.

Buyer requests that his bank grant a

letter of credit, which assures exporter

payment if she presents documents

proving goods were actually shipped.

Bank makes out letter of credit to

seller

and sends it to seller’s bank (called the

confirming bank).

Seller ships goods to buyer

according to letter of credit’s

terms and submits shipping

documents to bank issuing

letter of credit.

$ Letter

of Credit

Seller’s Bank Buyer's Bank

Buyer’s bank makes payment

to seller’s (confirming) bank.

Confirming bank then pays

seller amount specified in

letter of credit.

$

Buyer Seller



Establishing international locations

Importing and outsourcing

Creating a Web site


Joint ventures

Foreign licensing



Exporting



Importing and Outsourcing

Make sure that importing or outsourcing is right for your business

Establish a cost target for your product

Do your research before you leave home

Be sensitive to cultural differences

Do your groundwork


Importing and Outsourcing

Protect your company’s intellectual property

Select a manufacturer

Provide an exact model of the product you want manufactured

Stay in constant contact with the manufacturer and try to build a long-term relationship


Barriers to International Trade

Attitude - "My company is too small to export"

Lack of information about how to get started

Lack of export financing

Domestic Barriers:


Tariffs - Taxes a government imposes on goods and services imported into that country

Quotas - Limits on the amount of a product imported into a country

Embargoes - Total bans on imports of certain products

International Barriers:



Dumping - selling large quantities of a product in a foreign country below cost to gain market share

Political barriers - rules, regulations and risks

Business barriers - business practices and laws

Cultural barriers - differing languages, philosophies, traditions, and accepted business practices


International Barriers:


International Trade Agreements

World Trade Organization (WTO)

153 member countries that account for more than 97% of all world trade

North American Free Trade Agreement (NAFTA)

Created a single free trade zone with the U.S., Canada, and Mexico

Central America Free Trade Agreement (CAFTA)


Guidelines for Success in International Markets

Make yourself at home in all three of the world's key markets - North America, Europe, and Asia

Appeal to the similarities within the various regions in which you operate but recognize the differences in their particular cultures

Be willing to commit the necessary resources to make your global efforts successful

Develop new products for the world market



Use the many resources available to research potential markets and to determine the ideal target for your products

Familiarize yourself with foreign customs and languages

Learn to understand your customers from the perspective of their culture, not your own


"Glocalize" - Make global decisions about products, markets, and management, but allow local employees to make tactical decisions about packaging, advertising, and service

Make positive and preferably visible contributions to the local community



Train employees to think globally, send them on international trips, and equip them with state-of-the-art communication technology

Hire local managers to staff foreign offices and branches



Do whatever seems best wherever it seems best, even if people at home lose jobs or responsibilities

Consider using partners and joint ventures to break into foreign markets you cannot penetrate on your own



All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

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