International Marketing Guerini PDF

# International Marketing Guerini ## International Marketing (Università Carlo Cattaneo) ### Course Information - Final grade: Project (40%) + Final Exam (60%) - Project: Market entry plan. Groups of 3-4 people. Due date: December 17th. - Form groups and publish them on Moodle by October 1st...

# International Marketing Guerini ## International Marketing (Università Carlo Cattaneo) ### Course Information - Final grade: Project (40%) + Final Exam (60%) - Project: Market entry plan. Groups of 3-4 people. Due date: December 17th. - Form groups and publish them on Moodle by October 1st - Choose a company by October 8th. - Company information + Market information due by October 22nd. - First project deadline: November 19th. - Final exam: Written, 6 questions about topics covered in class. Due date: December 17th. ### Lecture 1 - **International Marketing**: Marketing that occurs on an international level. ### The Marketing Process #### International Enviroment - **Marketing Research:** Analytic and strategic. - **Marketing Program:** Operational part of the marketing plan. - **Intercultural Negotiations:** Negotiation between cultures. - **Marketing Audit:** Evaluating the effectiveness of the overall marketing strategy. #### Firms Need: 1. Proper Analysis (analisi corretta). 2. Strategy planning. 3. Marketing programs. 4. Implementation and control of marketing programs. - **Marketing products and services globally** requires navigating national and political boundaries. - **Managerial implications:** - Know your customers. - Serve them continuously. - Be a preferred option compared to local and international competitors. - **The international environment differs from country to country**, requiring adaptation of marketing strategies. #### Why do firms internationalize? - **Reactive motivations**: - Competitive pressures - Overproduction - Declining domestic sales - Excess capacity - **Proactive motivations**: - Profit - Economies of scale - Growth #### International Marketing Strategy - Differentiate from competitors. ### Market Selection Strategy 1. **Decide which markets are attractive.** - Selection criteria - Number of markets - Market portfolio 2. **Choose an entry strategy.** 3. **Segment and position the offering.** - Consider the differences among consumers within and between markets. - Segmentation helps define target markets. - Positioning articulates what makes a product unique. - **Ways to Internationalize:** Franchising, joint ventures, subsidiaries, acquisitions, licensing, etc. #### Defining Marketing Programs - **Four Ps**: - Product - Price - Place - Promotion #### Global Vs. Local Marketing Programs - **Global**: Standardization across all markets. - **Local**: Products and services adapted to individual countries. - **Glocal**: Balancing standardization and adaptation. #### Intercultural Negotiations - Implement plans after creating a marketing strategy. - Consider the impact of culture differences on negotiations. - Intercultural issues will emerge during the implementation process. #### Market Audit - **Circular process** used to control the market. - **Market metrics** help measure and control performance. - **Reinforces objectives and goals.** ### Lecture 2 #### Foreign Market Evaluation (Valutazione del Mercato Estero) and Selection - Identify countries for expansion. #### International Marketing Model 1. **Market(s) Choice:** Select the right market. 2. **Marketing Objectives:** Define key performance indicators. 3. **Entry Mode Selection:** Choose the best way to enter the market. 4. **Marketing Program:** Define the 4Ps. 5. **Control and Adapt:** Ongoing monitoring and corrective action if necessary. #### The Model’s Features - Sequential: Each step must be completed before moving to the next. - Comprehensive: Includes market selection, evaluation, and implementation. - Outcome-Oriented: Results in a ranked list of countries based on attractiveness. #### Market Choice - Conduct in-depth market analysis before entry. - **Three key steps:** 1. Gather information about the country. 2. Compare information across countries. 3. Choose a country. - **Management issue:** Identifying the right information and how to collect it. - **Two scenarios:** - **Few markets:** Limited number of markets (2-3) requiring in-depth analysis. - **Many markets:** Large number of markets (800+) requiring screening to narrow down selections. #### In-depth Market Analysis - Analyze **macro-environmental factors:** Political, demographic, technological, cultural, economic, and natural environment. - Analyze **micro-environmental factors:** - Competitors. - Clients: Use social and cultural analysis to understand customer preferences. - Distribution: If the target market is international, analyze the distribution network. #### Social and Cultural Analysis - Provides information about: - Consumer characteristics and behaviors. - Local specifics. - Lifestyles. - **Focuses on:** - Cultural aspects. - Consumer behaviors. #### Barriers to Entry - Consider factors that may prevent market entry. - **Examples:** - Language differences. - Country/market boundaries (limiti). #### Country/market Boundaries - **Examples:** - Boicots and Embargos: Quotas and commercial issues. - Non-tariff barriers: Import licenses and bilateral agreements. - Tariff barriers: Import quotas and monetary policies. #### Analyzing Market Accessibility - Evaluate the ease of entry based on barriers. - **Low accessibility:** High barriers. #### The Double Screening Process - **Two step process (when the number of countries is high):** 1. **Product Specific Screening Criteria:** Reduce the number of potential market locations based on industry-specific factors. 2. **Firm Specific Screening Criteria:** Narrow down the selection to identify the most attractive countries for a specific company. #### Initial Screening - **Focuses on:** - Risk: Exclude countries with high entry barriers and risk. - Market Potential: Exclude counties with low market potential for a specific product category. #### Second Screening - **Focuses on:** - Key Success Factors: Exclude countries that don’t align with a company's strengths. - Market Potential: Exclude countries with low market potential for the specific company. #### Criteria for Second Screening - **Examples:** - Number of competitors. - Purchasing power. - Potential clients. - Country turnover. - Turnover of distribution. - Turnover of product. - Legislation and duties. #### Market Attractiveness - Analyze market potential. - **Key elements**: - Market dimensions (size, growth, segmentation, regulatory landscape) - Profitability - Accessibility #### Market Potential - Estimate the **maximum total sales revenue** for a product category in a specific market. - **Consider:** - Market size: The number of customers and what they need. - Market growth: The rate of sales growth in a particular market. #### Country Risk - **Three types of risk:** - **Political risk:** The likelihood that political events will affect the profitability of a business. - **Financial risk:** Currency fluctuation, exchange rate, and ability to secure loans. - **Commercial risk:** The risk of default from partners, customers, or suppliers. #### Political Risk Analysis - **Focuses on:** - Political stability: Government stability, rule of law, and regulatory environment. - Government attitude to foreign direct investment (FDI): How receptive is the government to foreign investment? - Expropriation risk: The likelihood that the government will seize assets. - Government duration: Longer-term stability reduces risk. #### International Marketing Research (Ricerca di Mercato Internazionale) - **Definition:** Systematic gathering, recording, and analyzing data related to marketing goods and services. #### Typical Research Question: - Is the market global? - Are consumers global? - Can you offer a product in all markets? #### Company Orientation - Ethnocentric: Belief that the home country model is superior. - Polycentric: Belief that local market adaptations are essential. - Geocentric: Utilizes global standards with adaptations based on regional differences. #### Common Mistakes - **Ethnocentric companies may fail to**: - Recognize cultural differences. - Understand local preferences. - Adapt to local market contexts. ### Lecture 3 #### Export Planning - **Definition:** Tools used by companies to analyze foreign markets. - **Companies use:** Data analysis, best practices, Open Data Information systems. #### Company Profile - Provides information about a company's: - Background and operations. - Goals and objectives. - Target markets. - Competitive position. #### Mission of Export Planning - **Provide small to medium size companies with**: - **Agile Planning:** Quick and flexible planning processes. - **Control:** Over operations to mitigate risks. - **Data-driven Decision Making:** Leveraging information and data to improve decision making. #### Benefits of Export Planning - **Reduces economic uncertainty** for companies, especially small to medium sized companies. - **Supports SME development:** Encourages best practices for internationalization. - **Provides access to**: - Market information. - Open source data on countries and product categories. - Specific product data. - Historical sales data. - **Offers tools**: - To measure attractiveness. - To analyze aversion to risk. - To evaluate accessibility. #### Country Portfolio Analysis - **Companies need to**: - **Identify attractive markets.** - **Manage a portfolio of countries** to achieve strategic goals. ##### Phase 1: Company Internationalizes - **Key activities:** - Selection and evaluation of attractive markets: - Identify the best markets based on specific criteria. - Development of a comprehensive marketing program. - Obtain international experience. - Develop expertise with investments in foreign markets. ##### Phase 2: Portfolio Evaluation - **Key activities:** - **Evaluate the current foreign market portfolio** to identify potential for: - Expansion - Disinvestment - **Decide on a tool**: Use the right tool to match the challenge. - **Analyze the portfolio:** Identify strengths, weaknesses, and opportunities. - **Strategies to Consider**: - **Cushman Matrix** - **BCG Matrix** - **Leontiades Matrix** - **Key-Country Matrix** #### Key-Country Matrix - Classifies countries into nine cells based on their market opportunity. - **Key features:** - **Composite dimensions**: Multiple criteria, factors, or variables. - **Variables**: Country attractiveness, competitive position, etc. - **Weighting scheme** used to determine the relative importance of these factors. - **Market opportunity**: Nine specific cells representing different degrees of opportunity. #### Cell Descriptions: - **Light Green (Best Area)**: Strong competitive position and high attractiveness. - **Green (Middle Area)**: Moderate competitive position and moderate attractiveness. - **Grey (Worst Area)**: Weak competitive position and low attractiveness. #### Managing Key-Country Matrix - **Investment strategy**: - Invest in **light green** counties first. - Invest in **green** countries next. - Consider **grey** country investments after establishing secure operations in the best locations. #### Key Country Focus - **Key country**: Countries in light green. - **Marginal countries**: Countries in grey. - Grow aggressively in key countries. - Limited investment in marginal countries with the potential for growth. #### Equilibrated Portfolio - A matrix balanced with countries in each of the three areas. - **Divide the matrix into three sections**: - **Upper part (teal):** High priority for investment. - **Middle part (green):** Moderate priority. - **Lower part (blue):** Lowest priority. #### The Decision to Invest (when using a Key-Country Matrix) - Consider: - **Market attractiveness:** The size, growth, and segmentation of the market. - **Competitive position**: The company’s strength and market share. - **Control of the portfolio:** Ensure a balance of countries across all three areas. ### Lecture 4 #### Entry Plan Format - **Similar to a marketing plan**, but focused on a specific foreign market. - **Examples**: - Analyze a foreign market. - Consider current trends. - Identify the best entry mode. #### Entry Modes - **Key options**: - **Export:** Selling directly or indirectly. - **Alliances**: Joint ventures or franchising. - **Foreign Direct Investment:** Creating subsidiaries or establishing a manufacturing facility. #### Key Considerations for Entry Mode Selection - **Company Goals**: Define specific goals and objectives related to the foreign market. - **Company Size**: Consider resources and capabilities. - **Product Line**: Determine the product fit with the foreign market. - **Competition**: Assess competitive dynamics and market features. #### Matrix 1: - **Two factors to consider**: - **Pressure for local production**: Local regulations and customer needs. - **Company goals**: Expansion plans and resources. #### Decision Criteria for Entry Mode - **Factors to analyze**: - Potential sales revenue. - Business costs. - Risk exposure. - Control over operations. - **Key recommendation**: Quantify factors whenever possible. #### Product Influence on Entry Mode - **Factors to consider**: - **Differentiation**: A high degree of differentiation creates price advantages. - **Service requirements**: More service requirements may require a branch or subsidiary. - **Technology intensity**: Licensing is more likely for industrial products, while trademarks are typically licensed for consumer products. - **Adaptation**: High adaptation requirements may require a branch, subsidiary, or local manufacturing. #### Variables Affecting Entry Mode - **External variables**: - Entry conditions. - Macro-environment. - Competitive landscape. - **Internal variables**: - Company objectives. - Company values and culture. - Resources. - Product portfolio. #### Exporting - **Two approaches:** - **Indirect exports**: Use intermediaries. - **Direct exports**: Sell directly to the foreign market. #### Indirect Exports - **Intermediaries**: - Firms - Export intermediaries - Wholesalers (grossista) - Retailers - **Selling process**: - **Manufacturer**: Sells products to export intermediaries. - **Export intermediary**: Sells products to wholesalers or retailers. - **Wholesaler**: Sells products to retailers. - **Retailer**: Sells to the end consumer. - **Direct exports**: Manufacturer sells directly to wholesalers, retailers, or end consumers. #### Export Intermediaries - Companies that specialize in **connecting firms with the global market**. - **Key services**: - Marketing research: Understand market trends and customer needs. - Gap Analysis: Identify a company’s strengths and weaknesses. - Contact building: Connect firms with buyers and customers. - Negotiation: Secure the best deals for products. - Logistics : Manage the delivery process. #### Examples of Export Intermediaries - **Export Management Companies:** Act as representatives or distributors. - **Trading Companies**: Operate internationally and provide services. #### Sogo Shosha - **Japanese trading companies** known for global operations. - **Key strategies**: - **Global market presence**: Serve a wide range of markets with a wide range of products. - **Economies of scale**: Leverage large volumes of trade to secure lower prices. - **Information**: Develop sophisticated information system to identify market opportunities. - **Barter trade**: Utilize bartering for goods and services. #### Export Management Companies - Specialize in **international marketing services** on a commission basis. #### Direct Exports - **Manufacturer** sells directly to: - Wholesalers. - Retailers. - End consumers. #### The Direct Export Process - **Involves working directly with**: - Wholesalers - Retailers - End consumers. #### Direct Export Advantages - **Greater Control**: Over marketing, pricing, and distribution. - **Improved Customer Relationships**: Can build relationships with foreign customers. - **Higher Sales**: Often results in higher sales volumes. #### Direct Export Disadvantages - **Increased Costs**: Direct selling requires more resources. - **Slower Speed of Entry**: Opening new markets can take longer with direct selling. - **Less Market Coverage**: May be challenging to enter a large number of markets. #### Key Considerations for Direct Export - **Selling Expertise**: Requires knowledge of market trends, customer needs, and distribution channels. - **Pricing**: Price products competitively. - **Logistics**: Manage distribution efficiently. - **Marketing**: Build brand awareness, promote products, and establish a strong presence in the market. #### Evaluating Export - **Second-best option**: Often used when: - **Commitment is low**: Resource and time constraints limit the scope of the operation. - **The country of origin effect (COO)** is high: The company’s country of origin provides a competitive advantage. - **Effective Management Tools**: Utilize the right tools to optimize performance. #### Exporting and the Value Chain - **Consider:** - **Relative value of exports**: Compare the value of export activities to other entry modes. - **Integration**: Do you want to relocate all value chain activities, or just products? - **Control**: Who controls the value chain? #### Globalization and the Fading of National Markets - **Competitive pressures**: Companies face a more challenging landscape with global competitors. - **Standardization**: May occur in some markets, but global competitors still must consider local adaptations. - **The need for differentiation**: Companies need to differentiate offerings in diverse markets. #### When is exporting the right choice? - **Consider the following factors**: - **Market goals:** Align the export strategy with the company’s overall strategic goals. - **Market features:** Analyze the specific characteristics of the market. - **Product**: Determine if the product fits in the market. - **Financial resources:** Ensure adequate resources are available for export activities. #### Managing Export - **Key consideration**: Companies have to define clear goals for each market. - **Choice between Direct and Indirect Exporting**: - **Indirect exporting:** Simplifies entry but reduces control and slows down entry into large numbers of markets. - **Direct exporting:** Offers more control but increases costs. ### Lecture 5 #### Entry Modes - **Focus on**: - **Indirect Exporting:** Using intermediaries. - **Direct Exporting** : Selling directly to the market. - **Alternative entry modes:** Franchising, joint ventures, strategic alliances, and Foreign Direct Investment (FDI). - **Value Chain**: Redefining value chain activities. #### Indirect Exporting (Recap) - **Key features:** - Manufacturer sells to intermediaries. - Intermediaries sell to wholesalers which in turn sell to retailers. #### Direct Exporting - **Key feature:** Manufacturer sells directly to wholesalers, retailers, or end consumers. #### Alternative Entry Modes - **Franchising:** A licensing agreement that allows a franchisee to operate a business based on a proven business concept. - **Joint Ventures**: Combining resources with another company to create a new business. - **Strategic Alliances:** Collaborating with another company to achieve specific goals. - **Foreign Direct Investment (FDI):** Creating a foreign subsidiary or establishing a manufacturing facility. #### Factors Affecting the Decision to Use Indirect or Direct Exporting - **Company Resources and Capabilities**: Consider the company’s expertise and financial resources. - **Market Size and Growth**: Larger markets offer greater potential for direct exporting. - **Competitive Dynamics**: Assess the competitive landscape and the need for control. - **Risk Tolerance**: Consider the level of risk the company is willing to take. - **Regulatory environment**: Analyze the regulatory framework and consider the impact on the business. <start_of_image>ᄒ #### The Value Chain - **Understand the stages**: - **Value Chain**: The steps involved in creating and delivering a product or service. - **Activities**: The specific tasks involved in each stage. - **Processes**: The workflows that link tasks together. #### Dispersing Value Chain Activities - **Key drivers**: - **Comparative Advantage**: Countries with lower costs, access to skilled labor, or other advantages may be attractive for certain value chain activities. - **Efficiency gains**: Cost savings from economies of scale or scope. - **Competitive pressures**: Companies may need to relocate or adjust their value chain to compete. - **Flexibility and risk reduction**: Diversifying the value chain reduces dependence on a single location. - **Innovation and learning** : Exposure to new cultures can foster innovation. - **Barriers to market penetration**: Regulations or other barriers may prevent direct exporting. #### Contractual Arrangements - Alternative entry modes: - **Cross marketing:** Companies collaborate to reach new markets. - **Contract manufacturing:** Outsource production to another company. - **Management contracting:** Hire another company to manage specific operations. ### Lecture 6 #### Country of Origin (COO) Effects - **Definition:** The impact of a country’s image on the perception and evaluation of products. - **Key factors:** - **Country image (CI):** The perception of a country's qualities, goods, and services. - **Brand Equity**: The value associated with a brand. - **Product category**: The specific type of product/service. #### Managing COO Effects - **COO can be**: - **Positive**: Leveraged to increase brand value. - **Neutral**: May have little impact. - **Negative**: May diminish brand value. #### The Importance of COO Effects - **Influences**: - **Customer brand preference**: Consumers may select products based on their perception of the country of origin. - **Market entry**: Choosing a location for a subsidiary or manufacturing facility. - **Export performance**: The success of exports, particularly luxury goods or high-value products. #### The Relationship Between CI And Products - **Products are**: - **Part of the CI**: Cars from Germany are associated with quality engineering. - **Influenced by CI**: The perception of a product can change based on the image of the producing country. - **Not static**: Country image can evolve and shift over time. #### Country Stereotypes - **Definition** : Generalized beliefs about a country based on its people, culture, products, or services. - **Example**: - “Made in China” is often associated with low-quality products. - “Made in Italy” is often associated with high-quality and luxurious goods. #### Managing COO Effects: - **Companies have to**: - **Understand the source of COO effects**. - **Develop strategies to manage positive, neutral, or negative COO effects.** - **Strategic Alternatives for Managing COO Effects** : - **Authentic COO:** Highlight the country of origin when it’s a positive asset. - **Other COO**: Associate the product with a different country that has a positive image in the target market. - **Hybrid COO:** Combine a country's image with the product's specific features. #### The COO Matrix - **Four quadrants**: - **Favorable match**: Positive country image and product features. - **Unfavorable match**: Negative country image and product features. - **Favorable mismatch**: Positive country image but less-relevant product features. - **Unfavorable mismatch**: Negative country image and irrelevant product features. #### Managing COO Effects - **Favorable Match**: Leveraging the COO is a key strategy. - **Use**: - **Naming**: Reflect the country of origin in the brand name. - **Color**: Use colors associated with the country. - **Images**: Utilize images that represent the country’s culture. - **Communication:** Highlight the country of origin and its positive associations in marketing materials. - **Unfavorable Match**: Use a hybrid strategy. - **Focus on**: - **Highlighting specific attributes**: Showcase the qualities of the product. - **Building brand identity** - **Leveraging the COO of a different country**: Associate the product with a country that has a more positive image. - **The Key Takeaway:** Companies need to analyze COO effects and develop a strategy that aligns with their marketing objectives, product features, and target market. ### Lecture 7 #### Market Segmentation - **Definition**: The process of dividing a market into smaller groups with shared traits, needs, and preferences. - **Purpose** : Develop targeted marketing programs. #### Why Segment? - **Key benefits:** - **Effective resource allocation**: Target specific groups of consumers. - **Enhanced customer understanding**: Gain insight into customer needs and preferences. - **Improved product positioning**: Create products that resonate with specific segments. - **Increased profitability**: Maximize return on investment by focusing on targeted markets. #### Segmentation Process - **Four steps:** 1. **Market Division:** Divide the market into segments. 2. **Segment Selection**: Determine which segments are the most attractive. 3. **Value Proposition Development**: Create a unique value proposition for each segment. 4. **Positioning**: Place the product in the minds of the target consumers. #### Key Segmentation Variables - **Factors to consider** when segmenting a market: - **Demographic**: Age, gender, income, education, occupation, family size, and ethnicity. - **Geographic**: Country, region, city, climate, population density, and size of the market. - **Psychographic**: Lifestyle, values, attitudes, interests, personality, and opinions. - **Behavioral**: Usage rate, purchase frequency, purchase occasion, product loyalty, and benefits sought. #### Geodemographic Segmentation - A combination of geographic and demographic data. - **Useful for**: - Retailers: Targeting specific neighborhoods. - Marketing research: Understanding consumer behaviors in particular areas. #### The Challenge of Over-Segmentation - **Over-segmentation** occurs when the market is divided too finely and the strategy becomes less effective. - **Key considerations**: - **Cost**: Segmentation studies are expensive. - **Time**: Segmentation can be a time-consuming process. - **Complexity**: Managing multiple segments can be difficult. #### Segmentation in Business- to-Business (B2B) Markets - **Key Considerations**: - **Decision-making unit (DMU):** Several individuals may be involved in the buying decision. - **Purchasing process:** Understand the steps involved in the B2B buying process. - **Segmentation variables:** Focus on factors such as: - **Company size:** Small, medium, and large businesses. - **Industry**: Specific sectors such as manufacturing, retail, or healthcare. - **Operational structure:** The company’s organizational structure and decision-making processes. - **Technical requirements**: The product’s specific technical features. - **Financial resources**: The company’s budget. - **Purchasing procedures**: The company’s processes for buying products or services. #### Segmenting Foreign Markets - **Key challenges:** - **Varying market structures:** International markets are more diverse. - **Cultural differences:** Adapt to different cultural values and preferences. - **Regulatory environment changes**: Different laws and regulations impact marketing strategies. #### Approaches to International Market Segmentation - **Two primary approaches**: - **Macro-level segmentation**: Segmenting by country based on aggregate characteristics such as demographics or economic indicators. - **Micro-Level segmentation**: Segmenting within countries based on local factors and customer behaviors. #### Intramarket vs. Intermarket Segmentation - **Intramarket segmentation:** Create unique segments within each country. - **Intermarket segmentation:** Identify segments that overlap between different countries to develop a regional marketing strategy. #### Micro-segmentation - **Key advantages**: - **More accurate**: Reflects the diversity of customer behavior. - **More targeted**: Allows for more precise market targeting. - **Greater effectiveness**: Improved marketing results from targeting specific segments. #### Global SES (Strategically Equivalent Segment) - **Definition**: Targeting consumers across multiple international markets who have similar needs. - **Key characteristics**: - **Respond similarly to marketing mix**: Respond to price, promotion, and distribution in similar ways. - **Segmentation for product class**: Focus on specific product categories. #### Similarities in SES - Key factors: - **Lifestyles**: Shared lifestyle preferences. - **Health concerns**: Similar concerns about health and wellness. - **Personality**: Shared personality traits. ### Lecture 8 #### International Products and Branding - **Key considerations**: - **Product policy**: Developing a strategy to determine which products to offer in international markets. - **Brand management**: Building a strong brand presence in international markets. #### Introduction - **The International Marketer’s Task**: Determine the market offer for a specific foreign market. - **Key considerations** - **Product offer:** Analyze the product and its features. - **Services**: Evaluate the service expectations of the market. - **Value**: Assess the product’s value in the market and what attributes are valued by consumers. #### The Product Offer: Components - **Actual product:** - **Brand name**. - **Quality**: The product’s level of quality. - **Features**: The product’s specific attributes. - **Packaging**: The product’s design and packaging. - **Augmented product:** - **Value-added services**: After-sales service, installation, delivery, warranties, or financing. #### Goods Vs Services and Rights - **Companies can sell:** - **Goods**: Tangible products. - **Services**: Intangible products. - **Rights**: Intellectual property rights. #### Licensing: - **Allows a company to** - **Grant another company permission** to use a specific brand, trademark, patent, or service in a foreign market. #### Key Advantages of Licensing - **Low cost**: No initial investment needed. - **Reduced risk**: Lower risk of failure compared to direct investment. - **Potential for high profit**: Royalty payments can be lucrative. - **Market entry**: Quickly penetrate a new market. - **Preemption**: Enter a market ahead of competitors. - **Brand protection**: Help ensure the brand is not misused. #### Franchising - **Definition**: A type of licensing agreement that allows a franchisee to operate a business using a specific brand and system. - **Key features**: - **Proven system**: The franchisor provides a standardized system for operations. - **Reduced risk**: Franchisees benefit from a successful business model. - **Training**: Franchisees receive training on all aspects of the business. - **Marketing**: Franchisees receive support in marketing the brand. #### Joint Ventures - **Definition**: A business partnership between two or more companies. - **Key features**: - **Sharing of resources**: Companies combine financial, technical, or marketing resources. - **Shared risk and reward**: Companies share the profits and losses of the venture. - **Local market knowledge**: Access to local expertise and networks. #### Strategic Alliances - **Definition**: 合作关系 - **Key features**: - **Flexible arrangement**: Companies can customize the alliance to meet specific needs. - **Shared goals**: Partners collaborate to achieve common goals. - **Limited control**: Partners may have limited control over the other company’s operations. - **Examples**: - Joint marketing agreements. - Technology transfer agreements. - Sharing production facilities. #### Foreign Direct Investment (FDI) - **Definition**: Investing in a foreign company for a long-term commitment - **Key features**: - **Control**: Investors maintain significant control over the foreign business. - **Investment**: Involves higher levels of financial commitment than licensing or joint ventures. - **Risks**: Significant risks due to political, financial, and economic factors. #### FDI vs. Portfolio Investment - **Portfolio investment**: Purchasing shares or bonds in a foreign company for financial return. - **FDI**: Investing in a foreign company with the goal of controlling or managing its operations. #### Reasons for FDI - **Market-driven**: - **Access to new markets**: Expand into new markets with growth potential. - **Avoid trade barriers**: Minimize trade restrictions and costs. - **Lower costs**: Access lower labor costs or raw materials. - **Demand for local goods**: Meet local demand for products or services. - **Derived demand:** - **Suppliers**: Companies may shift suppliers to the same location as their own operations. - **Government incentives**: Tax breaks, grants, or other incentives from host governments. #### Consolidation Issues When FDIing - **Adaptation vs Transformation**: Companies need to determine if they will adapt existing strategies or transform their operations to fit the new market context. - **Core competencies**: Maintaining key strengths and avoiding the risk of losing them during adaptation. - **Management approach**: Adjusting management practices to fit the new market dynamic. - **Marketing mix**: Adjusting the marketing mix based on the new market context. #### The Configuration and Coordination of Marketing Activities on a Global Scale - **Key challenges**: - **Organizing**: Develop a structure for global marketing operations. - **Coordination**: Ensure consistent efforts across international markets. #### International Firm Structure Types - **Global company**: Centralized structure controlled by headquarters. - **Multinational company:** Decentralized structure with autonomous subsidiaries. - **International company:** A hybrid structure with some centralized and some decentralized elements depending on the specific activities. #### Key Considerations for Structuring Global Marketing Operations - **Firm orientation**: Determine the right organization structure based on whether the company is: - **Ethnocentric**: Home country orientation. - **Polycentric**: Host country orientation. - **Geocentric**: Global orientation. - **Coordination**: The process of ensuring that all parts of the global marketing organization are working together effectively. - **Communication:** Developing a clear communication strategy to reach all customers and stakeholders. #### Key Coordination Criteria - **Diktat**: Centralized decision-making where headquarters dictate policies. - ** Advantages**: Quick decision-making. - **Disadvantages**: Limited flexibility and potential for conflict. - **Consensus**: Decentralized decision-making where local branches have the power to decide. - **Advantages**: Higher flexibility and understanding of local issues. - **Disadvantages**: Slower decision-making and potential for conflicts. - **Friendly Persuasion**: A hybrid approach that allows for local input while still maintaining some level of centralized control. - **Advantages**: Balances the need for control and flexibility. - **Disadvantages**: Potential for confusion or conflicting goals. #### The Transnational Firm - **Key features**: - **Network structure**: A decentralized network of subsidiaries with a high degree of coordination. - **Strategic leader**: A subsidiary that plays a leading role in global marketing, potentially replacing the traditional headquarters. - **Black hole:** A subsidiary that is not as well-integrated into the global marketing process. #### Key Considerations for the Transnational Firm