International Marketing Strategies

Market Selection and Market Entry

• The presentation discusses market selection and market entry strategies for international marketing.
• Key factors in a company's choice of foreign markets include the firm's degree of internationalization, overseas experience, resources, industry type, and internationalization goals. Existing networks of relationships also matter.
• Environmental factors, including international industry structure, market internationalization level, host country specifics, market potential, competition, and psychic/geographic distance, are crucial considerations.
• Market similarity is important for evaluating potential opportunities.
• International market segmentation is a key step in the market selection process.
• Factors for prioritizing and evaluating country markets include institutional factors (political stability, infrastructure, local resources), consumer factors (customer numbers, purchasing power, behavior), and competitive factors (intensity of competition, competitive advantages of competitors).
• Market entry barriers are also evaluated; these can be institutional, consumer-related, and competition-related.

World Economy

• Economic integration, which was around 10% in the early 20th century, is now close to 50%.
• The European Union (EU) and NAFTA are examples of highly integrated regions.
• Global companies often displace or absorb local competitors.
• Capital flows now have greater influence than trade in driving global economies.
• The struggle between capitalism and socialism is largely over.
• Technological changes, particularly e-commerce, force companies to reconsider their business models.

Stages of Market Development (World Bank)

• The World Bank classifies countries into different stages of market development, based on gross national income (GNI).
• Stages include low-income, lower-middle-income, upper-middle-income, and high-income countries.
• Each stage exhibits unique characteristics in industrialization, employment, urbanization, wages, literacy, and reliance on foreign aid.
• Differences also include economic growth, technological sophistication, and outlook.

Economic Differences Between Countries

• Key economic indicators used to evaluate countries include market potential (GDP, quarterly or yearly GDP growth, income distribution), infrastructure, economic stability (stability and inflation rates), exchange rates, and political stability.

The Big Mac Index

• Based on the theory of purchasing-power parity (PPP), the Big Mac Index assesses the relative value of currencies.
• The index measures the price of a Big Mac across different countries and adjusts exchange rates to reflect the differing costs of goods and services in each location.
• Exchange rate adjustments are needed to correct for discrepancies in costs and labor prices between countries.

Law and Politics

• Social culture and political ideology significantly impact market entry decisions.
• Different countries have varying political and legal systems, requiring global marketers to comply with local laws (e.g. export/import regulations).
• Political risk and change in the political environment are essential factors for companies operating internationally.

Exemplary WTO Cases

• WTO rulings and cases are provided (e.g. China's tariffs on auto parts and the US versus Brazil cotton subsidies).
• These illustrate different disputes around tariffs and trade laws, and how these can impact businesses.

Trade Agreements

• Preferential Trade Agreements (PTAs) aim to lower trade barriers within regions, offering special treatment to partner countries.
• The World Trade Organization (WTO) oversees over 300 PTAs and governs trade globally.

The World Trade Organization

• The WTO acts as a forum for trade negotiations and dispute mediation, working with multiple countries.
• The WTO's Dispute Settlement Body (DSB) resolves trade disputes amongst member nations and allows for enforcement of trade rules through the imposition of sanctions.

International Market Segmentation for Bosch Security Systems

• Companies segment markets using different criteria. Bosch's market segmentation was demonstrated in a slide for a specific target example.

Market Attractiveness Versus Competitive Strength

• This matrix helps firms evaluate market entry into new target countries, based on size, growth, purchase power, competitive conditions, infrastructure, and political stability, as well as their own organizational size and competitive strength.

Timing Market Entry

• The Waterfall and Sprinkler strategies are two main approaches to entering markets. Each approach has advantages and disadvantages.
• The Waterfall strategy emphasizes concentration in one market at first, while accumulating resources and taking time to study market reaction before moving to other markets. It has fewer startup costs, but also has the disadvantage of having potentially slower growth.
• The Sprinkler strategy is more diversified, expanding to multiple markets rapidly. The disadvantages increase startup costs, and this method has greater risk of failure.
• Companies might combine these approaches, selecting a lead country and extending to others only when market conditions and resources are favorable.

Foreign Market Entry Modes

• Entry methods range widely in terms of management risk, control and financial investment, with exporting being the least risky and strategic partnerships having the most risk.

Investment: Joint Ventures

• In a Joint Venture, partners invest together to create and run a business in a foreign market.
• A benefit is that the risk is shared, but the disadvantage is that the control is lessened compared with other modes of entry.

Investment: Equity Stakes

• Equity stake means owning a portion of a foreign company.
• Minority stake is when a company owns less than 50% of the shares.
• A majority stake is when ownership exceeds 50%.
• Full ownership is when a company has 100% control.

Additional Topics

• Presentation slides on various topics relating to licensing, tariffs and risks are also included.
• The presentation illustrates different countries’ varying policies and regulations.
• Economic policies, such as trade and fiscal policy, monetary policy, intellectual property rights, and wage and price controls, influence a firm's internationalization decisions.
• Protectionism contrasts with openness in global trade policies.