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Lecture 6-Int Mkt and SC

Lecture 6-Int Mkt and SC

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10 lnternational Marketing and Supply-chain

Management for MNCs
A!ter reading this chapter you shouId be abIe to.
º Understand hov compIex gIobaI markets can be and the need !or reIevant in!ormation
on !oreign markets.
º Understand market responses in terms o! the gIobaI-IocaI diIemma.
º Understand hov the marketing mix can vary in gIobaI markets.
º Understand the impIications o! the gIobaI-IocaI diIemma in the marketing mix.
º Understand the impIications o! gIobaI suppIy chains and outsourcing.
Wlar makes µiouucrs successíul in íoieign maikers. Wly uo some µiouucrs succeeu anu
orleis íail. Hov uoes rle inreinarional managei knov vlar makes a µiouucr valueu in
one culruie comµaieu ro anorlei. Hov uoes rle inreinarional managei communicare
virl µorenrial cusromeis in vaiious culruies. Wlar makes a µiouucr`s µackaging
aµµealing. Do cusromeis in a íoieign maiker µieíei ro Luy µiouucrs in laige mouein
ueµairmenr sroies oi in small íamily-ovneu coinei sroies. Wlar soirs oí seivices uo rley
1yiell, Inc. a Housron, 1exas, Laseu comµany, is
µioneeiing an exciring nev µiouucr caregoiy oí
lome-Laseu meuical uevices. 1le íiisr oí rlese
giounuLieaking µiouucrs is rle acne riearmenr
uevice, Zeno
1^
. Zeno is a lanu-lelu µoiraLle
elecrionic uevice íoi cleaiing milu ro moueiare
inuiviuual inlammaroiy acne µimµles. Zeno voiks
rliougl a µiecisely conriolleu aµµlicarion oí
lear ro rle acne µimµle. Wlen aµµlieu íoi a
sµeciíic amounr oí rime rle lear causes acne
Lacreiia ro selí-uesriucr anu rle µimµle uisaµ-
µeais.
1
1le µiouucr las mer virl signiíicanr
success in rle US, Lur sloulu 1yiell consiuei raking
Zeno gloLal.
1le gloLal aµµeal oí sucl a µiouucr ueµenus on
many íacrois. 1le íiisr is culruial values. Some
narional culruies, íoi examµle 1uikey, see acne as
a naruial couise oí liíe, anu unless ir is clionic,
voulu nor Le iesµonsive ro aggiessive anu exµen-
sive acne riearmenr íoi a noimal reenage case.
Orlei culruies, sucl as rle US, see µeoµle as moie
in conriol oí naruie anu rle enviionmenr
2
anu
voulu iesµonu vell ro a µiouucr rlar conriols
acne. In rle US, µeoµle renu ro íeel rlar rley can
anu sloulu Le aLle ro conriol many asµecrs oí
naruie sucl as noimal reenage acne anu rle eííecrs
oí aging.
1le seconu íacroi aííecring rle success oí Zeno
in gloLal maikers is uemanu anu sµenuing µovei.
1lis involves nor only rle µoµularion oí a µorenrial
íoieign maiker in reims oí rle numLei oí µeoµle
vlo voulu Le inreiesreu in µuiclasing sucl a
µiouucr Lur also lov rle income is uisriiLureu
acioss rle µoµularion. Counriies virl laige miuule
classes, vleie a laige µair oí rle µoµularion makes
enougl money ro sµenu somerling on µiouucrs
rlar aie nor essenrial ro live, aie liglly arriacrive
maikers in geneial. 1le µiesence oí a sizaLle miu-
ule class virl miuule-class anu uµµei miuule-class
incomes voulu mean rlar rleie is suíhcienr maiker
µorenrial íoi Zeno. Beyonu rlis, oí couise rle
sµecihc maiker segmenrs srill musr Le ieseaicleu
anu unueisroou.
1le rliiu majoi inluence in raking a µiouucr
like Zeno gloLal is iníiasriucruie. Zeno sells
íoi US$ 200, anu in rle US ir is solu rliougl
ueimarologisrs, ueimarology clinics, meuical sµas,
anu riaineu aesrlericians. In orlei voius, µeoµle
Luy rlis µiouucr Lecause a riaineu µioíessional, a
uocroi, nuise, oi meuical reclnician, sµecializing
in skin uisoiueis, iecommenus ir. Anu quire oíren
rle cusromei sees rle µiouucr µiomoreu in rle
uocroi`s oííice oi skin riearmenr cenrei. Wlile
Zeno uoes nor iequiie a µiesciiµrion, Lecause oí
irs cosr ir Lenehrs íiom Leing ¨solu¨ rliougl rle
meuical communiry. Ií Zeno is ro Le successíul in
íoieign maikers, rleie neeu ro Le rle iiglr meuical
clinics, rle iiglr meuical sµecialisrs, anu riearmenr
cenreis rliougl vlicl Zeno can Le iecommenueu
anu uisriiLureu. 1le Koiean (Biazilian, Clinese,
erc.) consumei inreiesreu in acne riearmenrs musr
lave access ro iníoimarion aLour rle exisrence oí
rle µiouucr, lov ir voiks, anu irs eííecriveness
rliougl meuical esraLlislmenrs. A counriy virl-
our rle meuical iníiasriucruie ro µioviue rlis
voulu nor Le viaLle íoi Zeno.
So 1yiell musr unueisranu consumei µieíei-
ences anu auuiess rle segmenr oí consumeis rlar
Zeno and the Global Market Ior Acne Jreatment
PRLVILW IB
SJRAJLGIC INSIGHJ
InternationaI ßusiness
vanr vlen rley Luy a µiouucr. As rle Pieviev IB Sriaregic Insiglr slovs, rlese
quesrions involve eveiyrling rle inreinarional managei uoes ro connecr,
communicare, anu uelivei µiouucrs ro cusromeis÷rlis is maikering. We can
unueisranu rle vay maikering voiks in reims oí rle marketing mix, vlicl is
(1) rle µiouucr oííeiing, (2) uisriiLurion, (3) µiicing, anu (4) all rle comµonenrs
oí maikering communicarions.
Oí all rle aieas vleie rle gloLal÷local uilemma aííecrs inreinarional
Lusiness, maikering may Le rle one vleie ir is rle Liggesr íacroi. All rle cosr
anu managemenr auvanrages oí a gloLal inregiarion sriaregy vleie rle mai-
kering mix is sranuaiuizeu acioss eveiy counriy aie srill giear. Yer, rle giearesr
µiessuie íoi a local-iesµonsiveness sriaregy comes íiom imµoiranr uiííeiences
in vlar cusromeis vanr anu lov cusromeis iesµonu íiom counriy ro counriy.
One oí rle key íacrois in lelµing rle inreinarional managei íiguie our rle
Lalance oí vleie anu vlen ro iesµonu locally anu vleie anu vlen ro sran-
uaiuize is knovleuge aLour rle maikers in quesrion.
Market ßesearch-The KnovIedge Advantage
Wlen you veie ueciuing on rle college you vanreu ro arrenu, vleie uiu you
srair. Rarlei rlan simµly rossing a coin, you mosr likely sraireu Ly sysrem-
arically garleiing iníoimarion on vaiious colleges ro consiuei. Garleiing rlis
iníoimarion gave you a knovleuge auvanrage as ir lelµeu you unueisranu many
oí rle íacrois involveu in making rle Lesr uecision íoi youi íuruie. Inreinarional
manageis aµµioacl uecisions associareu virl maikering in íoieign counriies in
mucl rle same vay. International marketing research is rle sysremaric garleiing
oí oLjecrive iníoimarion in anu aLour íoieign maikers rlar vill lelµ rle inrei-
narional managei unueisranu cusromei vanrs anu neeus. 1lis ieseaicl µioviues
a knovleuge auvanrage Lecause ir µioviues a ciirically imµoiranr guiue ro rle
inreinarional managei in Lalancing rle gloLal÷local uilemma, ueveloµing rle
aµµioµiiare maikering mix, anu, as ve uiscuss Lelov, segmenrarion, raigering,
anu maiker giovrl uecisions.
One oí rle hisr issues in Luiluing rle knovleuge auvanrage is ro unueisranu
vlar kinu oí maikering iníoimarion is neeueu. 1lis comes uiiecrly íiom rle
quesrions rlar rle inreinarional managei neeus ansveieu. Some quesrions aLour
íoieign maikers can Le ansveieu virl seconuaiy uara. Secondary data aie uara
rlar alieauy exisr anu veie garleieu íoi some µievious µuiµoses, somerimes Ly
M U L T I N A T I O N A L O P E ß A T I O N A L A N D f U N C T I O N A L 5 T ß A T E G I E 5
276
voulu aµµieciare anu value acne riearmenrs. Ir
musr ieseaicl irs µorenrial maikers anu make suie
rle economy is ueveloµeu ro rle level rlar rleie aie
enougl µeoµle virl enougl money ro Luy Zeno.
1yiell musr íuirlei ieseaicl irs µorenrial maikers
ro make suie rlar rle meuical iníiasriucruie is
auvanceu enougl ro suµµoir rle maikering oí
Zeno. In auuirion, ir musr ieseaicl all meuical anu
imµoir iegularions in eacl maiker rlar vill aííecr
Zeno. All oí rlis is a uaunring anu comµlex rask.
Yer rle µorenrial success oí a µiouucr like Zeno
makes rle iuea quire arriacrive.
marketing mix
Ihe combihaIioh o! ah
MNC's producI o!!erihg,
disIribuIioh, pricihg, ahd all
markeIihg commuhicaIioh
compohehIs
internationaI marketing
research
Ihe sysIemaIic collecIioh o!
ob|ecIive ih!ormaIioh ih ahd
abouI !oreigh markeIs IhaI
helps ihIerhaIiohal mahagers
uhdersIahd cusIomer wahIs
ahd heeds
secondary data
daIa IhaI already exisI ahd
were gaIhered !or some
previous purpose, someIimes
by goverhmehIs, Ihe UN,
Ihe World 8ahk, or oIher
agehcies ahd Irade
associaIiohs
goveinmenrs, rle UÞ, rle Woilu Bank, oi vaiious agencies anu riaue asso-
ciarions. Ioi examµle, an ^ÞC consiueiing maikering an acne riearmenr uevice
in Asian counriies miglr look ar income levels íiom goveinmenr uara anu rle
sales oí µlaimaceuricals oí ceirain ryµes availaLle íiom rle UÞ. 1lis voulu
µioviue rle inreinarional managei virl iníoimarion aLour vlerlei µeoµle can
aííoiu ro Luy sucl a uevice anu vlerlei sucl µiouucrs aie acceµraLle in a
culruie.
Ií rle inreinarional managei cannor ansvei lis oi lei quesrions iegaiuing
a íoieign maiker virl seconuaiy uara, µiimaiy uara may Le neeueu. Primary
data aie garleieu sµeciíically ro µioviue rle iníoimarion neeueu Ly rle
inreinarional managei, rley uiu nor µieviously exisr. Piimaiy uara mosr oíren
involve suiveys asking cusromeis, íoi examµle: lov sarisheu rley aie virl rle
µiouucr, vlar ryµes oí seivices aie mosr imµoiranr, vlar rley Lelieve is a
ieasonaLle µiice íoi rle coííee, anu lov mucl rley voulu Le villing ro sµenu
íoi a movie. Anorlei íoim oí µiimaiy uara involves cusromei µanels, vleie rle
same ser oí cusromeis aie suiveyeu ro measuie clanges ovei rime, íoi examµle
in µiouucr avaieness oi µiouucr knovleuge, oi in iesµonses ro auveirising
messages.
Piimaiy uara can Le garleieu in µeison Ly riaineu inreivieveis, Ly mail,
Ly e-mail, oi Ly veLsires. Regaiuless oí lov rle uara aie collecreu, rleie aie a
numLei oí comµlicarions in inreinarional maikering ieseaicl, mosr oí vlicl
involve language anu culruial uiííeiences. Develoµing quesrionnaiies in a uií-
íeienr language iequiies moie rlan simµle rianslarion. 1o avoiu seiious misrakes
in inreiµierarion, Lack rianslarion can Le useu. Back translation is vlen rle
quesrionnaiie is ieµeareuly rianslareu Lack anu íoirl Lerveen rle rvo languages
unril all oí ir agiees anu is consisrenr Lerveen Lorl languages.
Orlei µioLlems in inreinarional maikering ieseaicl can come íiom culruial
Liases. In some culruies, rleie can Le a Lias ro iesµonu in a ceirain vay iegaiu-
less oí lov you ieally íeel. Ioi examµle, rle ]aµanese hnu ir exriemely uiíhculr
ro say ¨no¨ uiiecrly oi ro uisagiee, so rle agiee÷uisagiee sraremenrs oíren useu
in maiker ieseaicl musr Le avoiueu in ]aµan. Besiues ]aµan, rleie is a culruial
Lias againsr saying ¨no¨ oi uisagieeing in a numLei oí orlei counries. Likevise,
many culruies lave a couiresy Lias. 1lar is, rle µeison iesµonuing vill sriive
ro Le µolire anu give you rle ansvei rlar rley Lelieve you vanr, vlicl may Le
rorally unielareu ro lov rley ieally íeel aLour rle µiouucr. In orlei culruies,
gerring cusromeis ro iesµonu anu µairiciµare in maiker ieseaicl ar all can Le
µioLlemaric. 1leie can Le sriong Liases againsr ievealing any iníoimarion aLour
íeelings anu oµinions. 1leie may also Le genuei issues. Ioi examµle, in rle
^iuule Lasr, ir is oíren uiíhculr ro ger rle oµinions oí íemale consumeis.
Anorlei imµoiranr maikering ieseaicl rool is íocus giouµs. A Iocus group
is a small giouµ oí acrual oi µorenrial cusromeis rlar aie garleieu esµecially ro
uiscuss anu ralk aLour rle roµic oi iuea rlar rle inreinarional managei neeus
ro unueisranu. Ioi examµle, an ^ÞC arremµring ro maiker an acne riearmenr
uevice in Koiea miglr garlei a giouµ oí six ro eiglr reenageis ro uiscuss rle
vlole norion oí acne anu acne riearmenr. 1le moderator, rle riaineu µioíes-
sional vlo iuns rle íocus giouµ, miglr slov rle reenageis rle acrual uevice
anu ask rlem ro uiscuss vaiious íearuies oi asµecrs oí rle acrual µiouucr. Again,
some oí rle same Liases aie a µioLlem íoi íocus giouµs: a culruial noim oí
alvays agieeing oi oí seeing uiííeienr oµinions as uiscouireous, oi oí gerring
consumeis ro µairiciµare anu µioviue iníoimarion ar all.
M A ß K E T I N G A N D 5 U P P L Y - C H A I N M A N A G E M E N T
277
primary data
daIa IhaI did hoI previously
exisI ahd were speci!cally
collecIed Io direcIly provide
Ihe ih!ormaIioh heeded by
a mahager, ahd o!Ieh
ihvolvihg surveys o!
cusIomers or cusIomer pahels
back transIation
Ihe repeaIed IrahslaIioh,
back ahd !orIh, beIweeh Iwo
lahguages uhIil a commoh
meahihg is cohsisIehI
beIweeh boIh lahguages
!ocus group
a small group o! acIual
or poIehIial cusIomers
speci!cally broughI IogeIher
Io discuss ahd Ialk abouI a
parIicular Iopic or idea IhaI
a mahager heeds Io
uhdersIahd
moderator
a Iraihed pro!essiohal who
leads ahd !aciliIaIes a !ocus
group
1le IB Sriaregic Insiglr Lelov slovs an examµle oí lov rle use oí a íocus
giouµ can µioviue rle vine inuusriy insiglrs inro rle Clinese maiker íoi vines.
In sum, ro Luilu a knovleuge auvanrage, ir is ciirical ro auaµr ieseaicl
µioceuuies ro local conuirions so rlar valiu anu useíul iníoimarion iesulrs.
Because culruial sensiriviry is so imµoiranr in maiker ieseaicl, somerimes liiing
a local maiker ieseaicl comµany is rle Lesr alreinarive. Local maiker ieseaicl
comµanies lave rle sµecializeu unueisranuing anu exµeiience virl local con-
uirions rlar aie necessaiy in ceirain counriies sucl as Clina anu rle AiaL srares.
1le inreinarional managei musr caieíully scieen local ieseaicl agencies ro
ensuie rlar rley µioviue ligl-qualiry iníoimarion.
Wlile inreinarional maiker ieseaicl is ryµically mucl moie exµensive rlan
uomesric ieseaicl, rle qualiry oí iníoimarion sloulu Le rle íocus anu musr nor
Le comµiomiseu Lecause oí cosr. Anorlei issue is rle aLiliry ro inregiare rle
nev maiker ieseaicl iníoimarion virl rle ^ÞC`s µiogiams. Inreinarional
M U L T I N A T I O N A L O P E ß A T I O N A L A N D f U N C T I O N A L 5 T ß A T E G I E 5
278
The enjoynenl ol drinking wine is growing in popularily
and lhus presenls a huge narkel opporlunily in nany
counlries. The US wine induslry is working lo develop
narkels on a nunber ol lronls: young adull age groups,
elhnic groups, and inlernalional narkels. Fesearch is being
done lo undersland whal lhe prelerences are in lhese
various groups and whal drives consuner response. Ol
parlicular concern is lrade dress. Trade dress relers lo lhe
physical appearance ol lhe producl and suggesls whal
narkelers can do lo nake il nore appealing. ín wine, lhis
is lhe color and shape ol lhe bollle, and ol parlicular
concern is lhe label. vine labels have becone nuch nore
colorlul, arlislic, and sonelines even whinsical, wilh
carloon·like inages and various depiclions ol aninals (lhis
lrend is called ¨criller¨ labelingì.
One ol lhe laslesl growing wine narkels is China,
3
bul
lillle is underslood aboul lhal narkel in lerns ol nain·
slrean cusloner response lo wine labels. As such, lo gain
sone knowledge aboul narkel prelerences so lhal con·
panies can develop lhis quile large and polenlially rich wine
narkel, narkeling researchers have begun using locus
groups. ín one sludy, researchers assenbled groups ol
20·sonelhing Chinese nen and wonen. Several key
challenges innedialely energed. The lirsl involved lhe
gender nix ol groups. ín nixed groups, lhe inleraclions
and levels ol parlicipalion were inbalanced. Ollen, regard·
less ol how lhe noderalor lried lo direcl inleraclion, one
gender, lypically lhe lenales, doninaled lhe discussion,
while lhe olher gender was quiel. To gain reliable inlor·
nalion, lhe locus groups had lo be splil by gender.
The second problen was lhe enlrenchnenl ol lradilional
perspeclives on lhe producl calegory. The noderalor had
lo renind and reinlorce lo parlicipanls lhal lhe subjecl was
grape wine and nol rice wine, as is lhe lradilional lype in
China. Fesulls lron lhe locus groups indicaled lhal wine
drinking anong younger people is evolving inlo whal looks
like nore nainslrean, widespread praclice. vine drinking
in lhis group seens lo enulale veslern praclices lhal are
perceived as hip and sophislicaled. ín older generalions,
wine drinking is seen as nedicinal. vine drinkers in
lhis group would drink snaller anounls regularly, lor
exanple one snall glass every day lor heallh benells. This
group is nol concerned aboul variely, lasle, or inage.
ínporlanlly, lhe views ol lhis older generalion ol wine
drinkers are consislenl wilh Chinese cullural views ol
nonlradilional, holislic, and herbal nedical praclices. One
lasl inleresling issue lhal energed is lhal lhe Chinese slill
believe lhal good wine can only cone lron France.
focus Groups on Wine in China l 8 S T P A T L C l C
l N S l C H T
maiker ieseaicl µioviues imµoiranr iníoimarion ro ueveloµ gloLal µlans anu
sriaregies anu ro lelµ ueciue rle exrenr oí local auaµrarion rlar is necessaiy.
1le knovleuge auvanrage is veiy imµoiranr in rle hisr Lasic uecision rlar
rle inreinarional managei makes÷is rle íoieign maiker laige enougl so rlar
rle ^ÞC can make µioíirs Ly oííeiing irs µiouucrs oi seivices rleie. 1lis
quesrion involves esrimaring rle maiker µorenrial anu íoiecasring uemanu in
rle local maiker. Beíoie ueciuing ro enrei rle maiker, rle ^ÞC neeus an
unueisranuing oí vlerlei oi nor local consumeis voulu Luy rle µiouucr anu
lov mucl oí rle µiouucr rley voulu Luy. Some laige inreinarional ieseaicl
comµanies, sucl as ACÞeilsen, can µioviue esrimares oí maiker uemanu, Lur
sucl iníoimarion is exµensive. Vaiious merlous rlar iely on seconuaiy uara
µuLlisleu Ly local goveinmenrs, rle Woilu Bank oi rle UÞ can also Le useíul.
Heie again, local maiker ieseaicl comµanies can Le veiy lelµíul.
Understanding GIobaI Demand-5egmentation
Segmenrarion uiives oui unueisranuing oí maiker uemanu. Segmentation, rle
µiocess oí giouµing consumeis accoiuing ro rleii µieíeiences anu neeus, allovs
rle ^ÞC ro railoi maikering µiogiams anu µiouucrs rlar íocus on hlling rlose
µairiculai neeus. Segmenrarion is Laseu on any claiacreiisric rlar associares
virl lov consumei ueciues ro sµenu lis oi lei money. Ioi examµle, incomes
anu sµenuing µovei, genuei, µioíession, oi rle µiesence oí cliluien all associare
virl rle ryµes oí µiouucrs neeueu in vaiious segmenrs.
Somerimes maiker ieseaicl uncoveis segmenrs rlar aie gloLal. GloLal seg-
menrs aie maue uµ oí cusromeis virl similai neeus iegaiuless oí rleii counriy.
Ioi examµle, consumeis rliouglour rle voilu lave a neeu anu µieíeience íoi
ieliaLle, convenienr, anu accessiLle communicarion. Auvances in communica-
rions reclnology lave maue ir µossiLle íoi cell-µlone comµanies sucl as Þokia
ro raµ inro rlese gloLal segmenrs. As rle laigesr cell-µlone manuíacruiei in rle
voilu, Þokia oííeis irs µiouucrs in Luioµe, Aíiica, rle ^iuule Lasr, Asia Pacihc,
Giearei Clina, anu Þoirl, Sourl, anu Larin Ameiica.
4
^aiker ieseaicl can also ieveal iegional segmenrs vleie cusromei neeus
anu µieíeiences aie similai virlin iegions rlar cioss seveial counriies. 1lis
can Le seen in ceirain iegions sucl as Cenrial Ameiica oi Sourlein Luioµe. Also
as an examµle, Aaíia, rle Sauui AiaLian íoou comµany, las caµiralizeu on
consisrenr µieíeiences íoi irs µiouucrs acioss Peisian iegions.
5
On occasion, maiker ieseaicl ieveals rlar segmenrs aie unique Ly counriy:
rlar is, cusromei µieíeiences aie so uiveise rlar cioss-Loiuei giouµing is nor
µossiLle. Hov consumeis` µieíeiences clusrei anu giouµ rogerlei acioss anu
virlin counriies is a key consiueiarion in gloLal÷local. Wlen segmenrs aie
gloLal oi iegional, ir is µossiLle ro rake auvanrage oí sranuaiuizeu maikering
µiogiams. Hovevei, vlen segmenrs aie unique virlin a counriy, oííeiings musr
Le auaµreu sµecihcally íoi rlose unique local neeus. As you vill see Lelov, rlis
is ielareu uiiecrly ro lov ro solve rle gloLal÷local uilemma inriouuceu in
Claµrei 2.
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segmentation
Ihe process o! groupihg
cohsumers accordihg Io
ahy characIerisIics IhaI
ih!uehce Iheir buyihg ahd
cohsumpIioh behavior,
allowihg MNCs Io Iailor
markeIihg programs ahd
producIs Io saIis!yihg Ihe
parIicular heeds o! disIihcI
cohsumer groups
Products and ßrands-GIobaI or LocaI?
Ioi rle maikerei, a product µioviues a ser oí Lenehrs rlar sarisíy neeus íoi rle
consumei. Ir consisrs oí all rle µlysical oi rangiLle comµonenrs, sucl as coloi,
as vell as all inrangiLle comµonenrs, sucl as seivice, ieµurarion, µiesrige, anu
orlei elemenrs rlar rle cusromei cannor íeel anu see. All rlese comµonenrs anu
claiacreiisrics, vlerlei rley aie rangiLle oi inrangiLle, can Liing value ro rle
consumei, anu raken as a vlole aie rle µiouucr. In inreinarional Lusiness,
rle ^ÞC can exrenu irs µiouucrs, auaµr irs µiouucrs, oi ir can ueveloµ nev
µiouucrs ro rake ro íoieign maikers. Oí couise, rlis ielares Lack ro rle ieseaicl
rlar slovs you vlerlei oi nor anu lov consumei neeus anu µieíeiences giouµ
acioss íoieign maikers.
Wlen rle ^ÞC`s µiouucr meers rle neeus oí cusromeis in íoieign maikers
virl lirrle oi no clange, maikereis say ir can Le exrenueu uiiecrly. Direct
extension may involve only language clanges on rle laLel oi insriucrions, as
virl soír uiinks oi Licycles, íoi examµle. Hovevei, somerimes even rlar is nor
necessaiy anu a comµlerely sranuaiuizeu µiouucr can Le oííeieu. 1le mosr
íamous examµle oí uiiecr exrension is Coke. In many maikers, ir is nor even
necessaiy íoi Coke ro clange rle language in µiouucr laLeling. Standardization
means rlar rle µiouucr is uniíoim anu consisrenr íiom counriy ro counriy.
Somerimes sranuaiuizeu µiouucrs can Le exrenueu uiiecrly ro only one oi a íev
counriies vlen rleie aie iegional segmenrs. Diiecr exrension voiks vlen
consumeis lave liglly common neeus anu common conuirions oí use anu
µuiclase in many counriies. In sucl cases, rle ^ÞC`s exisring µiouucr can hll
neeus virl lirrle oi no clange. Ioi examµle, rle Iiencl luxuiy Lag maikerei
Louis Vuirron uiiecrly exrenus irs µiouucr oííeiing virl no mouiíicarions ro
consumeis rliouglour rle voilu. You can Luy rle same Lag in Þev Yoik,
Paiis, oi 1okyo.
Wlile rleie aie many cosr auvanrages ro sranuaiuizeu µiouucrs, mucl oí
rle rime, enreiing íoieign maikers means rlar some µiouucr clanges aie
necessaiy. In some maikers, rlese can Le suLsranrial. Wlen consumei vanrs
anu neeus uiííei íiom counriy ro counriy, oi vlen rle conuirions vlen oi lov
rle consumei uses rle µiouucr uiííei, an adaptation strategy is aµµioµiiare.
Auaµrarion means rlar rle ^ÞC cusromizes anu auaµrs irs µiouucrs ro local
vanrs, neeus, anu conuirions. Auaµrarion is iaiely a quesrion oí ¨yes¨ oi ¨no,¨
Lur insreau ir involves quesrions oí vlar íearuies ro cusromize, lov mucl anu
in vlicl vays ro cusromize rlem íoi vlicl counriies. 1oo mucl cusromizarion
is cosrly anu may nor necessaiily Lerrei seive consumei neeus. 1oo lirrle cus-
romizarion may ignoie imµoiranr uiííeiences in neeus íiom counriy ro counriy,
anu cosr rle ^ÞC sales anu maiker slaie.
Wlen enreiing íoieign maikers, rle ^ÞC may ueciue ro ueveloµ a nev
µiouucr íiom sciarcl. In rle case oí nev µiouucr ueveloµmenr íoi mulriµle
íoieign maikers, rle uecisions oí sranuaiuizarion oi auaµrarion aie nor elimi-
nareu. 1leie aie srill conceins ovei vleie anu lov mucl local auaµrarion is
aµµioµiiare íiom maiker ro maiker. Also, rleie aie srill uecisions aLour rle
exrenr anu scoµe oí auvanrages ro Le gaineu íiom sranuaiuizarion. Hovevei,
Lecause rle nev µiouucr Legins virl a gloLal scoµe, rle gloLal÷local uilemma
is manageu íiom rle veiy Leginning. Ioi examµle, vlen rle µiouucr is ¨Loin
gloLal,¨ íiom rle veiy Leginning rleie is a sriong íocus on raµµing rle com-
monaliries acioss vaiious íoieign maikers. Likevise, íiom rle Leginning, rle
M U L T I N A T I O N A L O P E ß A T I O N A L A N D f U N C T I O N A L 5 T ß A T E G I E 5
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product
a seI o! behe!Is IhaI saIis!es
heeds !or Ihe cohsumer,
ihcludihg all physical or
Iahgible compohehIs as well
as all ihIahgible compohehIs,
such as service, repuIaIioh,
presIige, ahd oIher elemehIs
IhaI Ihe cusIomer cahhoI !eel
ahd see
direct extension
markeIihg Ihe same producI
Io cusIomers across !oreigh
markeIs wiIh ohly mihor
modi!caIiohs like lahguage
chahges oh Ihe label or
ihsIrucIiohs, or ho chahges
aI all
standardization
maihIaihihg a producI's
uhi!ormiIy ahd cohsisIehcy
!rom couhIry Io couhIry
adaptation strategy
cusIomizihg or adapIihg
ah MNC's producIs Io Ihe
local wahIs, heeds, ahd
cohdiIiohs o! di!!erehI
!oreigh markeIs
nev µiouucr íoimularion can Le uesigneu so rlar auaµrarion ro local siruarions
anu local maiker µieíeiences is accomµlisleu moie easily. Ceirain comµonenrs
anu íearuies aie easily clangeu our oi auueu in íoi vaiious maikers.
Lxµeirs oíren ieíei ro rle ¯0/30 iule leie, meaning rlar ar leasr ¯0 µeicenr
oí a gloLal µiouucr musr iemain consisrenr vlile 30 µeicenr can iemain lexiLle
íoi iesµonse ro local conuirions.
6
Ioi examµle, B^W`s mouels aie conhguieu
sliglrly uiííeienrly Lerveen Luioµean anu US maikers. Ií you ovn a laµroµ
comµurei, you can see rlar rle only local auaµrarion necessaiy is ro clange rle
coiu rlar µlugs inro rle µovei conveirei ro auaµr ro uiííeiences in elecriiciry
ieceµracles.
Global ahd Local 8rahdihg
1le brand is rle iuenriry oí a µiouucr. Ir incluues rle name, logo, symLols,
reims, song, colois, sµecial µackaging claiacreiisrics, µiouucr aµµeaiance,
voius, oi anyrling else useu ro esraLlisl oui associarion virl rle µiouucr anu
iuenriíy rle µiouucr. Ioi examµle, rle Þike Lianu is Laseu on rle ¨svoosl¨
symLol, rle ¨]usr uo ir¨ slogan, as vell as an aiiay oí orlei rlings rlar esraLlisl
rle image oí Þike µiouucrs anu oui µosirive associarion virl rlem. Belov, you
M A ß K E T I N G A N D 5 U P P L Y - C H A I N M A N A G E M E N T
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Since ils crealion in !974 by Japan´s Sanrio Conpany,
Hello Killy has grown by leaps and bounds. Hello Killy
ranks as lhe lhird nosl recognized Asian brand and is
recognized in nore lhan 40 counlries across lhe world.
Killy´s crealors purposely did nol develop any delails aboul
Killy or her lile. vilh her oversized noon·shaped lace,
bullon nose, six whiskers, and dol eyes, she was sinply
cule. This allowed her beholders, young girls, lo nake Killy
whalever lhey needed her lo be.
This lurned oul lo be a very snarl nove, as across lhe
globe lhe lillle cal seens lo convey a nessage. Exaclly
whal lhis nessage is likely varies lron cullure lo cullure.
Sone experls believe lhal in colleclivisl cullures such as
China and Japan, where groups such as lanily, co·workers,
and peer groups have greal inHuence on behavior, people
reacl lo a brand such as Hello Killy only because il is
whal everyone else does. According lo lhese experls,
consuners in colleclivisl cullures are nore inleresled in
lhe concrele producl lealures and do nol respond lo
abslracl personalily lrails and characlerislics porlrayed in
brands.
ín individualislic cullures like lhe US where people lend
lo ¨do lheir own lhing,¨ brands such as Hello Killy have
wide appeal precisely because she can nean a variely ol
lhings lo dillerenl people. ín individualislic cullures people
respond lo unique brand personalilies and like brand
porlrayals lhal are lriendly, according lo experls.
However, sone experls also suggesl lhal lhese nolions
ol colleclivisn versus individualisn do nol necessarily
apply across all aspecls ol a person´s lile. ín lheir public
lives, lhe Japanese have an aversion lo slanding oul, or
challenging aulhorily and social norns. Yel in lheir privale
lives, Japanese highly value ideals ol sell·expression,
lreedon, and uniqueness-nolions lhey would and could
never express al work or in lhe educalional syslen. So il
could be lhal brand porlrayals based on cerlain personal·
ilies and characlerislics do appeal across cullures. The
challenge in global branding is lapping inlo lhese cusloner
responses lhal cross cullural and nalional boundaries. The
lesson lron Hello Killy is lhal sinplicily nay be key.
Source: Adapled lron Fandall Frosl, 2006, ¨Cullures splil over brand
personalily,¨ www.brandchannel.con, April !9.
HeIIo Kitty-What Do ßrands Mean
Across CuItures?
l 8 S T P A T L C l C
l N S l C H T
brand
Ihe idehIiIy o! a producI
embodied ih Ihe hame,
logo, symbols, Ierms, sohg,
colors, special packagihg
characIerisIics, producI
appearahce, words, or
ahyIhihg else used Io
esIablish our associaIioh wiIh
Ihe producI ahd idehIi!y Ihe
producI
can see an examµle oí lov uolls íiom ]aµan can lave uiííeienr Lianu images
in uiííeienr culruies.
In Lianuing sriaregies anu uecisions, rle ^ÞC again íaces rle gloLal÷local
uilemma. Wlerlei exrenuing an exisring µiouucr oi ueveloµing a nev µiouucr
íoi íoieign maikers, rle ^ÞC musr ueciue vlerlei ro use one Lianu acioss all
maikers oi a seµaiare Lianu íoi iegional maikers oi even a seµaiare Lianu íoi
eacl counriy maiker. Wlen a µiouucr las a gloLal iuenriry, vlen rleie is a
single Lianu íoi rle µiouucr rliouglour rle voilu, ir is calleu a global brand.
AgloLal Lianu las a consisrenr iuenriry virl cusromeis in all maikers. A gloLal
Lianu las rle same µiouucr Lenehrs anu claiacreiisrics, rle same Lianu name,
logos, anu slogans, all virl rle same meaning íoi consumeis rliouglour rle
voilu.
As rle íolloving IB Lrlical Clallenge nores, gloLal Lianus can Le so
imµoiranr rlar rley even lave erlical imµlicarions íoi an ^ÞC.
1leie aie veiy íev riuly gloLal Lianus. LxliLir 10.1 slovs rle roµ 25
Lianus in rle voilu. Lacl yeai, InreiLianu, a consulring comµany, riacks rle
M U L T I N A T I O N A L O P E ß A T I O N A L A N D f U N C T I O N A L 5 T ß A T E G I E 5
282
Clobal brands are now ballling nol only lor cusloners´
allenlion bul also nore inporlanlly lor cusloners´ lrusl.
Trusl is buill over line by engaging cusloners and
behaving responsibly in business aclivilies. The íÑC´s
brand nessages are only one ol lhe nany sources ol
inlornalion now available lo cusloners, and oul ol all
lhose sources lhe brand inlornalion developed and pul
oul by lhe íÑC is lhe inlornalion leasl lrusled by
cusloners. A survey by lhe vorld Econonic Forun (vEFì
lound lhal lrusl in global conpanies is al an all·line low.
Cusloners lend lo lrusl jusl aboul anyone else nore lhan
lhe íÑC. They seen lo lrusl non·governnenlal agencies
(ÑCOsì such as Creenpeace parlicularly.
Cusloner lrusl provides a nind·blowing conpelilive
advanlage lhal can be hugely leveraged and inpossible lo
replicale. íl is easy lo lose and exlrenely dillcull lo regain
once losl. The vEF survey indicales lhal lhe global cus·
loner is now nuch less likely lo be ¨laken in¨ by branding
nessages produced and pul oul by íÑCs. ínporlanlly,
cusloners seen lo lrusl íÑCs lhal are seen as conlribul·
ing lo lhe besl inleresls ol sociely and lhose lhal place
lhenselves in a posilion ol accounlabilily lor lheir aclions.
To build lrusl, cusloners nusl believe lhal lhe íÑC
is responsible and accounlable in ils brand building
and branding nessages. The íÑC nusl develop brand
inages lhal openly reHecl aulhenlicily and genuineness.
ínporlanlly, lhe íÑC nusl build in nolions ol cusloner
responsiveness and receplivily lo larger issue ol global
elhics.
The lwenly·lirsl·cenlury global cusloner is slreel savvy
and very good al spolling inconsislencies in branding
aclivilies and nessages. These cusloners look lor dis·
conlinuilies in brand inlornalion provided by lhe íÑC
and lhal provided by lhe nullilude ol olher sources
now available, lor exanple blogs. íÑCs can prolecl
lhenselves againsl possible danage lo lheir brands in
incidences where lheir elhical behavior is being queslioned
by a powerlul ÑCO such as Creenpeace. However, lo be
an elleclive delense, lhe íÑC´s inage ol responsibilily,
accounlabilily, responsiveness, and inlegrily nusl be in
place belore any incidenls occur.
Source: Arlo Brady, 2006, ¨Corporale responsibilily: The role ol lhe
brand,¨ www.brandchannel.con, íarch !3.
Trust in GIobaI ßrands L T H l C A L
C H A L L L N C L
gIobaI brand
a sihgle brahd used !or a
producI IhroughouI Ihe
world. A global brahd has
a cohsisIehI idehIiIy wiIh
cusIomers ih all markeIs,
usihg Ihe same producI
behe!Is ahd characIerisIics,
Ihe same brahd hame, logos,
ahd slogahs, wiIh Ihe same
meahihg !or cohsumers ih all
couhIries ahd markeIs
µeiíoimance oí roµ gloLal Lianus. As ve can see, rlese gloLal Lianus can Le
exriemely valuaLle íoi rle ^ÞC. A majoi µair oí rle auvanrage oí gloLal
Lianus comes íiom economies oí scale. 1le ueveloµmenr anu maikering cosrs
íoi a gloLal Lianu can Le sµieau ovei laige sales volumes in many maikers.
GloLal Lianus aie mucl moie visiLle rlan local Lianus Lecause oí rleii con-
sisrenr iuenriry. Wlen cusromeis riavel aiounu, rley see rle µiouucr in orlei
M A ß K E T I N G A N D 5 U P P L Y - C H A I N M A N A G E M E N T
283
|xh|o|| 10.1 The 25 Top GIobaI ßrands
Source: IhIerbrahd, "8esI global brahds," www.ihIerbrahd.com/besI_global_brahds.aspx
2007 2008 8rand Sector Country of Crigin 2008 8rand Change in
Rank Rank Value ($m) 8rand Value
1 1 Coca-Cola 8everages UhiIed SIaIes 66,667 2%
3 2 I8M CompuIer Services UhiIed SIaIes 59,031 3%
2 3 Microso!I CompuIer So!Iware UhiIed SIaIes 59,007 1%
4 4 GL Diversi!ed UhiIed SIaIes 53,086 3%
5 5 Nokia Cohsumer LlecIrohics Fihlahd 35,942 7%
6 6 1oyoIa AuIomoIive 1apah 34,050 6%
7 7 ihIel CompuIer Hardware UhiIed SIaIes 31,261 1%
8 8 McDohald's ResIaurahIs UhiIed SIaIes 31,049 6%
9 9 Dishey Media UhiIed SIaIes 29,251 0%
20 10 Google IhIerheI Services UhiIed SIaIes 25,590 43%
10 11 Mercedes 8ehz AuIomoIive Germahy 25,577 9%
12 12 HP CompuIer Hardware UhiIed SIaIes 23,509 6%
13 13 8MW AuIomoIive Germahy 23,298 8%
16 14 GilleIIe Persohal Care UhiIed SIaIes 22,689 8%
15 15 Americah Lxpress Fihahcial Services UhiIed SIaIes 21,940 5%
17 16 Louis VuiIIoh Luxury Frahce 21,602 6%
18 17 Cisco CompuIer Services UhiIed SIaIes 21,306 12%
14 18 Marlboro 1obacco UhiIed SIaIes 21,300 0%
11 19 CiIi Fihahcial Services UhiIed SIaIes 20,174 -14%
19 20 Hohda AuIomoIive 1apah 19,079 6%
21 21 Samsuhg Cohsumer LlecIrohics Republic o! Korea 17,689 5%
New 22 H&M Apparel Swedeh 13,840 New
27 23 Oracle CompuIer So!Iware UhiIed SIaIes 13,831 11%
33 24 Apple CompuIer Hardware UhiIed SIaIes 13,724 24%
25 25 Sohy Cohsumer LlecIrohics 1apah 13,583 5%
counriies as vell as rleii ovn. In auuirion, gloLal Lianus gain íiom meuia
oveilaµ. Porenrial cusromeis in rle US can viev many Canauian 1V clannels
anu lisren ro many Canauian iauio srarions. Wirl rle auvanceu communicarions
reclnology making sarellire 1V anu iauio moie anu moie common, rlis meuia
oveilaµ vill Lecome commonµlace anu even moie Lenehcial ro gloLal Lianus.
In sµire oí rle µoveiíul auvanrages oí gloLal Lianus, gloLal Lianuing
sriaregies aie nor alvays µossiLle anu nor alvays rle mosr uesiiaLle aµµioacl.
Local Lianuing sriaregies may Le necessaiy Lecause rle Lianu name may lave
some unuesiiaLle associarions oi oííensive meanings in rle local culruie.
Likevise, ceirain reims may lave a sµecihc meaning rlar is nor consisrenr acioss
culruies. Ioi examµle, µiouucr Lianu names uo nor conrain rle reim ¨uier¨ in
associarion virl caloiic conrenr in Iiance Lecause uier is a sµecihc meuical reim
iequiiing sale in a µlaimacy. Bianus like Dier Coke musr Le solu as Coke Liglr.
In ]aµan, rle uier is rle narional legislaruie. 1leie aie many examµles oí Lianu
names rlar lave iesriicreu gloLal use. Ioi examµle, rle Clevy Þova rianslares
inro ¨no go¨ in Sµanisl. 1le IB Sriaregic Insiglr Lelov gives anorlei iecenr
examµle.
Local Lianus can Le a giear asser. Local Lianuing can signal rlar rle com-
µany is sensirive ro culruial uiííeiences anu commirreu ro seiving rle local
maiker. Cusromeis may íeel iesenrmenr rovaiu a ceirain counriy oi rovaiu Lig
^ÞCs in geneial. In sucl cases, local Lianus aie µieíeiaLle. Local Lianus can
somerimes enjoy moie suµµoir íiom local ieraileis vlen rley auvise cusromeis
on µiouucr cloices. Local Lianus may also lave viuei uisriiLurion virl moie
local ieraileis. 1lis means rlar aírei-sales seivices, sucl as µiouucr ieµaii anu
mainrenance, aie moie availaLle anu easiei íoi cusromeis. Iinally, even rlougl
ir may nor alvays Le riue, Luyeis may Lelieve rlar gloLal oi iegional Lianus
oííeieu Ly vell-knovn ^ÞCs aie moie exµensive rlan local oííeiings.
Cusromeis in local maikers may see local Lianus as Lerrei value íoi rleii money.
Ioi examµle, in 1uikey consumeis see aµµliances µiouuceu Ly rle 1uikisl
comµany Aicelik as µioviuing Lerrei value íoi rleii money rlan rle Lerrei
knovn, moie µiesrigious Lianus íiom Wesrein ^ÞCs.
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284
The Cernan conpany Adidas·Salonon used a caricalure
ol an Asian boy on lheir ¨Yellow Series¨ shoe lhal was
released in April 2006 in Paris, Tokyo, Hanburg, Dennark,
San Francisco, Ñew York, and Los Angeles. The shoes sell
lor $250 and depicl a boy wilh buckleelh, a bowl haircul,
and slanled eyes. Anerican Asians lind lhe caricalure
ollensive, suggesling lhal il is racisl and deneaning. The
avanl·garde arlisl who drew lhe characler has a Chinese
nolher and noled lhal lhe caricalure looks like he did when
he was eighl years old. Adidas is allenpling lo lap inlo a
younger hipper narkel and believed lhal lhis group would
undersland lhe inage as arl. This was a serious nisjudg·
nenl as Anerican Asians do nol see il as arl and conlinue
lo be angered by lhe producl.
Source: Adapled lron íichael Tunison, ¨Asians Decry Adidas Shoe
as a íisslep,¨ 2006, Vashing!on Pos!, April !4, p. D0!.
CuIturaI 5ensitivity Issues 5hov up
in 5urprising Ways !or Adidas
l 8 S T P A T L C l C
l N S l C H T
Wlen an ^ÞC ueciues ro rake irs µiouucrs ro íoieign maikers a Lig issue
is rle country oI origin (COO) eIIect. 1lis means rlar consumeis can rake sriong
messages Laseu on rle locarion vleie rle µiouucr is maue anu maikereu. 1le
COO inluence can Le µosirive ií rle counriy is vieveu µosirively, oi negarive
ií rle counriy is vieveu negarively. Somerimes rle COO signals qualiry, as virl
Iiencl vines. Somerimes ir signals less uesiiaLle cues sucl as rle uníaii com-
µeririve µiacrices associareu virl Clina oi suLsranuaiu qualiry. 1le COO eííecr
oíren comes íiom rle ¨maue in¨ laLel, Lur ir can also come íiom rle cusromei`s
µeiceµrions aLour vleie rle µiouucr oiiginares. 1le íolloving IB Sriaregic
Insiglr examines rle COO oí rle ¨maue in Clina¨ laLel.
M A ß K E T I N G A N D 5 U P P L Y - C H A I N M A N A G E M E N T
285
vhal does lhe ¨nade in China¨ lag nean in lhe narkel·
place? A recenl survey ol narkeling execulives showed
lhal counlry ol origin (COOì ellecls are slrong lor Chinese
producls. ínporlanlly, a vasl najorily ol lhese narkeling
experls believe lhal lhe slrong ellecl ol lhe ¨nade in
China¨ label is negalive and harnlul in lhe narkelplace.
They reporled lhal Chinese producls are seen as cheap,
poor value, poor qualily, unreliable, and unsophislicaled
(i.e. very basicì. ínporlanlly, lhis is nol a perceplion con·
lined lo veslern counlries, because lhese execulives
cane nol only lron lhe USA bul also lron Europe, Lalin
Anerica, and even lhe Asia/Pacilic regions. Also, il is
nol an inpression liniled lo specilic producl calegories
because il includes cars, lurnilure, lood, appliances,
clolhing, loys, and conpulers, anong olhers. ínlereslingly,
China is seen as lhe land ol original equipnenl nanulac·
lurers (OEísì. This likely has sone basis in realily because
so nany Chinese conpanies nass·produce unbranded and
unidenlilied parls and conponenls designed and devel·
oped by íÑCs as ingredienls in lheir own global brands.
Believe il or nol, lhis silualion is very sinilar lo lhe one
lor lhe ¨nade in Japan¨ lag in lhe !960s and !970s. The
Japanese underlook an aggressive slralegy lo upgrade
lheir low·qualily inage and successlully lranslorned il lo
lhe exlenl lhal beginning in lhe !930s and conlinuing
lhrough loday, lhe label ¨nade in Japan¨ now slands lor
exlrenely high·qualily and highly innovalive producls. The
Chinese see lhis as a road lhal lhey inlend lo lollow and
have enbarked on a carelully orcheslraled and coordinaled
slralegy. Firsl, Chinese conpanies have acquired a nunber
ol brands lhal are well eslablished wilh slrong brand
equily. Second, wilh each acquisilion lhey are absorbing
lhe experlise in brand developnenl and nanagenenl lhal
cones wilh lhe acquired brand and lhen incorporaling il
lhroughoul lheir conpanies. These Chinese conpanies are
gaining nol only lhe equily and credibilily ol eslablished
brands bul also lhe knowledge and lalenl lo apply lo lheir
own honegrown brands.
Chinese·owned brands are already beneliling lron lhis
slralegy and are expecled lo clinb in slalus and equily in
lhe nexl live years. As noleworlhy exanple, Lenovo
acquired lhe íBí PC division lale in 2004 and plans lo use
lhal brand as a plallorn lor narkeling ils producls, while
al lhe sane line using lhe acquired brand experlise lo build
ils own capabililies in brand crealion and nanagenenl.
Anolher Chinese brand on lhe nove is Bird, a nobile phone
conpany. Bird has posilioned ilsell as lhe lirsl and only
Chinese brand lo becone a lop len nobile phone brand
as il currenlly ranks nunber eighl and il is expecled lo
conlinue challenging eslablished nanes such as Sansung,
Sony Ericsson, Panasonic, and íilsubishi.
vhile currenl perceplions ol China are clearly hurling
Chinese brands, lhe Japanese denonslraled lhal such
perceplions can indeed be overcone. Civen lhe newly
acquired experlise coupled wilh lhe eslablished brand
nanes and lhe ingrained low·cosl produclion capacily,
powerlul Chinese brands nay cone sooner lhan we lhink.
Source: Jell Syslun, Fred Burl, and Annie Ly, 2005, ¨The slralegy
ol Chinese brands,¨ ínlerbrand vhile Paper.
Country o! Origin E!!ects o!
"Made in China"
l 8 S T P A T L C l C
l N S l C H T
country o! origin (COO)
e!!ect
Ihe meahihgs ahd messages
cohsumers derive !rom
where a producI is made
ahd markeIed. 1he ih!uehce
cah be posiIive i! Ihe couhIry
is viewed posiIively ahd
hegaIive i! Ihe couhIry is
viewed hegaIively
Alrlougl COO eííecrs can Le quire sriong, rley can clange ovei rime.
Piouucrs íiom ]aµan veie once rlouglr ro Le oí µooi qualiry Lur aie nov seen
as among rle liglesr-qualiry µiouucrs in rle voilu. In íoimeily communisr
counriies sucl as rle Czecl ReµuLlic, US Lianus sucl as Þike anu ReeLok aie
associareu virl íieeuom. Inreiesringly, COO eííecrs iemain inracr even vlen
rley uo nor acrually aµµly ro rle µiouucr. Wirl rle incieaseu economic con-
necrions Lerveen counriies anu rle incieasingly gloLalizeu suµµly clains ve
uesciiLe Lelov, µiouucrs may acrually come íiom seveial counriies. A consumei
may Luy a Douge Ram µickuµ riuck rlinking rlar ir is an Ameiican µiouucr.
Yer rle riuck may lave Leen manuíacruieu in ^exico virl comµonenrs íiom
Geimany anu 1aivan as vell as rle US! Wlar sloulu rle ¨maue in¨ laLel say.
In íacr, rle srickei on a Douge µickuµ nov inuicares rle µeicenrage oí µairs anu
comµonenrs rlar oiiginare in rle US.
DeIivering Products across the GIobe-
Distribution and 5uppIy Chains
Have you evei rlouglr aLour lov µiouucrs in rle suµeimaiker÷say, íoi
examµle, 1illamook cleese÷hnu rleii vay ro you. All rle comµanies rlar lelµ
ger rle cleese íiom rle uaiiy íaimei ro you make uµ rle uisriiLurion clannel
íoi cleese. A distribution channel consisrs oí inreimeuiaiies, mosrly vlolesaleis
anu ieraileis rlar uo all rle voik ro ger µiouucrs ro you, rle enu usei. In auuirion
ro riauirional ierail sroies, moie anu moie rlese uays rle comµany`s µiouucrs
ieacl rle consumei rliougl e-raileis, sroies rlar sell µiouucrs rliougl veLsires
on rle Inreiner. In iaie cases, rle comµany may acr as irs ovn uisriiLurion
clannel. 1lis is calleu direct distribution Lecause rle comµany sells irs µiou-
ucrs uiiecrly ro rle consumei. Wlen rlis laµµens, ir is mosr oíren rliougl
rle Inreiner. A majoiiry oí rle rime, lovevei, ir is jusr roo exµensive íoi rle
comµany ro sell µiouucr irems one ar a rime ro cusromeis vlen inreimeuiaiies
(vlolesaleis anu ieraileis) can uo ir ar a mucl lovei cosr. In raking irs µiouucrs
ro íoieign maikers, a comµany may use mulriµle uisriiLurion clannels as slovn
in LxliLir 10.2.
ReIailihg ih Global MarkeIs
Reraileis aie inreimeuiaiies vlo aie closesr ro rle cusromei anu seive rle
cusromei uiiecrly. Because oí rlis, ierailing is mosr oíren a localizeu acriviry.
1leie aie vasr uiííeiences in ierailing íiom counriy ro counriy. Peoµle in rle US
aie useu ro seeing mosrly laige sroies virl a vasr aiiay oí µiouucrs, sucl as
Walmair suµeisroies. In some counriies, moie ierail sroies aie small mom-anu-
µoµ sroies, somerimes caiiying only a veiy limireu line oí irems. 1lis is rle case
íoi Iraly, Algeiia, anu many µairs oí Iiance, íoi examµle. In some counriies,
mucl ierailing acriviry srill laµµens rliougl remµoiaiy oµen-aii maikers oi
Lazaais. 1le meiclanrs ienr a sµor anu ser uµ rleii remµoiaiy sloµ, sell rleii
µiouucrs íoi rle aíreinoon, uay, oi evening, rlen µack uµ anu ieµear rle same
iourine rle nexr veek oi nexr evening.
In any case, alrlougl ieraileis alvays inreiacr uiiecrly virl cusromeis, rleie
is vaiiance íiom counriy ro counriy in rle seivices µioviueu ro consumeis. In
many sroies in rle US, cusromeis uo nor ger any arrenrion íiom salesµeoµle,
M U L T I N A T I O N A L O P E ß A T I O N A L A N D f U N C T I O N A L 5 T ß A T E G I E 5
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distribution channeI
Ihe seI o! ihIermediaries,
mosIly wholesalers ahd
reIailers, IhaI help geI
producIs Io ehd users buI do
hoI mahu!acIure Ihe
producIs
direct distribution
MNCs sellihg producIs
direcIly Io cohsumers wiIh
ho wholesale or reIail
ihIermediaries
vlo aie rleie only ro comµlere riansacrions ar rle casl iegisrei. In ]aµan, ceirain
comµonenrs oí ierail seivice aie legenuaiy anu conriasr ueciueuly virl rle US.
Ioi examµle, ar rle cleckour, rle cleik ryµically viaµs rle µiouucr, Loxes ir,
airisrically viaµs rle Lox again, anu rlen µurs rle µackage in an arriacrive
sloµµing Lag. In Iiance, ir is nor unusual íoi rle cusromeis ro Liing rleii ovn
sloµµing Lags.
1lougl ierailing vaiies giearly íiom counriy ro counriy, oveiall ir is iaµiuly
clanging voiluviue. 1lese clanges involve rliee majoi rienus: incieasing
ierailei size, incieases in e-railing, anu rle gioving imµoirance oí gloLal
ieraileis. Iiisr, alrlougl rleie aie srill many counriies vleie small, sµecialry
sloµs, oi mom-anu-µoµ sroies µieuominare, rleie is a sriong rienu oí laigei
ierail sroies ueveloµing a sriongei µiesence voiluviue. In Clina, íoi examµle,
consumeis can sloµ in laige suµeimaikers anu ueµairmenr sroies moie rlan
evei Leíoie.
LxliLir 10.3 slovs lov ierail esraLlislmenr size las incieaseu iecenrly in
Clina. Lven in Iiance, vleie riauirional small meiclanrs lave Leen µieíeiieu
lisroiically, laige sujernarcles anu ueµairmenr sroies aie seen moie anu moie
íiequenrly÷anu rleii µaiking lors aie jammeu!
As menrioneu eailiei, ^ÞCs can use rleii veLsires as a µiomorional rool.
Incieasingly, rle Inreiner also is useu in all ryµes oí Luying anu selling anu
vaiious Lusiness riansacrions. 1lis is geneially knovn as e-commerce. 1le
^ÞC can sell irs µiouucrs rliougl irs ovn veLsire, lovevei, íoi eííiciency
ieasons, moie oíren Inreiner uisriiLurion inreimeuiaiies, viirual ierail sroies,
aie useu. 1lese inreimeuiaiies aie calleu e-tailers. PioLaLly rle mosr íamous
examµle oí an e-railei is Amazon.com. Imµoiranrly, ^ÞCs can Lenehr íiom
rle sµillovei as communicarions reclnologies, e.g. rle Inreiner, lave íieeu uµ
rle access ro íoieign µiouucrs. Consumeis íiom all ovei rle voilu can log on
M A ß K E T I N G A N D 5 U P P L Y - C H A I N M A N A G E M E N T
287
firms taking their products to !oreign markets
Direct ChanneI 5ystems Indirect ChanneI 5ystems
DirecI
sales-
persohal
sellihg by
sales rep ih
!oreigh
markeIs
Ohlihe
markeIihg-
!irm's owh
dedicaIed
websiIe
DirecI
markeIihg-
e.g.
caIalogs
Wholesalers or disIribuIors
ih !oreigh markeIs
Wholesalers
ReIailers ih
!oreigh markeIs
L-Iailers (may be ih
several lahguages)
Consumers in !oreign markets
|xh|o|| 10.2 PossibIe Combinations o! Distribution ChanneIs vith Various
Intermediaries That May ße InvoIved in GIobaI Distribution
e-commerce
buyihg ahd sellihg
IrahsacIiohs cohducIed
Ihrough Ihe IhIerheI
e-taiIers
IhIerheI disIribuIioh
ihIermediaries (virIual reIail
sIores)
ro Amazon.com ro viev anu µuiclase µiouucrs. ^ÞCs raking rleii µiouucrs
ro íoieign maikers lave an incieaseu clance ro seive rlose maikers rliougl rle
Inreiner anu vaiious e-raileis. 1o ensuie success in íoieign maikers, veLsires
sloulu Le uesigneu virl culruial sensiriviry in minu, jusr as µiinr oi relevision
aus aie, anu even ueveloµing veLsires in orlei languages. Larei, in Claµrei 15,
you vill leain moie aLour e-railing in inreinarional Lusiness.
1le rliiu imµoiranr rienu in
inreinarional uisriiLurion is rle giovrl
anu incieasing imµoirance oí gloLal
ieraileis. Global retailers aie laige-scale
ierailing ^ÞCs. Þor only aie rlese
inuiviuual ierail esraLlislmenrs laigei,
rley aie locareu rliouglour vaiious
iegions oí rle voilu anu some oí rlem
aie riuly gloLal. Ioi examµle, Walmair
las sroies in Clina, Luioµe, Larin
Ameiica, rle CaiiLLean, Canaua, ]aµan,
anu Koiea. IKLA, rle Scanuinavian
lome íuinisling ierailei, las sroies in
Luioµe, Asia, anu rle Unireu Srares.
Caiieíoui, rle Iiencl lyjernarcle,
las oµeneu sroies in Larin Ameiica,
Clina, anu orlei µairs oí Asia. 1le
M U L T I N A T I O N A L O P E ß A T I O N A L A N D f U N C T I O N A L 5 T ß A T E G I E 5
288
10%
3%
2%
4%
6%
19%
21%
16%
19%
SpecialiIy
ReIailer
ReIail
Pharmacy
3C sIore
Home
ImprovemehI
sIore
Cohvehiehce
sIore
Shoppihg
cehIer
HypermarkeI
SupermarkeI
DeparImehI
sIore
|xh|o|| 10.J ßetaiIing in China
NoIes:
HypermarkeI-usually de!hed as beihg 2,500 square meIers or bigger, similar Io Ihe Super Wal-MarI ih
Ihe US.
3C sIore-a semi-specialIy Iype o! sIore carryihg commuhicaIioh producIs, ih!ormaIioh Iechhology
producIs ahd digiIal producIs.
gIobaI retaiIers
large-scale reIailihg MNCs
IhaI have locaIiohs
IhroughouI various regiohs
o! Ihe world
numLei anu inluence oí rlese mega-ieraileis conrinues ro inciease in rle gloLal
maiker.
Wholesalihg ih Global MarkeIs
Oíren, esµecially in inreinarional maikers, rle ^ÞC`s µiouucrs uo nor go
uiiecrly ro a ierailei. 1le ^ÞC hisr sells irs µiouucrs ro a vlolesalei oi uis-
riiLuroi locareu in rlar counriy oi ar leasr in rlar iegion. 1lese vlolesaleis
oi uisriiLurois aie comµanies rlar riansíei µiouucrs íiom rle manuíacruiei
uovn rle uisriiLurion clannel so rlar rley evenrually ger ro a ierailei anu rlen
ro you, rle consumei. 1le uisriiLuroi in rle local maiker sells rle íoieign
µiouucr ro rle local ieraileis in rle local maikers. Seveial vlolesaleis may Le
involveu in rle uisriiLurion oí a µiouucr Leíoie ir gers ro rle ierailei. Ioi
examµle, in ]aµan, µiouucrs µass rliougl rliee oi somerimes even moie
vlolesaleis. Counriies uiííei in rle seivices µioviueu Ly vlolesaleis ro ieraileis.
In ]aµan, ieraileis exµecr ro Le aLle ro ieruin all unsolu goous ro rle vlolesalei.
¯
Oírenrimes, local conuirions make ir necessaiy íoi ^ÞCs ro use vlolesaleis in
íoieign maikers. 1lese clallenges can involve gerring µiouucrs rliougl iegula-
rion in rle íoieign maiker oi negoriaring rle comµlexiries oí local iníiasriucruies
sucl as riansµoirarion anu vaielousing.
Global Supply-chaih MahagemehI
DisriiLurion clannels closely ielare ro suµµly-clain managemenr. Supply chains
involve all rle rasks anu seivices rlar connecr eveiyrling rlar laµµens ro a
µiouucr íiom iav mareiial ro rle consumei. DisriiLurion clannels aie rle larei
µair oí rle suµµly clain rlar ueliveis rle µiouucr ro rle enu usei. Hovevei, rle
souicing oí suLcomµonenrs anu suLassemLlies comµonenrs anu iav mareiials
useu ro make rle µiouucrs also aie µair oí rle suµµly clain.
Suµµly clains involve all rle linkages Lerveen rle oiiginarion oí iav
mareiials, ro rle vaiious µiocessing µoinrs oí iav mareiials, ro rle µiouucrion
íaciliries anu rlen ro rle uisriiLurion clannels uesciiLeu aLove. Suµµly clains
involve riansµoiring oí goous anu mareiials, invenroiy managemenr anu
ílovs, oiuei µiocessing, mareiials lanuling, anu vaielousing. ^any µairs
anu suLcomµonenrs useu in µiouucrs, as vell as iav mareiials, aie souiceu
íiom orlei counriies. 1lus in many vays ir is laiu ro hnu a Lusiness vleie
rle suµµly clains aie nor in íacr gloLal suµµly clains. Ioi examµle, rle Ioiu
Ciovn Vicroiia is assemLleu in Canaua, ¯5 µeicenr oí rle 1oyora Avalon
assemLly is uone in rle US, anu rle P1 Ciuisei is a µiouucr oí Cliyslei rlar is
assemLleu in ^exico. LxliLir 10.4 slovs a simµliheu examµle oí Þikon`s gloLal
suµµly clain. ^any oí rlese gloLal nervoiks Lerveen ^ÞCs aie mucl moie
comµlex.
An incieasingly imµoiranr issue íoi ^ÞCs incluues rle comµlexiries oí
managing an erlical suµµly clain. Consumeis aie incieasingly avaie rlar an
^ÞC`s Lianu image iesrs nor only on rle erlical managemenr oí rleii ovn
comµany Lur also on lov rleii suµµlieis ueal virl issues sucl as clilu laLoi,
íaii µay, voiking conuirions, anu enviionmenral imµacr. 1le IB SusrainaLiliry
Piacrices Lox oveileaí slovs lov a UK comµany rakes caie in souicing susrain-
aLle voou µiouucrs íoi irs lome imµiovemenr Lusiness.
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289
suppIy chains
all Ihe Iasks ahd services IhaI
cohhecI everyIhihg IhaI
happehs Io a producI !rom
raw maIerial Io Ihe
cohsumer. DisIribuIioh
chahhels are Ihe laIer parI o!
Ihe supply chaih IhaI delivers
Ihe producI Io Ihe ehd user
Rarlei rlan jusr Luying iav mareiials sucl as sreel oi µlasric anu µiouucing
a µiouucr enriiely on rleii ovn, many ^ÞCs nov Luy comµlereu suLcom-
µonenrs anu suLassemLlies neeueu in rleii ovn hnisleu µiouucrs íiom orlei
comµanies. 1lis is calleu outsourcing in rle suµµly clain. G^, rle auro-makei,
µioviues an examµle oí oursouicing vlen ir Luys elecrionically conriolleu cai
sears íiom ]olnson Conriols iarlei rlan making rle sears irselí.
1leie aie seveial ieasons íoi rle giovrl oí gloLal oursouicing. 1le hisr is
cosr savings. As you miglr imagine, a slaie oí rlis comes uiiecrly íiom cleaµei
oveiseas laLoi cosrs. Hovevei, Lecause oursouicing allovs íoi rle concenriarion
oí sµecializeu skills, sµecializeu comµanies rlar µioviue oursouiceu µiouucrion
ro many comµanies gain economies oí scale, oíren saving even moie. Also, rlis
concenriarion oí sµecializeu skills incieases rle qualiry anu ieliaLiliry oí our-
souiceu goous. Ioi examµle, comµanies in Inuia lave maue massive invesrmenrs
in rle mosr auvanceu communicarion reclnologies anu in language riaining rlar
ensuies rlar cusromeis can leai no riaces oí Inuian accenrs. 1lis las íacilirareu
exrensive anu ligl-qualiry oursouicing oí cusromei seivice íuncrions Ly a vasr
iange oí comµanies íiom Ameiican Lxµiess ro Delra Aiilines.
S
As an auuirional
Lur veiy imµoiranr Lenehr, Lecause oursouicing allovs rle ^ÞC ro minimize
invesrmenrs in irs ovn µlanrs, equiµmenr, riaining, anu manuíacruiing íaciliries,
anu rlus limir irs hxeu cosrs anu oveileaus, rle ^ÞC rlar oursouices can Le
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290
Product deveIopment and production
UP5 5uppIy Chain 5oIution
º Air/oceah !reighI
ImporIihg, sales ahd services o! cameras ih
º Nikoh PhoIo producIs Ihc. (1apah)
º Nikoh Hohg Kohg LId. (Hohg Kohg)
º Nikoh Sihgapore PIe LId. (Sihgapore)
º Nikoh (Malaysia) Sdh. 8hd. (Malaysia)
º Nikoh (1hailahd) Co., LId. (1haihlahd)
º Nikoh Imagihg (Chiha) Sales Co., LId. (Chiha)
º Nikoh Imagihg Korea Co., LId. (Korea)
CehIral supply, admihisIraIive mahagemehI
!or Lurope uhiIs (NeIherlahds) ImporIihg, sales
ahd services o! cameras ih
º Nikoh Precisioh Lurope GmbH (Germahy)
º Nikoh Lurope 8.V. (NeIherlahds)
º Nikoh AG (SwiIzerlahd)
º Nikoh UK LId (UK)
º Nikoh Frahce S.A.S. (Frahce)
º Nikoh Nordic A8 (Swedeh)
º Nikoh s.r.o. (Czech Republic)
º Nikoh Polska Sp.Z o.o. (Polahd)
"In house"-1apan
º ProducI desigh ahd developmehI
º Key compohehI (lehses) producIioh
º DevelopmehI ahd supporI o! so!Iware
1o
NorIh America,
LaIih America,
Caribbeah MarkeI
1o
Asiah MarkeIs
1o
Luropeah
MarkeIs
Ship Io US ahd
Cahada sales ahd
services ahd reIailers
LxporI Io LaIih
America ahd
Caribbeah disIribuIors
Repackaged Io
display speci!icaIiohs
UPS Supply Chaih SoluIioh
LogisIic CehIer, Maih Campus
(Louisville, KehIucky, USA)
"KiIIed" wiIh
accessories ahd
ready Io ship
Main production
China
º Mahu!acIure digiIal
camera compohehIs
ahd parIs !or lehses
º Some assembly
Main production
ThaiIand
º Mahu!acIure
cameras
º IhIerchahgeable
lehses, ahd digiIal
camera compohehIs
Other production sites
Ihdohesia ahd Korea
Manu!acturing and production !aciIities
|xh|o|| 10.4 Nikon Corporation - DigitaI Camera 5uppIy Chain
outsourcing
MNCs buyihg subcompohehIs
ahd subassemblies heeded ih
Iheir owh !hished producIs
!rom oIher compahies
moie lexiLle in imµoiranr sriaregic aieas. 1lis incieaseu lexiLiliry allovs rle
^ÞC ro Le auaµraLle anu ueal virl clanging conuirions so rlar ir can iemain
comµeririve.
1o gain all oí rle auvanrages oí a gloLal suµµly-clain nervoik, rle ^ÞC
musr unueisranu rle many comµlexiries involveu. Iiisr, oursouicing incieases
rle imµoirance oí rle µuiclasing anu acquisirion íuncrion in rle comµany.
Wlen rle ^ÞC is µuiclasing imµoiranr suLcomµonenrs íiom oursiue manu-
íacruieis, rle inreinarional µuiclasing manageis Luying rlose suLcomµonenrs
aie making uecisions rlar aie mucl moie imµoiranr rlan ií rley veie simµly
ieoiueiing µaµei íoi rle coµy macline. 1le managemenr oí key souicing ueci-
sions las maue µuiclasing a coie sriaregic íuncrion. Seconu, rle suµµly clain
musr Le vieveu anu manageu as a sysrem virl íull unueisranuing oí lov all
rle linkages aííecr one anorlei. 1le ^ÞC can no longei íocus only on venuois
virl vlom ir ueals uiiecrly, Lur musr also consiuei irs suµµlieis` suµµlieis anu
irs cusromeis` cusromeis. 1liiu, Lecause oí rle comµlex inreiconnecrions
Lerveen all rle ^ÞCs in rle suµµly clain, uara anu riacking iníoimarion las
Lecome mucl moie imµoiranr. In managing gloLal suµµly clains, ^ÞCs aie
renuing ro iely moie anu moie on soírvaie µlaríoims sucl as rlose ueuicareu
M A ß K E T I N G A N D 5 U P P L Y - C H A I N M A N A G E M E N T
291
Alnosl hall (47 percenlì ol Lalin Anerica is covered by
nalural loresl. However, lhe loresl is shrinking dranalically
as unsuslainable and ollen illegal logging lakes an esli·
naled 53 nillion heclares ol loresl every year. Counler
lo lhis lrend, Bolivia has becone a leader in providing
suslainable wood producls lo world narkels.
Bolivia has over lve nillion acres, nore lhan a quarler ol
lhe counlry´s loresl coverage, cerlilied under Foresl
Slewardship Council (FSCì rules. Sixleen ol lhe najor
loresl harvesl operalions in Bolivia are cerliled according
lo lhe FSC´s rules. FSC rules nol only cover proleclion ol
waler and olher nalural resources, bul also require respecl
lor lhe righls ol indigenous people and proleclion ol lhe
econonic well·being ol local connunilies and loresl
workers.
Bolivia is now Lalin Anerica´s leading suslainable linber
producer. Ñoles Daniel Arancibia, Lalin Anerican repre·
senlalive ol lhe Foresl Slewardship Council, ¨One ol
lhe key successes ol Bolivia was lhe willingness ol lhe
governnenl, privale seclor and non·proll groups lo work
logelher lo eslablish a syslen·wide arrangenenl lhal
would in lurn creale lhe precondilions lor suslainable
loresl nanagenenl.¨
The ¨Bolivia cerlilied¨ label now has an inpacl in lhe
overseas narkels lor Bolivian wood producls, noslly
lropical hardwoods sold as doors, lurnilure, lloorboards,
chairs, and sawn linber in lhe EU and lhe US. Exporls now
exceed $20 nillion a year.
Typical ol lhe Bolivia cerlilied wood inporlers is lhe UK
relailer B&O, a hone·inprovenenl slore. B&O is one ol
lhe nain inporlers ol Bolivia cerliled loresl producls and
yearly sources over !,700 cubic nelers ol round wood,
noslly used in ils garden lurnilure. B&O has a connil·
nenl lo ensuring all ils wood and paper producls cone
lron suslainable loresls or recycled nalerial. Explains
Ceorge Padelopoulos, B&O´s social responsibilily adviser,
¨ve wanl lo oller our cusloners a choice ol suslainable
producls al allordable prices and our linber·buying policy
is ained al achieving lhis.¨
Source: Adapled lron The £!hica| Corpora!ion, 2006, www.
elhicalcorp.con/conlenl.asp?ConlenlíD=4!74, íarch 23.
5tevarding 5ustainabIe forestry
in ßoIivia
l 8 S U S T A l N A 8 l L l T Y
P P A C T l C L S
sµeciíically ro suµµly-clain managemenr, Lur also on orleis sucl as CR^
(cusromei ielarionsliµ managemenr) anu LPS (enreiµiise managemenr sysrems).
1lese sµecializeu managemenr iníoimarion sysrems accumulare rle uara nec-
essaiy ro riack rle ílovs oí goous anu µiouucrs rliougl rle gloLal suµµly
M U L T I N A T I O N A L O P E ß A T I O N A L A N D f U N C T I O N A L 5 T ß A T E G I E 5
292
The cusloner, ír Friednan, phones Dell´s 300 nunber
wilh his requesl lor a laplop conpuler. The one ír
Friednan wanls has been co·designed by engineers in
Auslin, Texas, and Taiwan. Dell´s cusloner service repre·
senlalive lypes lhe order inlo lhe order nanagenenl
syslen and lhis sels oll a sequence ol evenls lhal spans
lhe globe and involves aclivilies and lransaclions in as
nany as !5 dillerenl counlries. The lnal slep is conpleled
when ír Friednan receives his conpuler aboul lwo
weeks laler.
Aller ír Friednan´s shipping inlornalion is oblained
and his credil card inlornalion verilied, lhe order is
released lo Dell´s produclion syslen. Dell has laclories in
íreland, China, Brazil, Tennessee, Texas, and íalaysia. ír
Friednan´s order goes oul by e·nail lo Dell´s nolebook
laclory in íalaysia. Fron lhere, all lhe parls lor his con·
puler are ordered lron lhe supplier logislics cenlers (SLCì
near lhe Dell laclory. These SLCs are localed around all
Dell laclories and are owned and operaled by Dell sup·
pliers. Their job is lo keep a supply ol all lhe parls needed
so lhey can be lrucked over lo lhe laclory lor jusl·in·line
nanulacluring.
As soon as a conpuler is ordered, Dell suppliers gel lhe
signal. These suppliers know exaclly whal Dell needs lo
produce ils conpulers on a ninule·by·ninule basis. Once
lhe needs are known, lhe supplier delivers lhe required
parls lo lhe Dell laclory wilhin 90 ninules. vhen lhe
supplier delivers lhe parls, il lakes Dell enployees 30
ninules lo unload lhe parls and enler lhe inlornalion in
Dell´s produclion lracking syslen. Dell nanagers know lhe
localion ol every parl in every SLC in lhe Dell syslen al all
lines.
So lron where do lhe parls lor lhe laplop llow inlo lhe
SLC? Keep in nind lhal lhere are 30 or so najor conpo·
nenls in lhe conpuler. The ínlel nicroprocessor cones
lron a planl in lhe Philippines, Cosla Fica, íalaysia, or
China. The nenory cones lron Korea, Taiwan, Cernany,
or Japan. The graphics card, nolherboard, and noden
cone lron China. The cooling lan cones lron Taiwan. The
displays cone lron Soulh Korea, Japan, or Taiwan.
The wireless card cones lron China, íalaysia, or Taiwan.
The ballery cones lron íexico, íalaysia, China, or Soulh
Korea. The disk drives cone lron Singapore, Thailand,
índonesia, China, Taiwan, or lhe Philippines. The power
adapler cones lron Thailand, Taiwan, or China. The power
cord cones lron íalaysia or índia. The renovable nen·
ory slick cones lron ísrael or íalaysia. And linally, lhe
carrying bag cones lron China. The lisl above indicales
where lhe supplier´s nanulacluring planls are localed so
lhis is where lhe parls aclually originale. ínporlanlly, while
sone ol lhese nanulacluring lacililies are owned by
conpanies localed in lhe sane counlry, a nunber are also
owned by conpanies in England, íreland, lhe US, Japan,
Korea, and Cernany, expanding lhe global scope ol lhis
supply·chain synphony even nore.
Keep in nind lhal lhe 30 conponenls above are only lhe
nain parl ol lhe piclure. There are a nunber ol snaller
conponenls as well. ín lacl, lhe lolal supply chain lor
ír Friednan´s conpuler involves aboul 400 conpanies
lron slarl lo lnish. Likewise, keep in nind lhal Dell uses
nulliple suppliers lor each parl. Thal way, il one supplier
breaks down or cannol neel Dell´s needs, olhers can slep
in. This keeps lhe How going conlinuously. A Dell nanager
noled lhal keeping lhis huge and conplex nelwork work·
ing snoolhing requires a lol ol collaboralion belween lhe
íÑCs. Dell works conslanlly on process inprovenenls
and real·line denand/supply balancing.
Source: Adapled lron Tonas L. Friednan, 2005, The Vor|d is F|a!.
A Brie! His!or, o! !he 2!
s!
Cen!ur,, Ñew York: Farrar, Slraus and
Ciroux
DeII's GIobaI 5uppIy Chain l 8 S T P A T L C l C
l N S l C H T
clains. 1ley lelµ ensuie rlar rle goous anu µiouucrs aiiive on rime ar rle iiglr
locarions, many oí vlicl aie oíren uisµeiseu rliouglour rle voilu.
Peilaµs one oí rle mosr soµlisricareu gloLal suµµly clains is rlar useu Ly
Dell Comµurei. In rle Sriaregic Insiglr oµµosire you can see lov rlis sysrem
voiks íoi rle comµeririve auvanrage oí Dell.
Pricing-GIobaI or LocaI?
Piicing in íoieign maikers is a ciirically imµoiranr elemenr oí rle maikering
µiogiam Lecause irs eííecrs on rle ^ÞC aie veiy uiiecr in reims oí ievenues
anu µiohrs. Wlile, oí couise, rle µiice musr covei µiouucr cosrs, Leyonu rlar
rle inreinarional managei musr unueisranu lov rle consumei in a íoieign
maiker values rle ^ÞC`s µiouucr: rlar is, vlar rle cusromei is villing ro
µay. 1lese rvo íacrois ser rle lovei anu uµµei Lounuaiies oí rle µiice, as
LxliLir 10.5 slovs. Orlei íacrois in íoieign maikers, sucl as comµerirois,
uisriiLurion clannels, anu goveinmenr µolicies, make rle µiicing uecision quire
comµlex.
Ioi seveial ieasons, comµerirois µlay a Lig µair in an ^ÞC`s µiicing ueci-
sions. Iiisr, rle numLei oí comµerirois can vaiy giearly íiom counriy ro counriy.
In some counriies rleie aie only a íev comµering µiouucrs, vlile in orlei
íoieign maikers rleie may Le many orleis comµering íoi rle same cusromeis.
Seconu, rle íoim oi ryµe oí comµerirois can Le quire uiííeienr in vaiious local
anu iegional maikers. Some comµerirois may Le small, orleis may Le srare-
ovneu, anu srill orleis may Le laige ^ÞCs. 1liiu, rle suµµoir comµerirois
enjoy can uiííei giearly acioss rle vaiious íoieign maikers. Lven ií comµerirois
aie nor srare-ovneu, rley may enjoy µieíeienrial riearmenr íiom rle local
M A ß K E T I N G A N D 5 U P P L Y - C H A I N M A N A G E M E N T
293
Upper Price ßoundary-WhaI Ihe markeI will bear-1he value IhaI cusIomers ih
Ihe !oreigh markeI aIIach Io or see ih Ihe !irm's producI.
Lover Price ßoundary in foreign Market-CosI plus some reasohable reIurh.
CompeIiIors
(Gray MarkeIs!)
GoverhmehI RegulaIiohs
ahd Policies
Firm Ob|ecIives
DisIribuIioh Chahhels
(Gray MarkeIs!)
|xh|o|| 10.¯ Pressures and factors Inñuencing GIobaI Pricing
goveinmenrs. 1ley may ger cleaµ loans, suLsiuies, Lerrei access ro lanu anu
mareiials neeueu, íoi examµle.
DisriiLurion clannels in rle íoieign maiker aie anorlei imµoiranr íacroi
in µiicing uecisions. 1le maigins uemanueu Ly vlolesaleis, uisriiLurois, oi
ieraileis aie oíren liglei in íoieign maikers rlan in rle lome counriy maiker.
Yer, ií rle ^ÞC vanrs ro comµere, ir musr µay rle maigins anu µass as mucl
oí rle cosrs as µossiLle on ro rle consumei in rle µiice. Comµlex uisriiLurion
clannels virl moie layeis can also inciease cosrs. Ioi examµle, as noreu aLove,
in ]aµan, µiouucrs musr µass rliougl seveial vlolesaleis Leíoie rley hnally
ieacl rle ierailei, vleie rle cusromei may µuiclase rlem. 1le ierailei in ruin
musr oííei moie seivices rlan voulu a similai sroie in rle US. 1le iesulr is rlar
similai goous solu in rle US anu ]aµan aie oíren moie exµensive in ]aµan, even
vlen rley aie ]aµanese goous. Ioi examµle, rle mosr exµensive 1oyora Camiy
voulu cosr aLour $32,500 Leíoie raxes in ]aµan Lur only $2¯,500 in rle US.
Iinally, goveinmenr iegularions anu µolicies inluence µiicing. Some gov-
einmenrs, even rlose rlar aie seemingly íiienuly, íinu vays ro keeµ íoieign
µiouucrs oíí rle slelves, anu rley oíren uo rlis rliougl µiicing. Some counriies
aie oµenly µiorecrionisr, virl sreeµ raxes on íoieign µiouucrs anu leavy ieu
raµe anu Luieauciacy meanr ro Log uovn anu limir maiker access ro íoieign
µiouucrs. Ioi examµle, Lecause Clina is riying ro ueveloµ irs ovn vine inuusriy,
íoieign vines rleie aie leavily raxeu anu leavily Luiueneu virl íoims anu
Luieauciaric ieu raµe. 1lis giearly inliLirs rle aLiliry ro maiker vines in Clina.
Some counriies uiiecrly iegulare rle µiice oí íoieign µiouucrs rliougl µiice
conriols. Somerimes rlese conriols can íoice íoieign comµanies ro µiice rleii
µiouucrs so lov rlar rley cannor make a ieasonaLle ieruin. Some goveinmenrs
aie even quire roleianr oí knock-oíí oi counreiíeir µiouucrs rlar can Le µiiceu
ro unueicur íoieign µiouucrs.
Ií rle maikerei misjuuges rle uµµei µiice Lounuaiy anu sers rle µiouucr
µiice roo ligl in a íoieign maiker, cusromeis vill avoiu rle µiouucr anu rle
^ÞC vill lose sales. Alreinarively, comµerirois may see a ligl µiice as an
oµµoiruniry ro inriouuce cleaµei knock-oíí veisions oí rle comµany`s µiouucr.
1lis can unueicur rle íoieign µiouucr`s clances ro make gains in rle maiker
Hovevei, serring rle µiice roo lov can somerimes Le an even Liggei µioL-
lem. Local goveinmenrs can see lov µiices as an arremµr ar uumµing. Dumping
occuis vlen a íoieign comµeriroi sells µiouucrs in a local maiker ar µiices rlar
aie Lelov local µiouucr cosrs. Because uumµing µurs local comµanies ar a
seiious uisauvanrage, local goveinmenrs vill sreµ in anu cause µioLlems íoi rle
íoieign comµany. Alreinarively, lov µiices can arriacr rle arrenrion oí govein-
menrs anu encouiage rlem ro rax oi iegulare ^ÞCs ro µiorecr rleii uomesric
comµanies. Ioieign cusromeis may also associare a lov µiice virl lov qualiry
anu sray avay íiom rle µiouucr.
Anorlei µossiLle laimíul ourcome oí serring rle µiice roo lov is giay
maikers. A gray market is cieareu vlen a lov-µiiceu µiouucr in one maiker is
Louglr uµ Ly unaurloiizeu uisriiLurois ar rle lovei µiice anu iesolu in anorlei
maiker ar a liglei µiice. Lov µiices in one maiker leau unaurloiizeu uealeis
ro make money Ly selling rle ^ÞC`s µiouucr in anorlei maiker ar a liglei
µiice.
All oí rlese íacrois make µiicing uecisions in íoieign maikers veiy comµlex.
In reims oí rle gloLal÷local uilemma, rlese íacrois among orleis ve uiscusseu
in eailiei claµreis, sucl as cuiiency movemenrs anu riansíei µiicing, make
M U L T I N A T I O N A L O P E ß A T I O N A L A N D f U N C T I O N A L 5 T ß A T E G I E 5
294
dumping
!oreigh compeIiIors sellihg
producIs ih a local markeI aI
abhormally low prices IhaI
are below producI cosIs
gray market
uhauIhorized disIribuIors
buyihg a low-priced producI
ih ohe markeI ahd resellihg
Ihe producI ih ahoIher
markeI aI a higher price
cooiuinarion anu sranuaiuizarion oí µiicing exriemely uiííiculr. Oí all rle
elemenrs in maikering, µiicing may Le rle one rlar is mosr uiiven Ly local
consiueiarions.
TaIking to Customers across the GIobe-
Marketing Communications
Hov uo you leai aLour µiouucrs. Wlar gers you inreiesreu in riying a uiííeienr
µiouucr. Somerimes you leai aLour µiouucrs íiom youi íiienus oi íamily, Lur
mosr oíren you leai aLour µiouucrs rliougl rle ^ÞC`s communicarion mix.
Auveirising in rle mass meuia, vlerlei ir is µiinr, iauio, rle Inreiner, oi 1V,
µiomorions sucl as couµons, µoinr-oí-µuiclase uisµlays (in-sroie uisµlays oi
signs), evenr sµonsoisliµ, oi conresrs, anu µeisonal selling Ly someone in rle
sroie oi someone vlo calls on you in youi lome÷all aie µair oí rle ^ÞC`s
communication mix. As rle reim inuicares, rle communicarion mix is anyrling
rlar rle ^ÞC uses ro iníoim cusromeis aLour irs µiouucrs, µiomore irs µiou-
ucrs, anu µeisuaue cusromeis ro Luy anu use irs µiouucrs. Wlen µiouucrs aie
Leing raken ro íoieign maikers, rle communicarion mix Liings a numLei oí
unique anu sµecial clallenges íoi rle ^ÞC. Again, rle gloLal÷local uilemma
leavily inluences communicarion sriaregies anu µiogiams.
Auveirising in rle mass meuia may Le rle mosr visiLle comµonenr oí rle
^ÞC`s communicarion mix. 1le ^ÞC`s Liggesr µioLlems oíren laµµen virl
language. Ir is moie rlan a marrei oí simµle rianslarion. Ioi examµle, maikering
exµeirs nore rlar rleie aie hve uiííeienr Sµanisl voius íoi ¨riie.¨
9
Oíren, voius,
µliases, oi reims lave suLrle meanings rlar aie unique ro rle culruie. Ioi
examµle, in QueLecois Iiencl, na blcnJe means ¨giilíiienu,¨ nor ¨my Llonu,¨
as ir voulu in rle US, anu na clunmeans ¨Loyíiienu,¨ nor ¨Luuuy.¨ Ir is vise
ro iememLei rlar voius uo nor alvays rianslare uiiecrly anu can lave meanings
rlar rle ^ÞC nevei inrenueu. Also, animal sounus vaiy Ly culruie. In rle US
a µig says oink. In ]aµan a µig says iuíí-iuíí.
In auveirising, rleie aie sriong culruial raLoos rlar musr Le avoiueu,
esµecially vlen uealing virl ieligion anu genuei issues. 1le use oí images anu
uiavings oí ieligious ueiries is sriicrly íoiLiuuen in Islam, íoi examµle. Aµµeals
ro vomen anu giils aie giearly iesriicreu in AiaL counriies. In 1uikey, L`Oieal
iecenrly useu nakeu íemale Louy images in aus íoi irs cellulire riearmenr µiou-
ucrs. 1le conseivarive 1uikisl goveinmenr Lanneu rle aus anu imµoseu leavy
µenalries on rle comµany. Likevise, uesµire rle luge iníluence oí Wesrein
culruie in Clina anu Inuia, rlese socieries iemain exriemely conseivarive iegaiu-
ing genuei-ielareu issues. Any messages rlar incluue even rle sliglresr sexual
connorarion oi image meer virl a negarive ieceµrion in rlese counriies. In
Iiance, ir is liglly uesiiaLle íoi auveirising ro lave a sriong airisric comµonenr,
virl moie music, uiama, anu louiisl in rle µiouucr µiesenrarion in aus. 1le
Iiencl see US auveirising as sraik anu clinical.
In auuirion ro language anu culruial uiííeiences, auveirising iegularions anu
access ro auveirising meuia, sucl as 1V, iauio, nevsµaµeis, anu magazines,
uiííei viuely íiom counriy ro counriy. In some counriies, meuia aie nor availaLle
Lecause rley uo nor exisr, vlile in orleis rley aie less ueveloµeu. Ioi examµle,
rle µosral sysrem in Clina is liglly limireu vlen comµaieu ro rle US, so rle
inreinarional managei musr allov íoi rlis in any auveirising rlar ueµenus on
M A ß K E T I N G A N D 5 U P P L Y - C H A I N M A N A G E M E N T
295
communication mix
ahyIhihg IhaI ah MNC uses
Io ih!orm cusIomers abouI
iIs producIs, promoIe iIs
producIs, ahd persuade
cusIomers Io buy ahd use iIs
producIs. CommuhicaIioh
mix ihcludes adverIisihg
(prihI, radio, Ihe IhIerheI,
or 1V), promoIiohs such as
coupohs, poihI-o!-purchase
displays, evehI spohsorship,
or cohIesIs, ahd persohal
sellihg
µosral ueliveiy. Lven vlen meuia íoi auveirising aie aLunuanr, some counriies
limir rle use anu access. In Geimany, íoi examµle, 1V auveirisemenrs can
aµµeai only ar ceirain rimes. 1le conrenr oí auveirisemenrs is liglly conriolleu
in ceirain counriies sucl as ^alaysia. LxliLir 10.6 slovs lov sµenuing on rle
majoi íoims oí auveirising vaiies íiom counriy ro counriy anu ieílecrs lov
^ÞCs musr auaµr maikering communicarions ro local conrexrs.
Regaiuless oí all rlese uiííeiences in rle exisrence anu use oí mass meuia
íoi auveirising, auvancemenrs in communicarion reclnologies aie Liinging giear
clanges. Sarellire 1V anu iauio aie Lluiiing narional Lounuaiies ar an asrounu-
ing iare. 1lese reclnologies lave iesulreu in voiluviue sµillovei oí auveirising
messages. A message uesigneu anu inrenueu íoi a local oi even iegional auuience
can Le vieveu all ovei rle voilu. Anorlei giear equalizing íoice in rle com-
municarion mix is rle Inreiner. Lailiei, ve uiscusseu rle imµacr oí rle Inreiner
M U L T I N A T I O N A L O P E ß A T I O N A L A N D f U N C T I O N A L 5 T ß A T E G I E 5
296
|xh|o|| 10.6 Advertising 5pending in 5eIected Nations
Advertising Media Usage
expenditures (% of advertising expenditure)
($ 8illion)
1
Jelevision Radio Print Cinema Cutdoor Cnline
NorIh America
Cahada 6.9 34.3 14.1 47.1 0.1 4.4 N/A
UhiIed SIaIes 159.4 35.7 14.1 42.3 0.2 2.9 4.9
LaIih America
ArgehIiha 1.9 41.8 4.6 44.8 1.5 4.6 3.1
8razil 3.8 51.7 10.1 27.1 N/A 5.8 5.3
Chile 0.7 44.9 10.1 37.7 0.0 5.8 N/A
Asia
Chiha 8.9 55.2 5.2 39.6 N/A N/A N/A
Hohg Kohg 2.0 33.5 7.0 50.5 0.0 8.0 1.0
Ihdia 2.4 43.4 4.1 39.3 2.5 9.8 0.4
1apah 39.7 46.0 4.2 34.3 N/A 12.7 2.8
Sihgapore 1.1 43.2 8.1 42.3 0.9 5.4 N/A
SouIh Korea 7.5 50.5 5.0 44.4 N/A N/A N/A
AusIralia 6.4 36.6 9.3 49.2 0.8 3.3 0.8
New Zealahd 1.2 33.6 13.4 49.6 0.0 2.5 N/A
Lurope
Frahce 12.5 32.0 8.0 47.3 0.7 11.5 0.6
Germahy 23.4 24.4 3.2 65.5 0.8 4.4 1.7
IIaly 10.3 55.9 4.6 33.9 1.0 3.8 0.8
Spaih 7.3 40.4 9.3 39.0 0.7 9.6 1.0
Swedeh 2.3 20.8 2.7 62.8 0.4 5.3 7.5
SwiIzerlahd 3.3 13.6 3.3 64.2 0.9 16.9 1.2
UK 20.1 31.8 4.1 53.7 2.0 6.3 2.1
Russia 3.9 48.5 4.1 26.3 0.5 20.1 0.5
Source: CalculaIed !rom Global MarkeI Ih!ormaIioh DaIabase, 2006, lnternational Marketing Data and Statistics.
1
CalculaIed wiIh year-oh-year currehcy exchahge raIe.
in ierailing, Lur ir also seives as a µoveiíul uevice íoi µiomoring rle ^ÞC`s
µiouucrs. ^ÞCs can use Lannei auveirisemenrs µlaceu on µoµulai sires ro
arriacr anu iníoim µorenrial cusromeis. 1lese µorenrial cusromeis can rlen seek
auuirional µiouucr iníoimarion íiom rle ^ÞC`s ueuicareu veLsires. Wlile rle
uiíhculries virl rle gloLal÷local uilemma vill alvays Le virl us in auveirising,
ir seems rlar communicarion reclnologies aie making gloLal sriaregies moie
anu moie viaLle.
Promotions, uevices sucl as couµons, conresrs, oi µoinr-oí-µuiclase uis-
µlays, aie geneially gioving in µoµulaiiry in maikers. Poinr-oí-µuiclase uisµlays
aie uisµlays oi signs rlar aie ser uµ in rle ierail sroie, oíren ar rle enu oí rle
aisle. 1le use oí µoinr-oí-µuiclase uisµlays las giearly incieaseu in Clina as
rle size oí ierail esraLlislmenrs las giovn. In orlei counriies, vleie many sroies
aie srill smallei, e.g. ]aµan anu Iiance, µoinr-oí-µuiclase uisµlays aie nor
aµµioµiiare.
1le use oí couµons, µioLaLly rle mosr common µiomorional uevice in rle
US, vaiies giearly íiom counriy ro counriy. Some counriies, sucl as Geimany
anu Ausriia, cuiienrly lave lavs íoiLiuuing rle use oí couµons. In Iiance,
Sveuen, anu Giear Biirain, íoi examµle, any µiomorional uevices rlar involve
oi linr ar games oí clance, sucl as lorreiies, sveeµsrakes, oi conresrs, aie giearly
iesriicreu oi íoiLiuuen.
10
In auuirion ro rle lavs, iníiasriucruies anu culruial
acceµrance oí µiomorions vaiy. Ioi examµle, as menrioneu eailiei, rlougl ir is
iaµiuly imµioving rle µosral seivice in Clina is srill nor vell ueveloµeu, making
rle ueliveiy oí couµons Ly mail imµiacrical. In auuirion, Clinese consumeis aie
somevlar emLaiiasseu ro use couµons.
In reims oí rle gloLal÷local uilemma, µiomorions aie mucl moie eííecrive
vlen manageu locally. Given rle vasr uiííeiences in lavs anu iegularions, as
vell as culruial acceµrance oí vaiious µiomorions, rleie aie íev oµµoiruniries
íoi gloLal µiogiams. Sµonsoisliµ oí ligl-µiohle voilu sµoiring evenrs may Le
rle mosr comµelling exceµrion. Ioi examµle, sµonsoisliµ oí rle Olymµic Games
oííeis sucl an oµµoiruniry. LxliLir 10.¯ slovs rle sµonsois oí some iecenr
Games. Ir is µioLaLly no acciuenr rlar seveial oí rlese sµonsois aie íounu on
oui lisr oí roµ gloLal Lianus. Sucl sµonsoisliµ, vlile liglly eííecrive in Luiluing
rle ^ÞCs` Lianus anu communicaring rle ^ÞCs` µiouucrs, is exriemely cosrly.
Because maikering communicarions µiacrices anu local counriy lavs vaiy
so giearly, ir is esµecially imµoiranr ro lave local guiuance anu iníoimarion,
anu rlis oíren comes in rle íoim oí an auveirising agency. Auveirising agencies
uesign µiinr, relevision, anu iauio auveirisemenrs anu Luy sµors in meuia so rlar
rle aus aie aiieu on relevision anu iauio µiogiams anu µlaceu in magazines anu
nevsµaµeis. In many counriies, local auveirising agencies aie quire iaie. 1lis
may exµlain vly, in rle lasr uecaue oi so, gloLal oi voilu auveirising agencies
sucl as Densu oi ]. Walrei 1lomµson Co. lave Lecome incieasingly imµoiranr.
1lese ^ÞCs esraLlisl local oµeiarions, virl local µeisonnel anu in-ueµrl
unueisranuing oí local conuirions íiom counriy ro counriy. Wlile, rley can Le
exµensive, rley may Le voirl rle cosr ií rley can µievenr cosrly misrakes.
Imµoiranrly, Lecause oí rleii gloLal µeisµecrive rlese agencies can lelµ ueveloµ
anu cooiuinare sranuaiuizeu communicarions µiogiams vleie µossiLle anu
aµµioµiiare.
Personal selling, vleie rle ^ÞC`s ieµiesenrarive inreiacrs one-on-one virl
cusromeis ro sell rle ^ÞC`s µiouucr, is an exµensive Lur µoveiíul communi-
carion rool íoi rle ^ÞC. Ir is oíren useu íoi selling laige anu comµlex µiouucrs
M A ß K E T I N G A N D 5 U P P L Y - C H A I N M A N A G E M E N T
297
personaI seIIing
ah MNC's represehIaIive
ihIeracIs ohe-oh-ohe wiIh
cusIomers Io sell Ihe
compahy's producI
promotions
devices such as coupohs,
cohIesIs, or poihI-o!-
purchase displays
sucl as aiiµlanes oi sreel µlanrs. Ioi examµle, vlen Boeing signeu rle conriacr
íoi $6 Lillion in aiiµlanes ro six Clinese aiilines lare in 2005, no uouLr a lion`s
slaie oí rle voik in rlar ueal involveu vaiious elemenrs oí µeisonal selling.
Ioi rle mosr µair, µeisonal selling eííoirs íoi ^ÞCs rake µlace virlin
counriies. 1le ^ÞC liies local sales ieµiesenrarives Lecause rley aie invaluaLle
in Liiuging culruial uiííeiences. In voiking virl Koiean comµanies, íoi exam-
µle, rle sales uiiecrois oí a Þoirlvesr semiconuucroi uesign comµany noreu
lov imµoiranr ir is ro ¨lave someone on rle giounu¨ so rlar rle comµany las
a íull unueisranuing oí rle cusromei, rleii neeus, anu rle local siruarion. 1lis
exrenus Leyonu language uiííeiences inro unueisranuing lavs, iegularions, local
iníiasriucruie, anu culruial riauirions.
Cioss-culruial negoriarion is one oí rle Liggesr clallenges in gloLal selling.
Lven virl a sriong local ieµiesenrarive, manageis íiom local Luying comµanies
anu íoieign selling comµanies oíren musr ger rogerlei ro negoriare agieemenrs.
Successíul negoriarions ueµenu on lov vell rle inreinarional manageis aujusr
anu accommouare culruial uiííeiences. LxliLir 10.S slovs rle srages in rle
cioss-culruial negoriarion µiocess, rley incluue µieµaiarion, Luiluing rle iela-
rionsliµ, exclanging iníoimarion anu rle hisr oííei, µeisuasion, concessions,
agieemenr, anu µosr-agieemenr. Pieµaiarion involves garleiing iníoimarion on
rle issues anu oLjecrives, rle µeoµle involveu as negoriarois, rle comµany, anu
M U L T I N A T I O N A L O P E ß A T I O N A L A N D f U N C T I O N A L 5 T ß A T E G I E 5
298
|xh|o|| 10.7 OIympic 5ponsors
Sponsors of the 8eijing 2008 Summer Clympic Cames
Coca-Cola AIos Origih 8ahk o! Chiha Chiha NeIcom
GL 1ohhsoh-1ohhsoh Sihopec Chiha NaIiohal PeIroleum CorporaIioh
Kodak Lehovo Chiha Mobile Volkswageh
Mahuli!e McDohalds Adidas Omega
Pahasohic Air Chihe PICC Samsuhg
Visa SIaIe Grid UPS Haier
8udweiser Sohu Yili 1sihgIao
Yah|ihg 8eer 8hpbilliIoh Hehg Yuah Xiahg Uhi-PresidehI
Sponsors of the Jurin 2006 Winter Clympic Cames
Coca-Cola AlIos Origih GL Kodak
Samsuhg Lehovo Mahuli!e McDohalds
Omega Pahasohic Visa FIAI Group
Sahpaolo 1elecom IIalia 1IM AXLM
Alpha Romeo LlpiIour ACICS 8erlohi
8udweiser LuIelsaI Ferrovi IhIerhaIiohal Hhmeccahica
IVLCO 1eI SeI 1ohhsoh-1ohhsoh Kyocera
Lahcia Reale MuIua
rle serring. Relarionsliµ Luiluing Legins vlen rle µeoµle íiom rle rvo com-
µanies acrually meer. 1le íocus is on simµly gerring ro knov one anorlei anu
ueveloµing a sense oí riusr.
1le ieal voik in cioss-culruial negoriarion Legins virl iníoimarion
exclange anu rle hisr oííei. 1lis srage is vleie eacl comµany ieveals irs neeus
anu oLjecrives. In rlis srage, rle negoriarois lay our rle reclnical limirarions
anu sranuaius íoi rle µiouucr íearuies, claiacreiisrics, µiice, anu qualiry. Heie
Lorl siues µiesenr rleii hisr oííei, vlicl is rle hisr µioµosal oí vlar rley voulu
like ro ger in rle agieemenr.
1le nexr sreµ, µeisuasion, is rle leair oí rle negoriarion µiocess anu
vleie eacl siue arremµrs ro ger rle orlei siue ro see irs ovn µosirion anu agiee
virl ir. Concessions anu agieemenr is vleie rle hnal agieemenr is ieacleu aírei
some mouiíicarion oí uemanus. Usually Lorl siues musr ielax some oí rleii
M A ß K E T I N G A N D 5 U P P L Y - C H A I N M A N A G E M E N T
299
PreparaIioh
º Develop ob|ecIives ahd plahs
º Research oIher !irm, mahagers, ahd
hegoIiaIioh seIIihg
RelaIiohship 8uildihg
º Ih!ormal social exchahges
º GeI acquaihIed
º 8uild IrusI
Ih!ormaIioh Lxchahge
º Lay ouI heeds ahd ob|ecIives
º Speci!y limiIaIiohs
º Speci!y producI characIerisIics,
price, eIc.
FirsI O!!er
º Propose ihiIial posiIioh
º Speci!y sIarIihg poihI !or exchahge
Persuasioh
º AIIempI Io move oIher !irm Io your
posiIioh
º Relax some demahds ih Iurh
Cohcessioh ahd AgreemehI
º Modi!icaIiohs so IhaI heeds cah be meI
!or boIh
º AcIual agreemehI oh exchahge Ierms
PosI-agreemehI
º LvaluaIe hegaIioh process
º LvaluaIe ouIcome
º Plah !or improvemehIs ih !uIure
hegoIiaIioh
|xh|o|| 10.3 Cross CuIturaI Negotiation Process
uemanus ro sarisíy eacl orlei`s neeus. Posr-agieemenr is vleie rle µiocess is
ie-evaluareu so rlar rle negoriarois can see vlar voikeu anu unueisranu vlar
uiu nor voik so rlar Lerrei negoriarion can iesulr rle nexr rime.
1lese sreµs aie all imµoiranr, Lur ir is even moie imµoiranr ro iememLei
rlar rleie is giear vaiiance íiom culruie ro culruie in rle iole oí eacl srage anu
vlen anu lov rley occui. Ioi examµle, in rle US rle eaily iníoimal srages aie
sloir anu less imµoiranr, vlile in ]aµan rle social non-Lusiness µairs oí rle
µiocess aie ciirical in serring rle srage íoi any success larei on. 1lis is rle mosr
imµoiranr srage anu cannor Le iusleu Lecause ir Luilus rle µeisonal conrexr on
vlicl rle vlole negoriarion µiocess ielies. In Clina, rle larei µairs oí rle
µiocess aie key Lecause imµoiranr agieemenrs anu concessions uo nor rake µlace
unril veiy lare in rle µiocess. 1le inreinarional managei musr Le liglly lexiLle
in reims oí enuing rimes vlen negoriaring virl rle Clinese. Some culruies, sucl
as ]aµanese, aie quire comíoiraLle virl silence in rle negoriarion µiocess vlile
orleis, sucl as rle Biazilians anu Ameiicans, renu ro sµeak consranrly. Þo
marrei vlar rle culruie, uoing youi lomevoik is key. Garleiing as mucl
iníoimarion anu unueisranuing oí rle orlei comµany, rle narional culruie, anu
even rle inuiviuual manageis íiom rle orlei comµany is necessaiy.
M U L T I N A T I O N A L O P E ß A T I O N A L A N D f U N C T I O N A L 5 T ß A T E G I E 5
300
C H A P 1 L R R L V I L W
1le gloLal÷local uilemma may µlay our in rle Liggesr vay in maikering. 1o
succeeu in gloLal maikers, rle ^ÞC managei musr unueisranu vlen anu lov
ro Le sensirive ro rle uiííeiences in gloLal maikers. Ar rle same rime, inrei-
narional manageis can gain key cosr anu comµeririve auvanrages ií rley
unueisranu lov anu vlen ro caµiralize on rle similaiiries acioss maikers, Lorl
iegionally anu gloLally. 1le hisr sreµ in ueveloµing maikering µiogiams rlar
eííecrively iesµonu ro rlese uiííeiences anu similaiiries involves garleiing
iníoimarion anu gaining a knovleuge auvanrage virl iegaiu ro íoieign maikers.
Inreinarional maiker ieseaicl incluuing µiimaiy anu seconuaiy uara can ansvei
imµoiranr maikering quesrions aLour uemanu, maiker segmenrarion, anu con-
sumei µieíeiences ro lelµ inreinarional manageis ueveloµ eííecrive µiogiams.
Lííecrive gloLal maikering µiogiams iely on rle maikering mix rlar consisrs
oí rle µiouucr, uisriiLurion, µiicing, anu maikering communicarion ro ieacl
cusromeis in íoieign maikers. Decisions aLour rle exrenr ro vlicl rle µiouucr
oííeiing anu µiouucr Lianu ueveloµmenr aie sranuaiuizeu oi auaµreu aie among
rle hisr uecisions rlar neeu ro Le maue Ly rle ^ÞC managei vlen going gloLal.
Ar rimes, ^ÞCs may exrenu a µiouucr anu Lianu uiiecrly ro orlei maikers virl
lirrle oi no clange. Hovevei, mosr oí rle rime rleie musr Le ar leasr some min-
imal auaµrarion÷some clanges maue ro rle µiouucr anu Lianuing in iesµonse
ro local conuirions in vaiious maikers. Rarlei rlan a quesrion oí ¨yes¨ oi ¨no,¨
auaµrarion anu sranuaiuizarion in µiouucrs anu Lianus is a marrei oí rle iiglr
amounr in rle iiglr µlaces. Ioi examµle, somerimes µiouucrs anu Lianus can
Le sranuaiuizeu acioss iegions Lur nor rliouglour rle voilu. GloLal Lianus
aie µiouucrs vleie rle oííeiing anu Lianuing aie µierry mucl sranuaiuizeu
acioss rle voilu. In iealiry, rlese aie quire iaie as some level oí culruial
sensiriviry anu auaµrarion ro local conuirions is usually necessaiy.
DisriiLurion anu suµµly clains comµiise an imµoiranr elemenr oí gloLal
maikering. 1le inreinarional managei musr ueveloµ a sysrem íoi ueliveiing rle
µiouucr in local maikers so rlar ir is ieauily availaLle ro rle cusromei. 1leie
aie rimes vlen uiiecr uisriiLurion, mosr likely rliougl rle Inreiner, voiks vell.
Hovevei, usually inuiiecr uisriiLurion rliougl ieraileis anu vlolesaleis in rle
íoieign maiker is neeueu ro ger rle µiouucr ro rle cusromei. 1le Inreiner is
incieasingly imµoiranr in µioviuing cusromeis virl access ro µiouucrs íiom
^ÞCs acioss rle gloLe. 1lis e-commeice is somerimes uone rliougl e-raileis,
vlicl aie Inreiner ieraileis. In auuirion ro e-railing, orlei rienus aie aííecring
ierailing rliouglour rle voilu. Ioi examµle, gloLal ieraileis, laige-scale ieraileis
virl sroies rliouglour rle voilu, aie Lecoming moie imµoiranr anu ierail
esraLlislmenrs aie gerring mucl laigei geneially.
GloLal suµµly clains aie an imµoiranr asµecr oí gloLal uisriiLurion anu
oí gloLal Lusiness in geneial. Suµµly clains lave Lecome moie imµoiranr
Lecause comµanies nov oursouice mucl moie rlan in rle µasr. 1eclnology,
cosr savings, anu lexiLiliry lave maue gloLal oursouicing veiy arriacrive. All
rle comµonenrs anu µairs in a Dell comµurei can come íiom comµanies in
uozens oí counriies, íoi examµle.
GloLal µiicing is iníluenceu Ly a numLei oí íacrois in íoieign maikers,
íoi examµle rle ryµe anu exrenr oí local comµeririon, maigins uemanueu in
M A ß K E T I N G A N D 5 U P P L Y - C H A I N M A N A G E M E N T
301
uisriiLurion clannels, anu goveinmenr iegularions. Ií rle µiice is ser roo lov in
íoieign maikers, rle ^ÞC can Le seen as uumµing oi giay maikers can Le
cieareu. Ií rle µiice is ser roo ligl, cusromeis in rle íoieign maiker vill ruin ro
local µiouucrs oi µiouucrs oí comµering ^ÞCs.
1le maikering communicarion mix consisrs oí auveirising, µiomorions,
anu µeisonal selling, eveiyrling rlar rle ^ÞC uses ro ralk ro irs cusromeis. Ií
µeisonal selling is neeueu, laving local sales µeisonnel in µlace in rle íoieign
maiker is ciirical. Hovevei, auveirising may Lecome moie sranuaiuizeu Lecause
oí sµillovei in all rle communicarion reclnologies. 1le Inreiner anu sarellire
relevision anu iauio allov cusromeis íiom all ovei rle voilu ro access vlarevei
iníoimarion rley vanr. Þonerleless, culruial noims, lavs, anu iegularions
iegaiuing µiomorions anu auveirising vaiy giearly íiom culruie ro culruie.
DI5CU55ION ÇUE5TION5
1. Wlar aie rle majoi sriaregic uiííeiences Lerveen maikering uomesrically
anu maikering inreinarionally.
2. Discuss rle imµoirance oí maikering ieseaicl íoi inreinarional maikering.
Wlar clallenges íace maikering ieseaicleis vlen rley enrei orlei coun-
riies.
3. DesciiLe rle cloices in rle maikering mix in ielarionsliµ ro rle gloLal÷local
uilemma.
4. Lxµlain lov anu vly rle maikering mix can vaiy in gloLal maikers.
5. Lxµlain vly consumei µiouucrs oíren iequiie moie auaµrarion rlan
inuusriial µiouucrs solu in Lusiness-ro-Lusiness maikers.
6. Discuss rle incenrives íoi ^ÞCs ro ueveloµ gloLal suµµly clains sucl as
rlar uesciiLeu in rle claµrei íoi Dell. Wlar aie rle majoi managemenr
clallenges íoi managing sucl gloLal suµµly clains.
M U L T I N A T I O N A L O P E ß A T I O N A L A N D f U N C T I O N A L 5 T ß A T E G I E 5
302

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