INTERNATIONAL

MARKETING
Global Marketing and Market
Entry Strategies

Dr. Khanh Ngo

khanh.ngo@isb.edu.vn

www.isb.edu.vn
 What did you learn from previous session?

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Code:

1/6/2022 Dr. Khanh Ngo www.isb.edu.vn

 Learning Objective

• Global Marketing Strategies:

• Global Strategy
• Global Marketing Strategy
• Competitive Analysis
• Global Market Entry Strategies:
• Country Selection
• Scale of Entry
• Choosing the Mode of Entry
• Exporting
• Licensing
• Franchising
• Expanding through Joint Ventures and Alliances
• Wholly Owned Subsidiaries
• Dynamics of Entry Strategies
• Timing of Entry
• Exit Strategies
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 Global Strategy

Global Industry:
• Those industries where a firm’s
competitive position in one country
is affected by its position in other
countries.
• The first question that faces
managers is the extent of
globalization of their industry. Every
industry has global or potentially
global aspects.

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 Global Strategy

Industry Globalization Forces

Four forces interact to determine the
potential of industry globalization
1. Market forces
2. Cost forces
3. Government forces
4. Competition forces

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 Global Strategy

Competitive Industry Structure

• Industry competitors
• Potential entrants
• Bargaining power of suppliers
• Bargaining power of buyers
• Threats of substitute products or
services

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 Global Strategy

Competitive Structure:
• Cost leadership
• Product differentiation
• Niche (narrow) strategy

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Global Strategy

• Gaining Competitive Advantage

• First-mover advantage versus first-
mover disadvantage
• Technology-driven approach
• Competitor-focused approach
• Customer-focused approach

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Global Strategy

Gaining Competitive Advantage

• First-mover advantage versus first-
mover disadvantage
• Technology-driven approach
• Competitor-focused approach
• Customer-focused approach

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Global Strategy

Gaining Competitive Advantage

• First-mover advantage versus first-
mover disadvantage
• Technology-driven approach
• Competitor-focused approach
• Customer-focused approach

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 Global Marketing Strategy

• Benefits of Global Marketing:

• Cost Reduction
• Improved Products and Program Effectiveness
• Enhanced Customer Preference
• Increased Competitive Advantage

• Limits to Global Marketing:

• Standardization vs. adaptation issues
• Globalization vs. localization
• Global integration vs. local responsiveness
• Aggregation versus adaptation
• Online scale versus offline market sensitivity

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 Global Marketing Strategy

Degree of product
standardization varies widely
based on many factors

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Competitive Analysis

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Global Market Entry Introduction

https://www.youtube.com/watch?v=UEJdc8h5gzg
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Global Market Entry Introduction

• In 1996, series of joint ventures

between Danone and Wahaha
founded, Danone 51% stake
• Bottle water, tea and juices under
Wahaha brand name.
• Danone left most day-to-day
management to Wahaha founder
(Zong Qinghou)
• The joint venture was hugely
profitable in China

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Global Market Entry Introduction

• In 2007, Zong was selling similar products

under the Wahaha brand name outside of the
joint ventures.
• Danone filed lawsuits in several countries
seeking control of 2.4bil USD Wahaha brand.
• Zong struck back: campaign against Danone,
compare Danone’s tactic with bullying of
Western power during Opium War era
• Local distributors, employees, nationalists
strongly support Zong
• “Amicable settlement” with the support of
both the Chinese and French governments
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Global Market Entry Introduction

https://www.youtube.com/watch?v=AYRu0eYNypI

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Global Market Entry Introduction

• In 1964, licensing agreement in Japan

with ACE, country’s leading luggage
manufacturer.
• By 2004, Japan was biggest market in
Asia (after USA market)
• In 2004, Samsonite decided to terminate
the agreement with ACE: 150 mil USD
business shrank to 3 mil USD.
• By 2014, sales had recovered to 77.8 mil
USD, lower than before and other Asian
countries

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 Question

How about Joint Ventures in Vietnam?

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 Introduction

• The need for a solid market entry decision is an integral part of a global market
entry strategy.
• Entry decisions will heavily influence the firm’s other marketing-mix decisions.
• Global marketers have to make a multitude of decisions regarding the entry
mode which may include:
(1) Country selection
(2) The scale of entry
(3) The mode of entry
(4) The time of entry
(5) A marketing-mix plan

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 Country Selection

• A crucial step in developing a global

expansion strategy is the selection
of potential target markets
• Logical Flowchart of the Entry
Decision Process

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 Country Selection

• A four-step procedure for the initial screening process:

1. Select indicators and collect data
2. Determine importance of country indicators
3. Rate the countries in the pool on each indicator
4. Compute overall score for each country

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 Scale of Entry

• Entry scale is a very important element of a firm’s globalization strategy

• Access to resources - monetary and human - is one big constraint
• Factors influencing scale of entry:
• Large-scale entry may induce volume-driven cost advantages
• Industries or services where location matters, large-scale entry can lead to lock-up of more
attractive locations
• Existing players less likely to respond aggressively when entrant has made strong investments
• Large-scale entry may discourage prospective players from entering market

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Choosing the Mode of Entry

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 Choosing the Mode of Entry

Decision Criteria for Mode of Entry:

• Market Size and Growth
• Risk
• Government Regulations
• Competitive Environment
• Cultural Distance
• Local Infrastructure
• Company Objectives
• Need for Control
• Internal Resources, Assets
• Flexibility

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 Question

What is indirect exporting?

What is direct exporting?

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 International Channel of Distribution Alternatives

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 Exporting

Indirect Exporting: use a middleman to Cooperative Exporting (Piggyback

handle exporting Exporting): company still want to have
• Exporter:
some control, uses the overseas
distribution network of another company
• Export merchants: a trading company will
buy and re-sell
• Export agents: representing a number of
non-competing manufacturers, receives a Direct Exporting: Firms set up their own
commission, not own the goods exporting departments and sells its
• Export management companies (EMC): the
products via a middleman located in the
export sales department for non-competing foreign market
manufacturer. Can act as an agent or as a
distributor

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 International Channel of Distribution Alternatives

Representative
Office

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 Question

What is licensing?

What is franchising?

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 Licensing

• Licensing: a contractual transaction where the licensor offers some proprietary

assets (trade marks, know-how, patents,…) to a licensee in exchange for royalty fees

• Benefits:
• Appealing to small companies that lack
resources
• Faster access to the market
• Rapid penetration of the global markets
• Caveats:
• Not getting paid, lost control of marketing,
failure in timely manner and volume.
• Licensee may not be committed
• Lack of enthusiasm on the part of a
licensee
• Licensee tarnish the trademark
• Biggest danger is the risk of opportunism.
Licensee may become a future competitor

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Licensing

• How to seek a good licensing agreement:

• Seek patent or trademark protection
• Thorough profitability analysis of a licensing
proposal
• Careful selection of prospective licensees
• Contract parameter (technology package, use
conditions, compensation, and provisions for
the settlement of disputes)

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 Franchising

• Franchising: Franchisor give franchisee the right to use trade names, trade-
marks, business model and know-how in given territory and time period
• Master franchising: local master franchisor sell local franchise within territory
• Benefits: • Caveats:
• Overseas expansion with a minimum • Revenues may not be adequate
investment • Availability of franchisee or a master franchisee
• Franchisees’ profits tied to their efforts • Limited franchising understanding overseas
• Availability of local franchisees’ • Lack of control over the franchisees’ operations
knowledge, better understanding of • Problem in performance standards
local custom and law. • Cultural problems
• Physical proximity

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 Question

Name some franchises in Vietnam?

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Exhibit 9-4: Top 20 Global Franchises

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Exhibit 9-5: GNC – International Franchising

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 Question

What is strategic alliance?

What is joint venture?

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 Expanding through Joint Ventures and Alliances

• Strategic alliances: a coalition of 2 or

more organizations to achieve strategically
significant goals that are mutually
beneficial.

• Joint venture: a business arrangement in

which two or more parties agree to pool
their resources for the purpose of
accomplishing a specific task

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 Expanding through Joint Ventures and Alliances

• Benefits:
• Higher rate of return and more
control over the operations
• Creation of synergy
• Sharing of resources
• Caveats:
• Access to distribution network
• Contact with local suppliers and • Lack of control
government officials • Lack of trust
• Conflicts arising over matters such
as strategies, resource allocation,
transfer pricing, ownership of
critical assets like technologies and
brand names
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 Expanding through Joint Ventures and Alliances

• Drivers Behind Successful International Joint Ventures

• Pick the right partner
• Establish clear objectives from the beginning
• Bridge cultural gaps
• Gain top managerial commitment and respect
• Use incremental approach
• Create a launch team during the launch phase:
(1) Build and maintain strategic alignment
(2) Create a governance system
(3) Manage the economic interdependencies
(4) Build the organization for the joint venture

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 Wholly Owned Subsidiaries

Acquisitions and Mergers:

• Quick access to the local market
• Good way to get access to the local brands

Greenfield Operations:
• Offer the company more flexibility than acquisitions
in the areas of human resources, suppliers, logistics,
plant layout, and manufacturing technology

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 International Channel of Distribution Alternatives

Joint
Venture or
Wholly
Owned
Subsidiary

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 Wholly Owned Subsidiaries
• Benefits:
• Greater control and higher profits
• Strong commitment to the local
market on the part of companies
• Allows the investor to manage
and control marketing,
production, and sourcing
decisions
• Caveats:
• Risks of full possible lost
• Developing a foreign presence
without the support of a third
party
• Risk of nationalization
• Issues of cultural and economic
sovereignty of the host country
• Can be blocked by antitrust
rulings
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Exhibit 9-9: Advantages and Disadvantages of
Different Modes of Entry

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Exhibit 9-9: Advantages and Disadvantages of
Different Modes of Entry

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 Group Activity

Which mode of entry is your company using right now in the

target country and other countries?
Which mode of entry may you use for your project? And why?

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 Timing of Entry

• International market entry decisions should also cover the following

timing-of-entry issues:
• When should the firm enter a foreign market?
• Level of international experience, firm size, and product & service offerings
• Mode of entry issues, market knowledge, various economic attractiveness
variables, etc.

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Exhibit 9-11: Timeline
International Expansion

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 Exit Strategies

• Reasons for Exit:

• Sustained losses
• Difficulty in cracking the market
• Volatility
• Premature entry
• Ethical reasons
• Intense competition
• Resource reallocation
• Risks of Exit:
• Fixed costs of exit
• Damage to corporate image
• Disposition of assets
• Signal to other markets
• Long-term opportunities

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