Tema 1 MKI.pdf

TEMA 1. INTRODUCCIÓN AL MARKETING INTERNACIONAL 1. EL PROCESO DE INTERNACIONALIZACIÓN DE LA EMPRESA: RAZONES Y OBSTÁCULOS 1.1. Reasons why the world of marketing has changed: The future is not what it used to be Pursuit of happiness Need for profita...

TEMA 1. INTRODUCCIÓN AL MARKETING INTERNACIONAL 1. EL PROCESO DE INTERNACIONALIZACIÓN DE LA EMPRESA: RAZONES Y OBSTÁCULOS 1.1. Reasons why the world of marketing has changed: The future is not what it used to be Pursuit of happiness Need for profitability in business Demand for value Competition is global... or it was 1.2. Reactive reasons for going international Survival Overproduction Economic Environment changes Political Environment changes – Regulations or barriers More competitive Environment 1.3. Proactive reasons for going international Increase in sales and profits Diversification Sell a unique product, or a technological breakthrough Have exclusive market information Economies of scale and progress in the learning process Continue sustainable growth Extending the product life cycle 6Have adequate R&D Risk diversification 2. ETAPAS EN EL PROCESO DE INTERNACIONALIZACIÓN 2.1. Obstacles for going international Import Tariff: a schedule of duties or taxes assessed by a government ton goods as they enter a country. Tariffs may be imposed to protect domestic industries from imported goods and/or to generate revenue. Administrative barriers: rules and regulations, and standards applied to imports of goods and services from foreign firms, in an effort to reduce the imports. Customs procedures: the set of managements and operations that are carried out related to a specific customs destination, when you want to import or export a certain merchandise. Subsidies: overnment payments, economic inducements or their financially quantifiable benefits provided to domestic producers or exporters contingent on the export of their goods or services. Trade quotas: explicit limits on the quantity of a good that can be imported or exported during a specified time period. Such limits are usually measured by physical quantity but sometimes by value. Currency Fluctuations and Payment Risks: Currency fluctuations pose significant risks for businesses engaged in international trade, impacting the cost of goods, profit margins, and cash flow. Exchange rate volatility can erode profitability and introduce uncertainty into financial planning efforts Standards and specifications of packaging: include packaging materials, dimensions, closures, labeling, and much more. 2.2. Stages of the internationalization process Domestic marketing: It is addressed to the national market Experimental participation: The possibility of exporting is being explored, taking orders from abroad Active participation: Exports to nearby countries and/or with relations through subsidiaries Committed participation: Becomes an experienced exporter with sales in a large number of countries by establishing production there. Global participation: Become a global exporter with globalized positioning and/or segmentation strategies. Stages Strategies Commitment Approach Entry Domestic Only in the market Attitudinal barriers marketing of origin Experimental Evaluating the Internal incentives, Ethnocentric Indirect Exporting participation possibility of unsolicited requests exporting Active participation Systematic Willingness to Ethnocentric Direct Exporting exploration and provide the planning necessary resources Committed Execute planning Long-term Polycentric/ Manufacturing in participation and commitment to Regiocentric foreign markets strategy of the markets international marketing mix Global participation Evaluating the Creation of Geocentric Global approach possibility of segments and/or exporting global positioning competitive advantages globally 2.3. Foreign Market Entry Strategies Indirect Exporting Independent intermediaries: companies who carries products between parts who are unwilling or unable to meet Cooperative export: this involves collaborative agreements with other firms (export marketing groups) concerning the performance of exporting functions. Direct Exporting Direct sales: a sale that is made directly to a customer, not through a intermediary Agents and distributors: Agents: An independent person or legal entity, which acts on behalf of another. In international transactions, this term normally refers to a sales representative who prospects on behalf of a foreign principal, earning a commission on sales eventually concluded between the principal and the ultimate client. Distributors: An independent person or legal entity that sell goods locally on behalf of a principal. Distributors buy the goods in their own name, then re-sell them at prices which they have some liberty to set. Distributorship is frequently based on a contract that grants the distributor exclusivity for a specific territory. Commercial subsidiary: A company controlled by another company, called parent company, usually through ownership of, at least, 50 per cent of its shares, or through other organizational or managerial agreement.The formation of a subsidiary company may be of benefit to a multinational corporation that wants to adapt its business to work within the legal parameters of a specific country. Manufacturing in foreign markets Manufacturing contract: Business agreements created when one company enters into a production agreement with another. It is is a process that involves hiring a manufacturer to handle the full production operations for a company Manufacturing license: Grant a local business the right to use or sell your intellectual property in exchange for fees (also known as royalties). Such intellectual property could include your trademarked business logo, or patents over your proprietary inventions. own production facility: Companies will be able to manufacture their product, exactly as they want it, to their quality standards and to a schedule that suits them. Global approach Joint-ventures: a partnership of two or more participating companies that have joined forces to create a separate legal entity. International franchising: A system based on the licensing of the right to duplicate a successful business format in foreign markets. The franchisor grants to the franchisee the exclusive power to distribute its products or services in establishments which are equivalently equipped and furnished, as well as the right to use Intellectual Property Rights (commercial signs, brands, trademarks etc.). It also provides the Know-How (Franchise Handbook), and the technical and commercial support for distribution to be carried out correctly. Strategic alliance: A strategic alliance is an agreement between two separate business entities to pool resources in order to achieve a common goal. In strategic alliances, the participants remain separate and do not form a new entity as with joint ventures and some other types of partnerships. 3. EL CONCEPTO DE MARKETING INTERNACIONAL International marketing is the performance of business activities designed to plan, price, promote, and direct the fl ow of a company’s goods and services to consumers or users in more than one nation for a profi t. The only difference between the defi nitions of domestic marketing and international marketing is that in the latter case, marketing activities take place in more than one country. This apparently minor difference, “in more than one country,” accounts for the complexity and diversity found in international marketing operations. 3.1. 10 differences between International and domestic marketing Culture: often diverse and multicultural markets Markets: widespread and sometimes fragmented Data: difficult to obtain and often expensive Politics: regimes vary in stability – political risk becomes an important variable Government: can be a strong influence in regulating importers and foreign business ventures Economies:varying levels of development and varying and sometimes unstable currencies Finance: many differing finance systems and regulatory bodies Stakeholder: ommercial, home country and host country Business: diverse rules, culturally influenced Control: difficult to control and coordinate across markets. 3.2. International marketing: concentration vs diversification... Concentration: 1) Greater knowledge of the chosen markets. 2) Possibility of offering a differentiated and adapted product. 3) Reduction of logistics and administration costs. 4) Greater resources for promotion and advertising in each market. 5) Control of customer risk. Diversification: 1) Comparative information on global markets. 2) Less dependence on a small number of markets. 3) Exploitation of short-term competitive advantages. 4) Taking advantage of temporary pricing opportunities. 5) Avoiding direct confrontation with the main competitors. 3.3. Global marketing The whole organisation focuses on the selection and exploitation of global marketing opportunities and marshals resources around the globe with the objective of achieving a global competitive advantage. It is focused on segments,rather than countries or regions with a geocentric point of view 4. ANÁLISIS DEL ENTORNO INTERNACIONAL The international economic factors Business cycle: The business cycle represents the four stages of economic growth, followed by economic decline. The four phases consist of:  Peak/Boom Contraction Recession Expansion Unemployment rates: Unemployment refers to the share of the labor force that is without work but available for and seeking employment. Inflation rates: Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. When the price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money. Labor costs: The sum of all wages paid to employees, as well as the cost of employee benefits and payroll taxes paid by an employer. The cost of labor is broken into direct and indirect costs. Direct costs include wages for the employees physically making a product, like workers on an assembly line. Indirect costs are associated with support labor, such as employees that maintain factory equipment but don't operate the machines themselves. Currency exchange rates: This can have a huge impact on both business profits and on securities prices. These rates are expressed as the ratio of the price of one currency against the price of the other. Market size: This can have a huge impact on both business profits and on securities prices. These rates are expressed as the ratio of the price of one currency against the price of the other. 4.1.Economic integration Free trade area (USMCA): tariff barriers to the trade of goods between member states are eliminated, but each country retains control over its own commercial policy; this means that certain types of barriers are effectively maintained. Customs Union (WAEMU): based on the creation of a Common Customs Tariff (CCT) with respect to the rest of the world. At the same time, customs duties between its member countries were eliminated. Common market (Mercosur): suppressing all barriers to trade (both tariff and non- tariff barriers). The single market continues to have a CCT with respect to the rest of the world. The elimination of barriers to the free circulation of capital and labour within the territory of the common market. Economic union (UE): An economic union is an agreement between two or more nations to allow goods, services, money and workers to move over borders freely. The countries may also coordinate social and financial policies to support this common market. 4.2. Technological environment Rivalries are……intensified Barriers are……low Threat of substitutes is……high Bargaining power suppliers…extremely low Bargaining power of buyers...high 4.3. The impact of the Internet on the marketing mix Product: new products, new delivery mechanisms Price: dynamic pricing, comparison pricing, bartering, bidding Place: direct distribution of digital products, supply chain management, channel integration Promotion:new communications media, advertising efforts variable 4.4. Political environment Causes of international market instability 1) POLITICAL ENVIRONMENT - Some forms of government seem to be inherently unstable – Changes in political parties during elections can have major effects on trade conditions – Nationalism – Animosity targeted toward specific countries – Trade disputes themselves Types of Governments: Formation and implementation of legislation Degree of Political Participation Orientation to Free Market Nationalism: -Concept of the nation-state -Economic Manifestations of Nationalism -Conflict with Multinationalism -Fear of Foreign Ownership and/or Control Response to Nationalistic Fears: Direct Economic Sanctions (exchange controls, local content rules, import restrictions, tax controls, gov’t intervention into factor resource markets) Confiscation: the seizing of a company’s assets without payment Expropriation: where the government seizes an investment but makes some reimbursement for the assets Domestication: when host countries gradually cause the transfer of foreign investments to national control and ownership through a series of government decrees (Mandating local ownership or with greater national involvement in a company’s management) Nationalization: when the expropriated investment becomes a goverment-run entity Animosity targeted toward specific countries: Direct Political Sanctions – Censure for Actions in Domestic Country – Complaint Lodged with Multilateral Body – Violence Issue of Foreign Direct Investment – Need to Conduct Thorough Risk Analysis – Factors of Importance to Identify – Need to Consider the Method of Entry Political and Social Activists (PSAs): Not usually government sanctioned Can interrupt the normal flow of trade Range from those who seek to bring about peaceful change to those who resort to violence and terrorism to effect change The Internet and social networks have become effective tools of PSAs to spread the word Nongovernmental Organizations (NGOs): Nongovernmental organizations (NGOs) are increasingly affecting policy decisions made by governments – Protests – Lobbying – Collaborations with governmental organizations  Many also are involved in mitigating much of the human misery plaguing parts of the planet – Red Cross and the Red Crescent – Amnesty International – Oxfam – UNICEF – Care and Habitat for Humanity Violence and Terrorism: International warfare is fast becoming obsolete as the number of wars have declined steadily since the end of the Cold War The greatest threat to peace and commerce for the twenty-first century remain civil strife and terrorism Tourism and International education are two industries that have been affected by terrorism. The latest fresh wave of terrorism is seen in the attacks by Sudanese terrorists on ships that sail in what has become known as the “horn of Africa.” Cyberterrorism and Cybercrime: The internet is a vehicle for terrorist and criminal attacks to inflict damage on a company with little chance of being caught – By foreign and domestic antagonists It is hard to determine if a cyber attack has been launched – By a rogue state – A terrorist – A hacker as a prank Each wave of viruses – Gets more damaging – Spreads so rapidly that considerable harm is done before it can be stopped Tools for cyberterrorism - can be developed to do considerable damage – To a company, – An entire industry – A country’s infrastructure Mounting concern over the rash of attacks Economic Risks: Tax controls – A political risk when used as a means of controlling foreign investments Price controls – Essential products that command considerable public interest – Pharmaceuticals , Food, and Gasoline Labor problems – Labor unions have strong government support that they use effectively in obtaining special concessions from business 2) LEGAL ENVIRONMENT Bases for Legal System: Common vs Code Law Other Systems No Single International Law or Agency: As Many Legal Systems as there are Nations Issues of Interest to Marketers: – Competition Rules Product Quality Rules Packaging Rules Warranty Law Advertising Price Maintenance Price Regulations Channel AgreementsPatents, Trademark, & Copyright Law Transport/Distribution Environmental Issue of Jurisdiction: World Court International Court of Justice Determining Jurisdiction – Jurisdictional Clauses in Contract – Where Contract was Entered Into – Where Provisions of the Contract – were Performed Special Issues Legal Recourse: Why Not Litigate Why Litigate Options to Litigation – Placate Aggrieved Party – Conciliation – Arbitration Protection of Intellectual Property Rights: Difficulty of Policing Property Rights Prior Use vs. Registration Conventions and Treaties 4.5. Culture Culture Is the way of life, especially the general customs and beliefs, of a particular group of people at a particular time. It is the sum of the: values, rituals, symbols, beliefs and thought The processes that are learned, shared by a group of people, and transmitted from generation to generation. 4.6. Culture origins Geography: Exercises a profound control. Includes climate, topography, flora, fauna, and microbiology. Influenced history, technology, economics, social institutions and way of thinking. History: Impact of specific events can be seen reflected in technology, social institutions, cultural values, and even consumer behavior Social institutions: School: the most important social institution. Direct link between a nation’s literacy rate and its economic development Difficult to communicate with a market when a company must depend on symbols and pictures. The media: it has replaced family time. Government: influences the thinking and behaviors of adult citizens. Propaganda through media. Passage, promulgation, promotion, and enforcement of laws. Corporations: most innovations are introduced to societies by companies. 4.7. Elements of culture: values Power-distance: The power distance index describes the extent to which the less powerful members or an organization or institution — such as a family — accept and expect that power is distributed unequally Masculinity- femininity: This dimension looks at how much a society values traditional masculine and feminine roles. Uncertainty avoidance: This dimension reflects the extent to which members of a society attempt to cope with their anxiety by minimizing uncertainty. In its most simplified form, uncertainty avoidance refers to how threatening change is to a culture Individualism- collectivism: Individualism and collectivism, respectively, refer to the integration of individuals into groups. Individualistic societies stress achievement and individual rights, focusing on the needs of oneself and one's immediate family. Short-Term vs. Long-Term Orientation: The long term and short term orientation dimension refers to the degree to which cultures encourage delaying gratification or the material, social, and emotional needs of its member. 4.8. Rituals, symbols and beliefs Rituals: Patterns of behavior and interaction that are learned and repeated: Marriages, funerals, baptisms, graduations. Symbols: Language Linguistic distance – relationship between language international marketing Aesthetics as symbols Insensitivity to aesthetic values can offend, create a negative impression, and, in general, render marketing efforts ineffective or even damaging Beliefs: Superstitions play a large role in a society’s belief system and therefore, to make light of superstitions in other cultures can be an expensive mistake. 4.9. Thought processes 4.10 P-Time versus M-Time Monochronic time Tend to concentrate on Divide time into small Most low-context one thing at a time units and are concerned cultures operate on M- with Time promptness Polychronic time Dominant in high-context Characterized by the Allows for relationships cultures simultaneous occurrence to build and context to of be many things absorbed as parts of high-context cultures 4.11. Culture consequences: management style Influencers of the authority structure of business: – High power distance ratio countries: Mexico, Malaysia – Low power distance ratio countries: Denmark, Israel Typical authority patterns: – Top-level management decisions – Decentralized decisions – Committee or group decisions 4.12. Cross-Cultural Analysis A systematic comparison of similarities and differences in material and behavioral aspects of culture. It is: 1) Descriptive 2) Analytical/functional Outline of Elements in Cross-cultural Analysis: – Determine Relevant Motivations – Determine Characteristic Behavior Patterns – Determine Relevant Cultural Values – Determine Important Institutions – Determine Relevant Rules, Norms, and Laws – Evaluate all the above with respect to mix variables 4.13. Imperatives, Electives, and Exclusives Cultural imperatives: - Business customs and expectations that must be met and conformed to or avoided if relationships are to be successful – In some cultures a person’s demeanor is more critical than in others – Imperatives vary from culture to culture Cultural electives: - Relate to areas of behavior or to customs that cultural aliens may wish to conform to or participate in but that are not required – A cultural elective in one county may be an imperative in another Cultural exclusives: - Customs or behavior patterns reserved exclusively for the locals Bibliography: Cateora, P. et al. (2020). Marketing internacional. McGraw-Hill Interamericana de España