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What is the first phase in planning for global markets?
The implementation phase does not require ongoing evaluation once the marketing plan is in place.
False
Name one form of alternative market-entry strategy.
Exporting
What is one of the advantages of joint ventures?
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In Phase 2, companies must analyze the __________ in each target market to adapt their marketing mix accordingly.
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Strategic International Alliances (SIAs) are established primarily to compete individually in the market.
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Name one disadvantage of joint ventures.
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Match the planning phase with its main focus:
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Which of the following is a question addressed in Phase 2 of planning for global markets?
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The __________ wisdom emphasizes clustering of national markets when considering global segmentation.
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Once a marketing plan is developed, a company will always enter the market.
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Match the following terms with their descriptions:
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What is the purpose of a situational analysis in Phase 3?
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Which term refers to a legal authority given to produce products based on popular media?
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Franchising is considered a separate category from licensing.
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What is the primary purpose of contract manufacturing?
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A ________ is a business agreement between a parent company and a franchisee.
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Match the business models with their descriptions:
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What company formed a joint venture with Verily to produce bioelectric medicines?
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Franchise agreements require franchisees to follow their own set of independent policies.
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Identify one example of successful licensing in Saudi Arabia.
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In a joint venture, partners share ________ of a newly-created business entity.
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What is a possible benefit of franchising for a franchisee?
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What does direct exporting involve?
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The seller's responsibility ends with the delivery of goods to the buyer's premises in Ex-works terms.
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What are Incoterms?
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In a contractual agreement, one company provides an asset in exchange for _____ or other compensation.
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Match the Incoterms with their definitions:
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Which Incoterm places the minimum responsibility on the seller?
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Indirect exporting involves selling to the final consumer in another country.
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What is the primary benefit of establishing direct sales in a foreign country?
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The term _____ is used when the seller pays all charges up to the point where goods are placed alongside the ship.
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Which term means the seller delivers goods to the buyer in the import country with all costs paid?
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Study Notes
Planning for Global Markets
- Planning is a systematic way to prepare for future events and manage uncontrollable external factors that could impact the company's strengths, weaknesses, and objectives.
- Planning involves setting goals and developing methods to achieve them, including allocating resources to specific countries and making rapid international growth possible.
Planning for Global Markets: Phase 1
- Phase 1 involves a preliminary analysis and screening of potential foreign markets.
- This phase evaluates the potential of foreign markets and analyzes the environment in which the company plans to operate.
- The goal is to ensure a match between company and country needs.
Planning for Global Markets: Phase 2
- Phase 2 focuses on defining target markets and adapting the marketing mix accordingly.
- This phase identifies and further analyzes potential target markets.
- The marketing mix is evaluated in each target market to determine necessary cultural/environmental adaptations and their impact on profitability.
Planning for Global Markets: Phase 3
- Phase 3 involves developing the marketing plan for specific markets after narrowing down target market options.
- The marketing plan includes a situational analysis, culminates in selecting an entry mode and specific action programs, and establishes what must be done, by whom, how, and when.
- The plan also includes budgets, expected sales, and profits.
- The company may choose to not enter a market if the plan reveals that objectives and goals cannot be met.
Planning for Global Markets: Phase 4
- Phase 4 involves implementation and control, where the planning process continues even after implementation.
- An evaluation and control system is established to ensure performance-objective action.
- Utilizing a planning process and system encourages consideration of all variables influencing success and promotes viewing all country markets and their interrelationships as an integrated global unit.
Alternative Market-Entry Strategies
- There are four broad modes of foreign market entry: exporting, contractual agreements, strategic alliances, and joint ventures and direct foreign investment.
Exporting
- Direct exporting involves selling to customers in another country, for example, through the internet.
- Indirect exporting involves selling to an importer or distributor in another country.
- Direct sales may involve establishing an office in a foreign country and are particularly used for high-tech and industrial products.
Incoterms
- Incoterms (international commercial terms) define the responsibilities and costs of both the seller and buyer throughout the sales process.
- Ex-works: Seller is responsible until goods are placed at buyer's disposal at the specified time and location; buyer bears all risks and costs beyond seller's premises.
- Delivery Duty Paid (DDP): Seller delivers goods to the buyer at a named location in the country of import, handling all costs and risks until delivery.
- Free Alongside Ship (FAS): Seller places goods alongside the vessel or other mode of transport at a named port and pays all charges up to that point.
- Free On Board (FOB): Seller is responsible until the goods are placed onboard the designated vessel.
- Cost and Freight (CFR): Seller arranges for sea carriage to a destination port and provides the buyer with documents necessary to claim the goods from the carrier.
Contractual Agreement
- A contractual agreement involves one company making an asset available to another in exchange for royalties or other compensation.
- This includes licensing agreements where the licensor makes an asset available to the licensee in exchange for royalties, license fees, or other compensation.
- Examples of assets that may be licensed include patents, trade secrets, brand names, and product formulations.
Special Contractual Arrangements: Contract Manufacturing and Franchising
- Contract Manufacturing: A company provides technical specifications to a subcontractor or local manufacturer, allowing them to specialize in product design while the contractor handles manufacturing.
- Franchising: A franchisee operates a business developed by the franchisor in return for a fee and adherence to franchise-wide policies.
Joint Ventures
- A joint venture is an entry strategy for a single target country where partners share ownership of a newly created business entity.
- Advantages: Shared risk, opportunity to learn the new environment, synergy by combining strengths, access to markets with barriers to entry.
- Disadvantages: Requires more investment than licensing, shared rewards and risks, potential for conflict, the partner may become a competitor.
Strategic International Alliances
- A strategic international alliance is a relationship established by two or more companies to cooperate due to mutual need and share risks in achieving a shared goal.
- Companies enter strategic international alliances for various reasons: rapid market expansion, access to new technology, increased efficiency and innovation, reduced marketing costs, strategic competitive moves, and access to additional sources of products and capital.
Global Strategic Partnerships
- Global strategic partnerships encompass collaborative agreements and partnerships for global impact.
From Marketing Management: Global Segmentation
- Conventional Wisdom: Assumes heterogeneity between countries and homogeneity within a country, focusing on macro-level cultural differences and clustering national markets.
- Unconventional Wisdom: Assumes the emergence of segments that transcend national boundaries, recognizing within-country differences, emphasizes micro-level differences, segments micro-markets within and across countries.
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Description
This quiz explores the key stages in planning for global markets, focusing on the preliminary analysis and screening of foreign markets in Phase 1. Phase 2 delves into defining target markets and adapting marketing strategies. Test your understanding of the essential components for successful international market entry.
