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~GLOBAL MARKETING STRATEGIES

Robert Schultz
Undersecretariat oI Foreign Trade
Expert
















Index:
1. Executive Summary

2. GlobalMarketingStrategies

4-, Market Entry $97,9008



4. Appendices

5. ReIerences



































1) Executive Summary:
Usually, selling Iocuses on the needs oI the seller, 2,7093 on the needs oI the buyer
(customer). The purpose oI business is to get and keep a customer. Or, to use Peter
Drucker`s more reIined construction to .70,90 and 005a customer. (through product
diIIerentiation and price competition)
International marketing involves the marketing oI goods and services outside the
organization`s home country. Multinational marketing is a complex Iorm oI
international marketing that engages an organization in marketing operations in many
countries. Global marketing reIers to marketing activities coordinated and integrated
across multiple markets.
A Iirm`s overseas involvement may Iall into one oI several categories:
1. 42089. Operate exclusively within a single country.
2. Regional exporter: Operate within a geographically deIined region that crosses
national boundaries. Markets served are economically and culturally homogenous.
II activity occurs outside the home region, it is opportunistic.
3. 547907 Run operations Irom a central oIIice in the home region, exporting
Iinished goods to a variety oI countries; some 2,7093, sales and distribution
outside the home region.
4. International: Regional operations are somewhat autonomous, but key decisions
are made and coordinated Irom the central oIIice in the home region.
ManuIacturing and assembly, 2,7093 and sales are decentralized beyond the
home region. Both Iinished goods and intermediate products are exported outside
the home region.
5. International to global: Run independent and mainly selI-suIIicient subsidiaries
in a range oI countries. While some key Iunctions (R&D, sourcing, Iinancing) are
decentralized, the home region is still the primary base Ior many Iunctions.
6. 4-, Highly decentralized organization operating across a broad range oI
countries. No geographic area (including the home region) is assumed a priori to
be the primary base Ior any Iunctional area. Each Iunction including R&D,
sourcing, manuIacturing, marketing and sales is perIormed in the location(s)
around the world most suitable Ior that Iunction.
Technology and globalization shape the world. The Iirst helps determine human
preIerences; the second, economic realities. Standardized consumer products, low price
and technology are key points Ior successIul globalization.
The globalization oI markets is at hand. With that, the multinational commercial world
nears its end, and so does the multinational corporation. The world`s needs and desires
have been irrevocably homogenized (market needs). This makes the multinational
corporation obsolete and the global corporation absolute. Nobody is saIe Irom global
reach and the irresistable economies oI scale (reduction oI costs and prices) and scope.
The multinational and global corporation are not the same thing. The multinational
corporation operates in a number oI countries and adjusts its products and practices in
each at high relative costs. The global corporation operates with resolute constancy at
low relative cost (price) as iI the entire world (or major regions oI it) were a single entity;
it sells markets the same high-quality things similarly everywhere. But, many global
Iirms produce the same products the same way Ior a global market but tailor their selling
approaches to local variations in the global market. (Standardization vs Localization)
The modern global corporation contrasts powerIully with the aging multinational
corporation. Instead oI adapting to superIicial and even entrenched diIIerences within and
between nations, it will seek sensibly to Iorce suitably (more or less) standardized
products and practices on the entire globe. (think globally, act locally)
2) Global Marketing Strategies:
Although some would stem the Ioreign invasion through protective legislation,
protectionism in the long run only raises living costs and protects ineIIicient domestic
Iirms (national controls). The right answer is that companies must learn how to enter
Ioreign markets and increase their global competitiveness. Firms that do venture abroad
Iind the international marketplace Iar diIIerent Irom the domestic one. Market sizes,
buyer behavior and marketing practices all vary, meaning that international marketers
must careIully evaluate all market segments in which they expect to compete.
Whether to compete globally is a strategic decision (strategic intent) that will
Iundamentally aIIect the Iirm, including its operations and its management. For many
companies, the decision to globalize remains an important and diIIicult one (global
strategy and action). Typically, there are many issues behind a company`s decision to
begin to compete in Ioreign markets. For some Iirms, going abroad is the result oI a
deliberate policy decision (exploiting market potential and growth); Ior others, it is a
reaction to a speciIic business opportunity (global Iinancial turmoil, etc.) or a competitive
challenge (pressuring competitors). But, a decision oI this magnitude is always a strategic
proactive decision rather than simply a reaction (learning how to business abroad).
Reasons Ior global expansion are mentioned below:
a. Opportunistic 4-, market development (diversiIying markets)
b. Following customers abroad (customer satisIaction)
c. Pursuing geographic diversiIication (climate, topography, space, etc.)
d. Exploiting diIIerent economic growth rates (gaining scale and scope)
e. Exploiting product liIe cycle diIIerences (technology)
I. Pursuing potential abroad
g. Globalizing Ior deIensive reasons
h. Pursuing a global logic or imperative (new markets and proIits)
Moreover, there can be several reasons to be mentioned including comparative
advantage, economic trends, demographic conditions, competition at home, the stage in
the product liIe cycle, tax structures and peace. To succeed in global marketing
companies need to look careIully at their geographic expansion. To some extent, a Iirm
makes a conscious decision about its extent oI globalization by choosing a posture that
may range Irom entirely domestic without any international involvement (domestic
Iocus) to a global reach where the company devotes its entire marketing strategy to
global competition. In the development oI an international marketing strategy, the Iirm
may decide to be domestic-only, home-country, host-country or regional/global-oriented.
Each level oI globalization will proIoundly change the way a company competes and will
require diIIerent strategies with respect to marketing programs, planning, organization
and control oI the international marketing eIIort. An industry in which Iirm competes is
also important in applying diIIerent strategies. For example, when a Iirm which
competes in the pharmaeutical industry which is heavily globalized, it has to set its own
strategies to deal with global competitors.(constant innovation)
Tracking the development oI the large global corporations today reveals a recurring,
sequential pattern oI expansion. The Iirst step is to understand the international
marketing environment, particularly the international trade system. Second, the company
must consider what proportion oI Ioreign to total sales to seek, whether to do business in
a Iew or many countries and what types oI countries to enter. The third step is to decide
on which particular markets to enter and this calls Ior evaluating the probable rate oI
return on investment against the level oI risk (market diIIerences). Then, the company
has to decide how to enter each attractive market. Many companies start as indirect or
direct export exporters and then move to licensing, joint-ventures and Iinally direct
investment; this company evolution has been called the internationalization process.
Companies must next decide on the extent to which their products, promotion, price and
distribution should be adapted to individual Ioreign markets. Finally, the company must
develop an eIIective organization Ior pursuing international marketing. Most Iirms start
with an export department and graduate to an international division. A Iew become
global companies which means that top management plans and organizes on a global
basis (organization history).
Typically, these companies began their business development phase by entrenching
themselves Iirst in their domestic markets. OIten, international development did not occur
until maturity was reached domestically. AIter that phase, these Iirms began to turn into
companies with some international business, usually on an export basis. But, this process
may vary dramatically with the size oI the domestic market. For example, when we
contrast the Netherlands market Ior Philips vs the US market Ior GE, we see that
smallness oI Netherlands`s market resulted in rapid globalization oI Philips` activities
when compared with GE`s activities in US. As the international side oI their sales grew,
the companies increasingly distributed their assets into many markets and achieved what
was once termed the status oI a multinational corporation (MNC). Pursuing multi-
domestic strategies on a market-by-market basis, companies began to enlarge and build
considerable local presence. Regions are treated as single markets and products are
standardized by region or globally; promotion projects a uniIorm image. Although this
orientation improves coordination and control, it oIten discounts national diIIerences. The
French automobile industry oIIers a good illustration oI the evolution oI an international
marketing strategy. In the 1980s, according to an industry analyst Ior EuroIinance:
'For years, the French industry depended on the domestic market. Then in the 1970s, it
developed a Europewide market. Now it Iinds it must crack the world market iI it expects
to survive. And it is getting a late start.
France`s Renault was moving quickly into the world market. It purchased 10 percent oI
Sweden`s Volvo and planned to design a new car in conjunction with Volvo. But, the
Volvo deal Iell apart which is one oI the reasons that they went to Nissan. Only during
their latest phase have these Iirms begun to transIorm themselves into global marketing
behemoths whose marketing operations are closely coordinated across the world market
rather than developed and executed locally. This traditional sequencing oI the growth
Irom domestic to international, to multi-domestic or multinational to global seems to be
Iollowed by most Iirms and also by many newly Iormed companies. However, some
newer Iirms are jumping right into the latest or global category and not necessarily going
through the various stages oI development (management vision).
Once a company commits to extending its business internationally management is
conIronted with the task oI setting a geographic or regional emphasis. A company may
decide to emphasize developed nations such as Japan or those oI Europe or North
America. Alternatively, some companies may preIer to pursue primarily developing
countries in Latin America, AIrica or Asia. Management must make a strategic decision
to direct business development in such a way that the company`s overall objectives are
congruent with the particular geographic mix oI its activities. Other Iactors in this
decision oI Ioreign market selection include in addition to macro-environmental issues
(economic, socio-cultural and political-legal Iactors), micro-environmental issues such as
market attractiveness and company capability proIile (skills, resources, product
adaptation and competitive advantage).
Developed economies account Ior a disproportionately large share oI world gross
national product (GNP) and tend to create many new companies. In particular, Iirms with
technology-intensive products have concentrated their activities in the developed world.
Although competition Irom both other international Iirms and local companies is usually
more intense in those markets, doing business in developed countries is generally
preIerred over doing business in developing nations. Because the business environment is
more predictable and the investment climate is more Iavorable.
Emerging markets diIIer substantially Irom developed economies by geographic region
and by the level oI economic development. Markets in Latin America, AIrica, the Middle
East and Asia are also characterized by a higher degree oI risk than markets in developed
countries. Because oI the less stable economic climates (income, employment, prices,
development, etc.) in those areas, a company`s operation can be expected to be subject to
greater uncertainty and Iluctuation. The issues are inIrastructure such as transportation,
technology, telecommunications, stable banking, convertibility oI currency, protection oI
Intellectual Property Rights, enIorceability oI contracts, and transparency in the legal
system (government agencies&systems, laws and ordinances, etc.). Moreover, huge
Ioreign indebtedness, unstable governments, Ioreign exchange problems, Ioreign
government entry requirements, tariIIs and other trade barriers, corruption, bureaucracy,
technological pirating and high cost oI product and communication adaptation can be
issues in those countries. Furthermore, the Irequently changing political situations in
developing countries (war, nationalism, etc.) oIten aIIect operating results negatively. As
a result, some markets that may have experienced high growth Ior some years may
suddenly experience drastic reductions in growth. In many situations, however, the higher
risks are compensated Ior by higher returns, largely because competition is oIten less
intense in those markets. Consequently, companies need to balance the opportunity Ior
Iuture growth in the developing nations with the existence oI higher risk.
The economic liberalization oI the countries in Eastern Europe opened a large new
market Ior many international Iirms. The market typically represents about 15 percent oI
the worldwide demand in a given industry, about two-thirds oI that accounted Ior by
Russia and other countries oI the Iormer Soviet Union.
Although many companies consider this market as long-term potential with little proIit
opportunity in the near term, a number oI Iirms have moved to take advantage oI
opportunities in areas where they once were prohibited Irom doing business. Many
countries are changing Irom a centrally planned economy to a market-oriented one. East
Germany has made the Iastest transIormation because its dominant western halI was
already there. Eastern European nations like Hungary and Poland have also been moving
quickly with market reIorms. Many oI the reIorms have increased Ioreign trade and
investment. For example, in Poland, Ioreigners are now allowed to invest in all areas oI
industry, including agriculture, manuIacturing and trade. Poland even gives companies
that invest in certain sectors some tax advantages.
At some point, the development oI any global marketing strategy will come down to
selecting individual countries in which a company intends to compete. There are more
than two hundred countries and territories Irom which companies have to select, but very
Iew Iirms end up competing in all oI these markets. The decision on where to compete,
the country selection decision is one oI the components oI developing a global
marketing strategy.
Why is country selection a strategic concern Ior global marketing management? Adding
another country to a company`s portIolio always requires additional investment in
management time and eIIort and in capital. Although opportunities Ior additional proIits
are usually the driving Iorce, each additional country also represents both a new business
opportunity and risk. It takes time to build up business in a country where the Iirm has
not previously been represented and proIits may not show until much later on.
Consequently, companies need to go through a careIul analysis beIore they decide to
move ahead. They can analyze the investment climate oI the country and determine
market attractiveness oI it.
In the context oI selecting markets Ior special emphasis, the lead market concept can help
in identiIying those countries. Lead market is the market where a company should place
extra emphasis. It is essential Ior globally competing Iirms to monitor lead markets in
their industries or better yet to build up some relevant market presence in those markets.
As global marketers eye the array oI countries available Ior selection, they soon become
aware that not all countries are oI equal importance on the path to global leadership.
Markets that are deIined as crucial to global market leadership, markets that can
determine the global winners among all competitors, markets that companies can ill
aIIord to avoid or neglect-such markets are 'must win markets. Contrary to other
markets, 'must win markets can not be avoided iI global market leadership is at stake.
Firms need to understand their competitors because corporate success results Irom
providing more value to customers than the competition. Industry structure is the
Iramework within which companies compete. Five Iorces determine the attractiveness oI
an industry: the threat oI new entrants, the bargaining power oI suppliers, the bargaining
power oI buyers, the presence oI substitute products and the intensity oI the rivalry
between Iirms in the industry. Firms need to manage these Iactors so that industry
structure is Iavorable.
Generic strategies are general classiIications oI prototype strategies that help us
understand diIIerent approaches to globalization. The concept has been widely used by
writers on business and corporate strategies including Michael E. Porter.
Generic strategies such as diIIerentiation, cost leadership and the like are archetypes that
describe Iundamentally diIIerent ways to compete. Creating and sustaining a competitive
advantage can be achieved by oIIering superior value through a diIIerential advantage or
managing Ior cost leadership. Firms can gain a competitive advantage through
diIIerentiation oI their product oIIering or marketing mix which provide superior
customer value or by managing Ior lowest delivered cost. These two means oI
competitive advantage when combined with the competitive scope oI activities (broad vs
narrow) result in Iour generic strategies: diIIerentiation, cost leadership, diIIerentiation
Iocus and cost Iocus. The diIIerentiation and cost leadership strategies seek competitive
advantage in a broad range oI market or industry segments whereas diIIerentiation Iocus
and cost Iocus strategies are conIined to a narrow segment. When we consider the idea
oI sustainability oI competitive advantage here, many oI these advantages are only
temporary and can easily be copied.
The sources oI competitive advantage are the skills and resources oI the company.
Analysing these Iactors can lead to the deIinition oI the company`s core competences.
These are the skills and resources at which the company excels and can be used to
develop new products and markets.
To many readers, the term 'global marketing strategy probably suggests a company
represented everywhere and pursuing more or less the same marketing strategy.
However, global marketing strategies are not to be equated with global standardization,
although they may be the same in some situations. A global marketing strategy
represents the application oI a common set oI strategic marketing principles across most
world markets. It may include but does not require similarity in products or in marketing
processes. A company that pursues a global marketing strategy looks at the world
market as a whole rather than at markets on a country-by-country basis which is more
typical Ior multinational Iirms. Globalization deals with the integration oI the many
country strategies and the subordination oI these country strategies to one global
Iramework. As a result, it is conceivable that one company may have a globalized
approach to its marketing strategy but leave the details Ior many parts oI the marketing
plan to local subsidiaries.
Few companies will want to globalize all oI their marketing operations. The diIIiculty
then is to determine which marketing operations elements will gain Irom globalization.
Such a modular approach to globalization is likely to yield greater return than a total
globalization oI a company`s marketing strategy.
To a large extent, international Iirms operating as multi-domestic Iirms have organized
their businesses around countries or geographic regions. Although some key strategic
decisions with respect to products and technology are made at the central or head oIIice,
the initiative oI implementing marketing strategies is leIt largely to local-country
subsidiaries. As a result, proIit and loss responsibility tends to reside in each individual
country. At the extreme, this leads to an organization that runs many diIIerent businesses
in a number countries-thereIore the term multi-domestic. Each subsidiary represents a
separate business that must be run proIitably. Multinational corporations tend to be
represented in a large number oI countries and the world`s principal trading regions.
Many oI today`s large internationally active Iirms may be classiIied as pursuing multi-
domestic strategies. Companies might globalize production or "back oIIice" operations
while maintain multiple local brands. Economic conditions, changes in consumer
attitudes and behavior and the rise oI generic brands have all contributed to a decline in
brand loyalty. More consumers have been selecting products Irom among manuIacturers`
brands, distributors` brands and generic products. OIten a coupon, price special or a
desire Ior variety will inIluence the purchase decision.
Regional marketing strategies Iocusing on Europe, Asia or Latin America represent a
halIway point between multi-domestic and truly global strategy types. Conceptually, they
are not global because the coordination takes place across one single region only, with
pan-European strategies standing out as the Iirst real regional marketing strategies
created because oI the run up to the European Union integration.
The marketing research surveys study and analyze various Iactors within Ioreign
markets and their importance to the decision about which Ioreign markets to enter. These
Iactors include: economic-Iinancial Iactors, political-legal Iactors, cultural Iactors,
demographic Iactors and trade agreements. (economic integration) (See appendix 1)
Integrated Global Business Strategies: Looking at global business strategies,
companies have several choices to make: Iirst, the global Iocus strategy and second, the
global business unit.
Formulating Clobal Focus Strategies: Geographic extension is one oI two key
dimensions in the strategy oI an international company. The second dimension is
concerned with the range oI a Iirm`s product and service oIIerings. To what extent should
a company become a supplier oI a wide range oI products aimed at several or many
market segments? Should a company become the global specialist in a certain area by
satisIying one or a small number oI target segments, doing this in most major markets
around the world?
Even some oI the largest companies can not pursue all available initiatives. Resources Ior
most companies are limited, oIten requiring a tradeoII between product expansion and
geographic expansion strategies. Resolving this question is necessary to achieve a
concentration oI resources and eIIorts in areas where they will bring the most return. We
can distinguish between two models: on the one hand, we have the broad-based Iirm
marketing a wide range oI products to many diIIerent customer groups, both domestic
and overseas; on the other hand, we have the narrowly-based Iirm marketing a limited
range oI products to a homogenous customer group around the world. Both types oI
companies can be successIul in their respective markets.
Creating Clobal Business Units: Many Iirms have come to realize that a strong global
presence in one given product was becoming a strategic requirement. Since traditional
multinational Iirms oIten competing through a multi-domestic strategy have realized the
weakness oI their unIocused patterns oI global coverage, they have begun to assemble
business units that have a better global Iocus. Many are striving to change their business
to reIlect more a coherent market position whereby a business consists oI strong units in
major markets. Avoiding globally unIocused strategies, international Iirms have either
retrenched to become regional specialists or changed their business Iocus to adopt global
niche strategies, selective globalization or complete globalization.
A strategy oI complete globalization is selected by Iirms that essentially globalize all oI
their business units. Selective globalization is adopted by Iirms that globalize several or
many businesses but also exit Irom others because Iinancial resources may be limited.
Global niche strategies are selected by Iirms that Iocus on one or very Iew businesses
worldwide and exit Irom others to make up Ior a lack oI resources. In general, companies
with a narrow product or business Iocus but globally marketed perIorm better than Iirms
with a broad product line. Since the establishment oI strong global marketing positions
requires substantial resources, many Iirms have begun to adopt the narrow Iocus model
by spinning oII business no longer viewed as part oI the company`s core operations.
Global Marketing Strategies:
A global marketing strategy that totally globalizes all marketing activities is not always
achievable or desirable (diIIerentiated globalization). In the early phases oI development,
global marketing strategies were assumed to be oI one type only, oIIering the same
marketing strategy across the globe. As marketers gained more experience, many other
types oI global marketing strategies became apparent. Some oI those were much less
complicated and exposed a smaller aspect oI a marketing strategy to globalization. A
more common approach is Ior a company to globalize its product strategy (product lines,
product designs and brand names) and localize distribution and marketing
communication.
Integrated Clobal Marketing Strategy: When a company pursues an integrated global
marketing strategy, most elements oI the marketing strategy have been globalized.
Globalization includes not only the product but also the communications strategy, pricing
and distribution as well as such strategic elements as segmentation and positioning. Such
a strategy may be advisable Ior companies that Iace completely globalized customers
along the lines. It also assumes that the way a given industry works is highly similar
everywhere, thus allowing a company to unIold its strategy along similar paths in country
by country. One company that Iits the description oI an integrated global marketing
strategy to a large degree is CocaCola. That company has achieved a coherent, consistent
and integrated global marketing strategy that covers almost all elements oI its
marketing program Irom segmentation to positioning, branding, distribution, bottling,
advertising and more.
Reality tells us that completely integrated global marketing strategies will continue to
be the exception. However, there are many other types oI partially globalized marketing
strategies; each may be tailored to speciIic industry and competitive circumstances.
Clobal Product Category Strategy:Possibly the least integrated type oI global
marketing strategy is the global product category strategy. Leverage is gained Irom
competing in the same category country aIter country and may come in the Iorm oI
product technology or development costs. Selecting the Iorm oI global product category
implies that the company while staying within that category will consider targeting
diIIerent segments in each category or varying the product, advertising and branding
according to local market requirements. Companies competing in the multi-domestic
mode are Irequently applying the global category strategy and leveraging knowledge
across markets without pursuing standardization. That strategy works best iI there are
signiIicant diIIerences across markets and when Iew segments are present in market aIter
market. Several traditional multinational players who had Ior decades pursued a multi-
domestic marketing approach-tailoring marketing strategies to local market conditions
and assigning management to local management teams- have been moving toward the
global category strategy. Among them are Nestle, Unilever and Procter&Gamble, three
large international consumer goods companies doing business in Iood and household
goods.
Clobal Segment Strategy: A company that decides to target the same segment in many
countries is Iollowing a global segment strategy. The company may develop an
understanding oI its customer base and leverage that experience around the world. In both
consumer and industrial industries signiIicant knowledge is accumulated when a
company gains in-depth understanding oI a niche or segment. A pure global segment
strategy will even allow Ior diIIerent products, brands or advertising although some
standardization is expected. The choices may consist oI competing always in the upper or
middle segment oI a given consumer market or Ior a particular technical application in an
industrial segment. Segment strategies are relatively new to global marketing.
Clobal Marketing Mix Element Strategies:%080strategies pursue globalization along
individual marketing mix elements such as pricing, distribution, place, promotion,
communications or product. They are partially globalized strategies that allow a
company that customize other aspects oI its marketing strategy. Although various types
oI strategies may apply, the most important ones are global product strategies, global
advertising strategies and global branding strategies. Typically companies globalize
those marketing mix elements that are subject to particularly strong global logic Iorces.
A company Iacing strong global purchasing logic may globalize its account management
practices or its pricing strategy. Another Iirm Iacing strong global inIormation logic will
Iind it important to globalize its communications strategy.
Clobal Product Strategy: Pursuing a global product strategy implies that a company has
largely globalized its product oIIering. Although the product may not need to be
completely standardized worldwide, key aspects or modules may in Iact be globalized.
Global product strategies require that product use conditions, expected Ieatures and
required product Iunctions be largely identical so that Iew variations or changes are
needed. Companies pursuing a global product strategy are interested in leveraging the
Iact that all investments Ior producing and developing a given product have already been
made. Global strategies will yield more volume, which will make the original
investment easier to justiIy.
Clobal Branding Strategies: 4-, branding strategies consist oI using the same brand
name or logo worldwide. Companies want to leverage the creation oI such brand names
across many markets, because the launching oI new brands requires a considerable
marketing investment. Global branding strategies tend to be advisable iI the target
customers travel across country borders and will be exposed to products elsewhere.
Global branding strategies also become important iI target customers are exposed to
advertising worldwide. This is oIten the case Ior industrial marketing customers who
may read industry and trade journals Irom other countries. Increasingly, global branding
has become important also Ior consumer products where cross-border advertising through
international TV channels has become common. Even in some markets such as Eastern
Europe, many consumers had become aware oI brands oIIered in Western Europe beIore
the liberalization oI the economies in the early 1990s. Global branding allows a company
to take advantage oI such existing goodwill. Companies pursuing global branding
strategies may include luxury product marketers who typically Iace a large Iixed
investment Ior the worldwide promotion oI a product.
Clobal Advertising Strategy: Globalized advertising is generally associated with the use
oI the same brand name across the world. However, a company may want to use diIIerent
brand names partly Ior historic purposes. Many 4-, Iirms have made acquisitions in
other countries resulting in a number oI local brands. These local brands have their own
distinctive market and a company may Iind it counterproductive to change those names.
Instead, the company may want to leverage a certain theme or advertising approach that
may have been developed as a result oI some 4-, customer research. 4-,
advertising themes are most advisable when a Iirm may market to customers seeking
similar beneIits across the world. Once the purchasing reason has been determined as
similar, a common theme may be created to address it.
Composite Clobal Marketing Strategy: The above descriptions oI the various global
marketing models give the distinct impression that companies might be using one or the
other generic strategy exclusively. Reality shows, however, that Iew companies
consistently adhere to only one single strategy. More oIten companies adopt several
generic global strategies and run them in parallel. A company might Ior one part oI its
business Iollow a global brand strategy while at the same time running local brands in
other parts. Many Iirms are a mixture oI diIIerent approaches, thus the term composite.
Competitive Global Marketing Strategies:
Two types oI approaches emerge as oI particular interest to us. First, there are a number
oI heated global marketing duels in which two Iirms compete with each other across the
entire global chessboard. The second, game pits a global company versus a local
company- a situation Irequently Iaced in many markets.
One oI the longest running battles in global competition is the Iight Ior market
dominance between CocaCola and PepsiCo, the world`s largest soIt drink companies.
Global Iirms are able to leverage their experience and market position in one market Ior
the beneIit oI another. Consequently, the global Iirm is oIten a more potent competitor
Ior a local company.
Although global Iirms have superior resources, they oIten become inIlexible aIter several
successIul market entries and tend to stay with standard approaches when Ilexibility is
called Ior. In general, the global Iirms` strongest local competitors are those who watch
global Iirms careIully and learn Irom their moves in other countries. With some global
Iirms requiring several years beIore a product is introduced in all markets, local
competitors in some markets can take advantage oI such advance notice by building
deIenses or launching a preemptive attack on the same segment.
3) Global Market Entry Strategies:
Exporting as an Entry Strategy:
Exporting represents the least commitment on the part oI the Iirm entering a Ioreign
market (See appendix 2). Exporting to a Ioreign market is a strategy many companies
Iollow Ior at least some oI their markets. Since many countries do not oIIer a large
enough opportunity to justiIy local production, exporting allows a company to centrally
manuIacture its products Ior several markets and thereIore to obtain economies oI scale.
Furthermore, since exports add volume to an already existing production operation
located elsewhere, the marginal proIitability oI such exports tends to be high.
A Iirm has two basic options Ior carrying out its export operations. The Iorm oI exporting
can be directly under the Iirm`s control or indirect and outside the Iirm`s control. It can
contact Ioreign markets through a domestically located (in the exporter`s country oI
operation) intermediary-an approach called indirect exporting. Alternatively, it can use an
intermediary located in the Ioreign market-an approach termed direct exporting.
Indirect Exporting: Indirect exporting includes dealing through export management
companies oI Ioreign agents, merchants or distributors. Several types oI intermediaries
located in the domestic market are ready to assist a manuIacturer in contacting
international markets or buyers. The major advantage Ior managers using a domestic
intermediary lies in that individual`s knowledge oI Ioreign market conditions.
Particularly, Ior companies with little or no experience in exporting, the use oI a domestic
intermediary provides the exporter with readily available expertise. The most common
types oI intermediaries are brokers, combination export and manuIacturers` export
agents. Group selling activities can also help individual manuIacturers in their export
operations.
Direct Exporting: Direct exporting includes setting up an export department within the
Iirm or having the Iirm`s sales Iorce sell directly to Ioreign customers or 2,7093
intermediaries. A company engages in direct exporting when it exports through
intermediaries located in the Ioreign markets. Under direct exporting, an exporter must
deal with a large number oI Ioreign contacts, possibly one or more Ior each country the
company plans to enter. Although a direct exporting operation requires a larger degree oI
expertise, this method oI market entry does provide the company with a greater degree oI
control over its distribution channels than would indirect exporting. The exporter may
select Irom two major types oI intermediaries: agents and merchants. Also, the exporting
company may establish its own sales subsidiary as an alternative to independent
intermediaries. SuccessIul direct exporting depends on the viability oI relationship built
up between the exporting Iirm and the local distributor or importer. By building the
relationship well, the exporter saves considerable investment costs.
The independent distributor earns a margin on the selling price oI the products. Although
the independent distributor does not represent a direct cost to the exporter, the margin the
distributor earns represents an opportunity that is lost to the exporter. By switching to a
sales subsidiary to carry out the distributor`s tasks, the exporter can earn the same
margin. With increasing volume, the incentive to start a sales subsidiary grows. On the
other hand, iI the anticipated sales volume is small, the independent distributor will be
more eIIicient since sales are channeled through a distributor who is maintaining the
necessary staII Ior several product lines. The lack oI control Irequently causes exporters
to shiIt Irom an independent distributor to wholly owned sales subsidiaries.
Many companies export directly to their own sales subsidiaries abroad, sidestepping
independent intermediaries. The sales subsidiary assumes the role oI the independent
distributor by stocking the company's products and/or services, sometimes jointly
advertising and promoting the products, selling to buyers and assuming the credit risk.
The sales subsidiary oIIers the manuIacturer Iull control oI selling operations in a Ioreign
market. Such control may be important iI the company`s products require the use oI
special marketing skills such as advertising or selling. The exporter Iinds it possible to
transIer or export not only the product but also the entire marketing program that oIten
makes the product a success.
The operation oI a subsidiary adds a new dimension to a company`s international
marketing operation. It requires the commitment oI capital in a Ioreign country,
primarily Ior the Iinancing oI account receivables and inventory. Also, the operation oI a
sales subsidiary entails a number oI general administrative expenses that are essentially
Iixed in nature. As a result, a commitment to a sales subsidiary should not be made
without careIul evaluation oI all the costs involved.
Foreign Production as an Entry Strategy:
Many companies realize that to open a new market and serve local customers better,
exporting into that market is not a suIIiciently strong commitment to realize strong local
presence. As a result, these companies look Ior ways to strengthen their base by entering
into one oI several ways to manuIacture.
Licensing: Licensing is similar to contract manuIacturing, as the Ioreign licensee
receives speciIications Ior producing products locally, but the licensor generally receives
a set Iee or royalty rather than Iinished products. Licensing may oIIer the Ioreign Iirm
access to brands, trademarks, trade secrets or patents associated with products
manuIactured. Under licensing, a company assigns the right to a patent (which protects a
product, technology or process) or a trademark (which protects a product name) to
another company Ior a Iee or royalty. Using licensing as a method oI market entry, a
company can gain market presence without an equity (capital) investment. The Ioreign
company, or licensee gains the right to commercially exploit the patent or trademark on
either an exclusive (the exclusive right to a certain geographic region) or an unrestricted
basis. Due to advantages oI low risk and low investment, licensing is a particularly
attractive mode Ior small and medium-sized Iirms. Licensing also is an eIIective mode
Ior testing the Iuture viability oI more active involvement with a Ioreign partner.
Licenses are signed Ior a variety oI time periods. Depending on the investment needed to
enter the market, the Ioreign licensee may insist on a longer licensing period to pay oII
the initial investment. Typically, the licensee will make all necessary capital investments
(machinery, inventory and so Iorth) and market the products in the assigned sales
territories, which may consist oI one or several countries. Licensing agreements are
subject to negotiation and tend to vary considerably Irom company to company and Irom
industry to industry.
Companies use licensing Ior a number oI reasons. For one, a company may not have the
knowledge or the time to engage more actively in international 2,7093. The market
potential oI the target country may also be too small to support a manuIacturing
operation. A licensee has the advantage oI adding the licensed product`s volume to an
ongoing operation thereby reducing the need Ior a large investment in new Iixed assets. A
company with limited resources can gain advantage by having a Ioreign partner market
its products by signing a licensing contract. Licensing not only saves capital because no
additional investment is necessary but also allows scarce managerial resources to be
concentrated on more lucrative markets. Also, some smaller companies with a product in
high demand may not be able to satisIy demand unless licenses are granted to other
companies with suIIicient manuIacturing capacity.
In some countries where the political or economic situation appears uncertain, a licensing
agreement will avoid the potential risk associated with investments in Iixed Iacilities.
Representing an export oI technology rather than goods (as in exporting) or capital,
licensing is an attractive mode in markets where political and economic uncertainties
make a greater involvement risky. Both commercial and political risks are absorbed by
the licensee. In other countries governments Iavor the granting oI licenses to independent
local manuIacturers as a means oI building up an independent local industry. In such
cases, a Ioreign manuIacturer may preIer to team up with capable licensee despite a large
market size, because other Iorms oI entry may not be possible.
A major disadvantage oI licensing is the company`s substantial dependence on the local
licensee to produce revenues and thus royalties usually paid as a percentage on sale
volume only. Once a license is granted, royalties are paid only iI the licensee is capable
oI perIorming an eIIective 2,7093 job. Since the local company`s 2,7093 skills
may be less developed, revenues Irom licensing may suIIer accordingly.
Another disadvantage is the resulting uncertainty oI product quality. A Ioreign
company`s image may suIIer iI a local licensee markets a product oI substandard quality.
Ensuring a uniIorm quality requires additional resources Irom the licenser that may
reduce the proIitability oI the licensing activity.
Thus, the producer loses some control in certain situations. The risk oI losing control oI
intellectual property and/or technological advantages can also be mentioned as another
disadvantage oI licensing.
Another potential problem is that the licensee may adapt the licensed product and
compete head on with the licensor. The possibility oI nurturing a potential competitor is
viewed by many companies as a disadvantage oI licensing. With licenses usually limited
to a speciIic time period, a company has to guard against the situation in which the
licensee will use the same technology independently aIter the license has expired and
thereIore turn into a competitor.
Although there is a great variation according to industry, licensing Iees in general are
substantially lower than the proIits that can be made by exporting or local manuIacturing.
Depending on the product, licensing Iees may range anywhere between 1 percent and 20
percent oI sales, with 3 to 5 percent being more typical Ior industrial products.
Conceptually, licensing should be pursued as an entry strategy iI the amount oI the
licensing Iees exceeds the incremental revenues oI any other entry strategy such as
exporting or local manuIacturing. A thorough investigation oI the market potential is
required to estimate potential revenues Irom any one oI the entry 897,9008 under
consideration.
Franchising: Franchising is a special Iorm oI licensing in which the Iranchiser makes a
total 2,7093 program available including the brand name, logo, products and method
oI operation. Usually the Iranchise agreement is more comprehensive than a regular
licensing agreement in as much as the total operation oI the Iranchisee is prescribed. It
diIIers Irom licensing principally in the depth and scope oI quality controls placed on all
phases oI the Iranchisee`s operation. The Iranchise concept is expanding rapidly beyond
its traditional businesses (such as service stations, restaurants and real-estate brokers) to
include less traditional Iormats such as travel agencies, used car dealers, the video
industry and proIessional and health improvement services. About 80 percent oI all
McDonald`s restaurants are Iranchised and as oI 1999 the Iirm operated about 24,500
stores in 116 countries.
Local Manufacturing: A common and widely practiced Iorm oI market entry is the local
manuIacturing oI a company`s products. Many companies Iind it to their advantage to
manuIacture locally instead oI supplying the particular market with products made
elsewhere. Numerous Iactors such as local costs, market size, tariIIs, laws and political
considerations may aIIect a choice to manuIacture locally. The actual type oI local
production depends on the arrangements made; it may be contract manuIacturing,
assembly or Iully integrated production. Since local production represents a greater
commitment to a market than other entry 897,9008, it deserves considerable attention
beIore a Iinal decision is made.
Under contract manuIacturing, a company arranges to have its products manuIactured by
an independent local company on a contractual basis. This is an entry mode in which a
Iirm contracts with a Ioreign Iirm to manuIacture parts or Iinished products or to
assemble parts into Iinished products. The manuIacturer`s responsibility is restricted to
production. AIterward, products are turned over to the international company which
usually assumes the 2,7093 responsibilities Ior sales, promotion and distribution. In a
way, the international company rents the production capacity oI the local Iirm to avoid
establishing its own plant or to circumvent barriers set up to prevent the import oI its
products. Contract manuIacturing diIIers Irom licensing with respect to the legal
relationship oI the Iirms involved. The local producer manuIactures based on orders Irom
the international Iirm but the international Iirm gives virtually no commitment beyond the
placement oI orders. Typically, the contracting Iirm supplies complete product
speciIications to the Ioreign Iirm, sets production volume and guarantees purchase.
Lower labor costs abroad are the major incentive Ior using this entry mode.
Typically, contract manuIacturing is chosen Ior countries with a low-volume market
potential combined with high tariII protection. In such situations, local production
appears advantageous to avoid the high tariIIs, but the local market does not support the
volume necessary to justiIy the building oI a single plant. These conditions tend to exist
in the smaller countries in Central America, AIrica and Asia. OI course, whether an
international company avails itselI oI this method oI entry also depends on its products.
Usually, contract manuIacturing is employed where the production technology involved
is widely available and where the 2,7093 eIIort is oI crucial importance in the success
oI the product.
By moving to an assembly operation, the international Iirm locates a portion oI the
manuIacturing process in the Ioreign country. Typically, assembly consists only oI the
last stages oI manuIacturing and depends on the ready supply oI components or
manuIactured parts to be shipped in Irom another country. Assembly usually involves
heavy use oI labor rather than extensive investment in capital outlays or equipment.
Motor vehicle manuIacturers and electronics industries have made extensive use oI
assembly operations in numerous countries.
OIten, companies want to take advantage oI lower wage costs by shiIting the labor-
intensive operation to the Ioreign market; this results in a lower Iinal price oI the
products. In many cases, however, the local government Iorces the setting up oI assembly
operations either by banning the import oI Iully assembled products or by charging
excessive tariIIs on imports. As a deIensive move, Ioreign companies begin assembly
operations to protect their markets. However, successIul assembly operations require
dependable access to imported parts. This is oIten not guaranteed and in countries with
chronic Ioreign exchange problems, supply interruptions can occur.
To establish a Iully integrated local production unit represents the greatest commitment a
company can make Ior a Ioreign market. Since building a plant involves a substantial
outlay in capital, companies only do so where demand appears assured. International
companies may have any number oI reasons Ior establishing Iactories in Ioreign
countries. OIten, the primary reason is to take advantage oI lower costs in a country, thus
providing a better basis Ior competing with local Iirms or other Ioreign companies
already present. Also, high transportation costs and tariIIs may make imported goods
uncompetitive.
Some companies want to build a plant to gain new business and customers. Such an
aggressive strategy is based on the Iact that local production represents a strong
commitment and is oIten the only way to convince clients to switch suppliers. Local
production is oI particular importance in industrial markets where service and reliability
oI supply are main Iactors in the choice oI product or supplier.
Many times, companies establish production abroad not to enter new markets but to
protect what they have already gained through exporting. Changing economic or political
Iactors may make such a move necessary. The Japanese car manuIacturers who had been
subject to an import limitation oI assembled cars imported Irom Japan, began to build
Iactories in United States in the 1980s to protect their market share. As mentioned above,
Japanese manuIacturers` reasons Ior the local production were partly political as the
United States imposed import targets Ior several years. Also, with the value oI the yen
increasing to one hundred yen per US dollar, exports Irom Japan became uneconomical
compared with local production. Thus, to deIend market positions, Japanese car
companies instituted a longer-term strategy oI making cars in the region where they are
sold.
Moving with an established customer can also be a reason Ior setting up plants abroad. In
many industries, important suppliers want to keep a relationship by establishing plants
near customer locations; when customers build new plants elsewhere, suppliers move too.
Another reason can also be shiIting production abroad to save costs.
Ownership Strategies:
Companies entering Ioreign markets have to decide on more than the most suitable entry
strategy. They also need to arrange ownership, either as a wholly owned subsidiary, in a
joint venture, or more recently in strategic alliance.
1oint Jentures: In a joint venture, an investing Iirm owns roughly 25 to 75 percent oI a
Ioreign Iirm, allowing the investing Iirm to aIIect management decisions oI the Ioreign
Iirm. Under a joint venture (JV) arrangement, the Ioreign company invites an outside
partner to share stock ownership in the new unit. The particular participation oI the
partners may vary, with some companies accepting either a minority or majority position.
In most cases, international Iirms preIer wholly owned subsidiaries Ior reasons oI control;
once a joint venture partner secures part oI the operation, the international Iirm can no
longer Iunction independently, which sometimes lead to ineIIiciencies and disputes over
responsibility Ior the venture. II an international Iirm has strictly deIined operating
procedures, such as Ior budgeting, planning and marketing, getting the JV company to
accept the same methods oI operation may be diIIicult. Problems may also arise when the
JV partner wants to maximize dividend payout instead oI reinvestment or when the
capital oI the JV has to be increased and one side is unable to raise the required Iunds.
Experience has shown that JVs can be successIul iI the partners share the same goals with
one partner accepting primary responsibility Ior operations matters. Despite the potential
Ior problems, joint ventures are common because they oIIer important advantages to the
Ioreign Iirm. By bringing in a partner the company can share the risk Ior a new venture.
Furthermore, the JV partner may have important skills or contacts oI value to the
international Iirm. Sometimes, the partner may be an important customer who is willing
to contract Ior a portion oI the new unit`s output in return Ior an equity participation. In
other cases, the partner may represent important local business interests with excellent
contacts to the government. A Iirm with advanced product technology may also gain
market access through the JV route by teaming up with companies that are prepared to
distribute its products. Many international Iirms have entered Japan, China and Eastern
Europe with JVs. But, not all joint ventures are successIul and IulIill their partners`
expectations. Despite the diIIiculties involved, it is apparent that the Iuture will bring
many more joint ventures. SuccessIul international and global Iirms will have to develop
the skills and experience to manage JVs successIully oIten in diIIerent and diIIicult
environmental circumstances. And in many markets, the only viable access to be gained
will be through JVs.
Strategic Alliances: A more recent phenomenon is the development oI a range oI
strategic alliances. Alliances are diIIerent Irom traditional joint ventures in which two
partners contribute a Iixed amount oI resources and the venture develops on its own. In
an alliance, two entire Iirms pool their resources directly in a collaboration that goes
beyond the limits oI a joint venture. Although a new entity may be Iormed, it is not a
requirement. Sometimes, the alliance is supported by some equity acquisition oI one or
both oI the partners. In an alliance, each partner brings a particular skill or resource-
usually they are complementary-and by joining Iorces, each expects to proIit Irom the
other`s experience. Typically, alliances involve either distribution access, technology
transIers or production technology with each partner contributing a diIIerent element to
the venture. Alliances can be in the Iorms oI technology-based alliances, production-
based alliances or distribution-based alliances.
Although many alliances have been Iorged in a large number oI industries, the evidence
is not yet in as to whether these alliances will actually become successIul business
ventures. Experience suggests that alliances with two equal partners are more diIIicult to
manage than those with a dominant partner. In particular, it is important to recognize that
the needs and aspirations oI partners may change over the liIe oI an alliance and do so in
divergent ways. Predicting what the goals and incentives oI the various parties will be
under various circumstances is a critical part oI eIIective planning. Furthermore, many
observers question the value oI entering alliances with technological competitors, such as
between western and Japanese Iirms. The challenge in making an alliance work lies in the
creation oI multiple layers oI connections or webs that reach across the partner
organizations. Eventually such connections will result in the creation oI new
organizations out oI the cooperating parts oI the partners. In that sense, alliances may
very well be just an intermediate stage until a new company can be Iormed or until the
dominant partner assumes control.
Entering Markets 1hrough Mergers and Acquisitions: Although international Iirms
have always made acquisitions, the need to enter markets more quickly than through
building a base Irom scratch or entering some type oI collaboration has made the
acquisition route extremely attractive. This trend has probably been aided by the opening
oI many Iinancial markets, making the acquisition oI publicly traded companies much
easier. Most recently even unIriendly takeovers in Ioreign markets are now possible.
Nevertheless, international mergers and acquisitions are diIIicult to make work.
A major advantage oI acquisitions is that they can quickly position a Iirm in a new
business. By purchasing an existing player, a Iirm does not have to take the time to
establish its presence or develop Ior itselI the resources it does not already possess. This
can be particularly important when the critical resources are diIIicult to imitate or
accumulate. Acquiring an existing Iirm also takes a potential competitor out oI the
market. Despite these advantages, acquisitions can have serious drawbacks. First and
Ioremost, acquisitions can be a very expensive way to enter a market. In addition to the
likelihood oI overbidding, acquisitions pose a number oI other challenges. Most targets
contain bundles oI assets and capabilities, only some oI which are oI interest to the
acquirer. Disposing oI unwanted assets or maintaining them in the portIolio is oIten done
at signiIicant cost, either in real terms or in management time. Although these obstacles
are serious, a number oI acquisitions Iail on another account: the post acquisition
integration process Iails. Integrating an acquired company into a corporation is probably
one oI the most challenging tasks conIronting top management.
Preparing An Entry Strategy Analysis:
OI course, assembling accurate data is the cornerstone oI any entry strategy analysis. The
necessary sales projections have to be supplemented with detailed cost data and Iinancial
need projections on assets (managerial, Iinancial, etc. resources). The data need to be
assembled Ior all entry strategies under consideration. Financial data are collected not
only on the proposed venture but also on its anticipated impact on the existing operations
oI the international Iirm. The combination oI the two sets oI Iinancial data results in
incremental Iinancial data incorporating the net overall beneIit oI the proposed move Ior
the total company structure.
For best results, the analyst must take a long-term view oI the situation. Asset
requirements, costs and sales have to be evaluated over the planning horizon oI the
proposed venture, typically three to Iive years Ior an average company. Furthermore, a
thorough sensitivity analysis must be incorporated. Such an analysis may consists oI
assuming several scenarios oI international risk Iactors that may adversely aIIect the
success oI the proposed venture. The Iinancial data can be adjusted to reIlect each new
set oI circumstances. One scenario may include a 20 percent devaluation in the host
country, combined with currency control and diIIiculty oI receiving new supplies Irom
Ioreign plants. Another situation may assume a change in political leadership to a group
less Iriendly to Ioreign investments. With the help oI a sensitivity analysis approach, a
company can quickly spot the key variables in the environment that will determine the
outcome oI the proposed market entry. The international company then has the
opportunity to Iurther add to its inIormation on such key variables or at least to closely
monitor their development. It is assumed that any company approaching a new market is
looking Ior proIitability and growth. Consequently, the entry strategy must support these
goals. Each project has to be analyzed Ior the expected sales level, costs and asset levels
that will eventually determine proIitability. Sales, costs and assets levels have to be
estimated beIore. Also, proIitability has to be estimated (past sales analysis, market test
method). In order to do this, assessing international risk Iactors, maintaining Ilexibility
and assessing total company impact are required. Market research that Iocuses on buying
patterns, customer segmentation on ability to pay especially in developing countries, etc.
(survey oI buyers` intentions, composite oI sales Iorce opinion, expert opinion) (SWOT
Analysis-strenghts, weaknesses, opportunities, threats)
Entry Strategy Configuration:
In reality, most entry strategies consist oI a combination oI diIIerent Iormats. We reIer to
the process oI deciding on the best possible entry strategy mix as entry strategy
conIiguration.
Rarely do companies employ a single entry mode per country. A company may open up a
subsidiary that produces some products locally and imports others to round out its
product line. The same Ioreign subsidiary may even export to other Ioreign subsidiaries,
combining exporting, importing and local manuIacturing into one unit. Furthermore,
many international Iirms grant licenses Ior patents and trademarks to Ioreign operations,
even when they are Iully owned. This is done Ior additional protection or to make the
transIer oI proIits easier. In many cases, companies have bundled such entry Iorms into a
single legal unit, in eIIect layering several entry strategy options on top oI each other.
Bundling oI entry strategies is the process oI providing just one legal unit in a given
country or market. In other words, the Ioreign company sets up a single company in one
country and uses that company as a legal umbrella Ior all its entry activities. However,
such strategies have become less typical-particularly in larger markets, many Iirms have
begun to unbundle their operations.
When a company unbundles, it essentially divides its operations in a country into
diIIerent companies. The local manuIacturing plant may be incorporated separately Irom
the sales subsidiary. When this occurs, companies may select diIIerent ownership
strategies, Ior instance, allowing a JV in one operation while keeping Iull ownership in
another part. Such unbundling becomes possible in the larger markets such as the United
States, Germany and Japan. It also allows the company to run several companies or
product lines in parallel. Global Iirms granting global mandates to their product divisions
will Iind that each division will need to develop its own entry strategy Ior key markets.
Portal or E-Business Entry Strategies: The technological revolution oI the Internet with
its wide range oI connected and networked computers has given rise to the virtual entry
strategy. Using electronic means, primarily web pages, e-mail, Iile transIer and related
communications tools, Iirms have begun to enter markets without ever touching down. A
company that establishes a server on the Internet and opens up a web page can be
connected Irom anywhere in the world. Consumers and industrial buyers who use modern
Internet browsers, such as Netscape, can search Ior products, services or companies and
in many instances even make purchases online. Whatever the Iorecasts, most experts
agree that the opportunity Ior Internet-based commerce will be huge. The Internet will
eliminate some oI the hurdles that plagued smaller Iirms Irom competing beyond their
borders. Given the low cost oI the Internet, it is very likely that many more established
Iirms will use the Internet as the Iirst point oI contact Ior countries where they do not yet
have a major base. However, there are many challenges to would-be Internet-based
global marketers. One oI the biggest is language. The second big challenge is the
IulIillment side oI the e-business. Here, we are dealing with completing a sale, shipping,
collecting Iunds and providing aIter-sales service to customers all over the world.
Exit Strategies:
Circumstances may make companies want to leave a country or market. Other than the
Iailure to achieve marketing objectives, there may be political, economic or legal reasons
Ior a company to want to dissolve or sell an operation (management myopia).
International companies have to be aware oI the high costs attached to the liquidation oI
Ioreign operations; substantial amounts oI severance pay may have to be paid to
employees and any loss oI credibility in other markets can hurt Iuture prospects.
Sometimes, an international Iirm may need to withdraw Irom a market to consolidate its
operations. This may mean a consolidation oI Iactories Irom many to Iewer such plants.
Production consolidation when not combined with an actual market withdrawal is not
really what we are concerned with here. Rather, our concern is a company`s actual
abandoning its plan to serve a certain market or country. This is diIIerentiation between
production withdrawal or consolidation and brand withdrawal. A Iirm can consolidate
production elsewhere while retaining a strong brand and marketing presence.
Changing political situations have at times Iorced companies to leave markets. Changing
government regulations can at times pose problems, prompting some companies to leave
a country. Exit strategies can also be the result oI negative reactions in a Iirm`s home
market.
Several oI the markets leIt by international Iirms over the past decades have changed in
attractiveness, making companies reverse their exit decisions and enter those markets a
second time.
Summary:
Global marketing is the process oI Iocusing an organization`s resources on the selection
and exploitation oI global market opportunities consistent with and supportive oI its short
and long-term strategic objectives and goals.
In this paper, I tried to analyze the ways a company competes in global environment by
using diIIerent tactics. Those tactics diIIer in a way a company`s capabilities and
willingness permit. A company must be careIul in using those tactics beIore globalizing
its operations. Because sometimes those tactics may Iail and result in loss oI proIit or
even closure oI the company.
I suggest to reader to obtain additional inIormation about this subject. For example, they
may contact my organization, Undersecretariat oI Foreign Trade, closest Chambers oI
Commerce or any other public or private organization located in Turkey or abroad. They
may also use any library or internet resources.
Ozet: (Turkce)
Global pazarlama, bir orgutun kaynaklarinin onun kisa ve uzun donemli stratejik
hedeIleriyle uyumlu ve destekleyici global pazar Iirsatlarinin secimi ve kullanimina
odaklanmasi surecidir.
Bu calismada, bir sirketin global cevrede Iarkli taktikleri kullanarak rekabet etme
yollarini analiz etmeye calistim. Bu taktikler, bir sirketin yetenek ve istekliliginin izin
verdigi bir yolla degisir. Bir sirket, Iaaliyetlerini globallestirmeden once bu taktikleri
kullanmada dikkatli olmalidir. Cunku, bazen bu taktikler basarisiz olabilir ve kar kaybi
veya sirketin kapanmasiyla bile sonuclanabilir.
Okuyucuya bu konu hakkinda ilave bilgi bulmasini oneriyorum. Ornegin, onlar benim
kurumum Dis Ticaret Mustesarligiyla, en yakin Ticaret Odasiyla, veya herhangi diger
Turkiye`de veya yurtdisinda yerlesik kamu veya ozel kurumla temasa gecebilirler. Onlar
herhangi kutuphane veya internet kaynaklarini da kullanabilirler.










4) Appendices:
Appendix 1:
Economic-Financial Factors:
N Amount oI Ioreign debt carried
N Income distribution within the market
N Amount oI Ioreign investment already in the market
N Natural resource base
N InIlation rate
Political-Legal Factors:
N Role oI government in business activities (Iree or not Iree markets)
N Stability oI government
N Barriers to international trade (whether or not Iavorable trade policies)
N Laws and regulations aIIecting the marketing mix (marketing regulations)
N Laws and regulations aIIecting business activities (acceptance oI Ioreign
investment, etc.)
N Stability oI the workIorce
N Political relations with trading partner
Cultural Factors:
N Style oI business within the market
N Attitudes toward bribes and questionable payments
N Language, race and nationalities, geographic divisions
N Role oI institutions, religious groups, educational system, mass media, Iamily
N Sociocultural (social interaction, hierarchies, interdependence, etc.)
Demographic Factors:
N Number oI organizations within the market
N Size and quality oI workIorce
N Population size and growth rate
N Composition oI house holds
N Geographic distribution and density oI population
Trade Agreements (blocks):
N %
N &
N %
N !