International Marketing

Strategies
Definition

International marketing (IM) or global marketing refers to marketing carried out

by companies overseas or across national borderlines. This strategy uses an
extension of the techniques used in the home country of a firm.

International marketing is the performance of business activities that direct the

flow of a company’s goods and services to consumers or users in more than one
nation for a profit .
Mode of engagement in foreign markets

After the decision to invest has been made, the exact mode of operation has to
be determined. The risks concerning operating in foreign markets is often
dependent on the level of control a firm has, coupled with the level of capital
expenditure outlayed. The principal modes of engagement are listed below:

 Exporting (which is further divided into direct and indirect exporting)

 Joint ventures
 Direct investment (split into assembly and manufacturing)
Exporting

 Direct exporting involves a firm shipping goods directly to a foreign market. A firm employing
indirect exporting would utilize a channel/intermediary, who in turn would disseminate the
product in the foreign market.
 From a company's standpoint, exporting consists of the least risk. This is so since no capital
expenditure, or outlay of company finances on new non-current assets, has necessarily taken
place.
 Thus, the likelihood of sunk costs, or general barriers to exit, is slim. Conversely, a company
may possess less control when exporting into a foreign market, due to not control the supply
of the good within the foreign market.
Joint Ventures

 A joint venture is a combined effort between two or more business entities,

with the aim of mutual benefit from a given economic activity.
 Some countries often mandate that all foreign investment within it should be
via joint ventures (such as India and the People's Republic of China).
 By comparison with exporting, more control is exerted, however the level of
risk is also increased.
Direct Investment

 In this mode of engagement, a company would directly construct a fixed/noncurrent asset

within a foreign country, with the aim of manufacturing a product within the overseas
market.
 Assembly denotes the literal assembly of completed parts, to build a completed product. An
example of this is the Dell Corporation. Dell possesses plants in countries external to the
United States of America, however it assembles personal computers and does not
manufacture them from scratch.
 In other words, it obtains parts from other firms, and assembles a personal computer's
constituent parts (such as a motherboard, monitor, CPU, RAM, wireless card, modem, sound
card, etc.) within its factories.
 Manufacturing concerns the actual forging of a product from scratch. Car manufacturers
often construct all parts within their plants.
 Direct investment has the most control and the most risk attached. As with any capital
expenditure, the return on investment (defined by the payback period, Net Present Value,
Internal Rate of Return, etc.) has to be ascertained, in addition to appreciating any related
sunk costs with the capital expenditure.
Competition in the Global Marketplace

 Most of the firms are eyeing at the global marketplace to improve their
competitiveness. Considerable controversy has arisen in recent years,
concerning the most appropriate strategy in international markets.
Deciding how to deal with the globalization of markets, poses tough issues
and choices for managers and their firms. They must consider both –
external environmental forces and internal organizational factors, before
they arrive at an international marketing strategy.
 The growing integration of international markets as well as the growth of
competition on a worldwide scale implies adoption of a global perspective
in planning marketing strategy.
Strategic Implications of Globalization

(a) International Alliances:

International alliance is another implication of globalization. International coalition, linking firms of the
same industry based in different countries have become an even more important part of global strategy.
(b) Organizational Challenges :
The need to configure and co-ordinate globally in complex ways creates some obvious organizational
challenges such as organizational structure, reporting hierarchies, communication linkages and reward
mechanisms.
(c) Government Relations:
In the globalized era, the selection of foreign market to enter and the mode of entry will, by and large,
depends on the negotiations with the foreign Government, and the ‘muscle power’ of the global firm can be crucial
in deciding the shift of power equilibrium. A global firm must ‘manage’ its relationship with the foreign
Government to its advantage. A shining example of what happens if it fails to do so is Enron in India.
(d) Competition:
A global firm may be in a better position to compete with its global rival as it can augment its resources
globally.
Strategy for Global Competitiveness

A. Global Competitiveness requires the simultaneous optimization of scale,

scope, and factor cost economies, along with the flexibility to cope with
unforeseen changes in exchange rates, tastes, and technologies. The desire of a
company to achieve global competitiveness together with technology, innovation,
quality, productivity, efficiency, etc. will bring global competitiveness.
B. Multinational Flexibility. The key to maintaining differentiation.
C. Worldwide Learning. Learning is also rapidly becoming the central game in
consumer electronics and is emerging as a key competitive capability in branded
package goods.
Achieving Global Competitiveness

The following four factors affect a company's ability to formulate and implement
global strategy:
 Organization structure comprises the reporting relationships in a business -
the 'boxes and lines.
 Management process comprises the activities such as planning and budgeting
that make the business run.
 People comprise the human resources of the worldwide business and include
both managers and all other employees.
 Culture comprises the values and unwritten rules that guide behavior in a
corporation.
Besides these, to become globally competitive, the company needs to focus on the following:
 Developing a marketing plan with universal appeal.
 Help employees understand the company's global vision.
 Benchmark off mistakes that other have made in the past.
 Select the right partners for joint ventures overseas.

Assemble Global Team

-------------------------------------- Define business -----------------------------------------

Identify key markets Identify key competitors

Check core strategy

Check country selection

--------------------------Diagnose industry globalization potential --------------------

Evaluate use of global strategy evaluate organization

capacity
I------------------------------ Develop global program ---------------------I
Thank you