International Marketing

International Marketing
Learning Objective(s): After the completion of this course the student should be able to:
1. Develop an understanding of current context and competitive nature of International
marketing environment.
2. Apply the knowledge and skills to devise and implement appropriate marketing
strategy.
3. Appraise themselves with various current marketing tools and practices for successful
strategies to enter, conquer & sustain in the foreign markets & eventually earn a global
presence required for an industry ready marketing professional
International Marketing
International Marketing
Books Recommended
1. Cateora, Graham, and Gilly, International Marketing
2. Keegan Warren, Global Marketing Management
3. Craig C. Samuel, Global Marketing Strategy
International Marketing
Rules of Engagement
1. You shall read the cases and come – There may be a surprise test
2. Will be marked present only if you are present in both the sessions
3. Usage of mobiles and laptops in the class is not allowed (unless specifically
instructed to) – devices shall be kept inside bag/ trouser pocket
4. It is for your benefit!
International Marketing
Evaluation
End-Term: 40 Marks
Mid-Term: 20 Marks
Project: 20 Marks
Course Era: 10 Marks
Surprise Quiz/ Case Study: 10 Marks
International Marketing
https://www.youtube.com/watch?v=bDNO0Dq3VYk

What are the advantages of international trade?

What are the disadvantages of international trade?

IM - Definitions
IE: “Study of movement of wealth across nation through all means
like business, migration, charity and all other means”.
IT: “Study of movement of Goods & Services across national
borders.”
IB: “A firm’s endeavors/ Activities for conduct of business in more
than one country”.
IM - Definitions
IM:
“Marketing practiced across borders/legal boundaries of nations”
“Marketing activities that build relation and help exchange of value with the
buyers in foreign market”.
“Marketing outside domestic boundaries of countries”.
“is the performance of business activities designed to plan, promote, produce,
price & direct flow of companies G/S to consumers in more than one country”
International Marketing
When Did it all start?
IM- Evolution of Globalisation
Globalisation 1.0 – Nation driven
Globalisation 2.0 – Company driven
Globalisation 3.0 – Technology driven
 IM- International Trade Theories
Classical Country based Theories
Mercantilism
Theory of Absolute advantage – Adam
Smith
Theory of comparative advantage –
Raicardo
Factor endowment theory – Hecksher &
Ohlin
Modern Firm based Theories
Country similarity theory – Steffan
Linder
PLC Theory – Raymond Vernon
Global strategic Rivalry – Krugman &
Lancaster
Porter’s National Competitive Advantage
theory
IM- Theory of Mercantilism
Used by the European nations in the 16th- 18th century.
Nations should accumulate wealth through trade surplus
Use protectionism to create import barriers.
It’s a win loose game.
Restrictive trade policies come up/ neo-mercantalism.
Exploitative in nature.
IM- Theory of absolute advantage
Adam Smith
“Ability of a nation to produce a good more efficiently & cost effectively than
any other country”
Specialization leads to increased skill, productivity and reduction in cost.
Use excess goods for export and import more goods to increase standard of
living of its people.
Advantages are either Natural or acquired - (HDI).
E.g.: East Asian countries & electronics goods manufacturing - Taiwan
IM- Theory of comparative advantage
Ricardo
A country might have absolute disadvantage.
But should produce goods where absolute disadvantage is less.
Looks at production function only.
Assumes the trading partners are ready for lower gains.
IM- Factor endowment theory
Hecksher & Ohlin
Two factors are considered Labor and Capital.
Labor endowed countries export labor intensive goods E.g.: China
Capital endowed countries export capital intensive goods E.g.: US
(Capital Labor relation has to be calculated on the basis of average capital)
IM- Country similarity theory
Country based theories incorporated product related factors like quality, brand,
loyalty…
Steffan Linder
Explains the concept of intra-industry trade (Toyota - Mercedes Benz)
Consumers in countries with similar development have similar preferences
First produced for domestic consumption
Exports start with similar countries (in development)
Ideal for branded goods
IM- Theory of international PLC
International market has a cyclical pattern (new, maturing, & standardized P)
Factors of production initially comes from the country of invention.
Once the market grows the product slowly moves away from country of origin.
The ‘inventing’ country starts importing the product.
◦ Introduction – inventing country/ developed country
◦ Growth – adoption by developing countries/ exported from inventor
◦ Maturity – global adoption/ lowest cost manufacture
◦ Decline – import by the ‘inventing’ country
IM- Global strategic rivalry
Paul Krugman and Kelvin Lancaster
Based on MNCs and their struggle to gain industry leadership
The companies compete by creating sustainable competitive advantage
They create entry barriers to rivals then and prevent their entry (R&D, IPR, Scale,
RM access, Brands…)
Such sustainable competitive advantages help globalization of the company
IM- Theory of competitive advantage
Michael Porter- A competitive advantage of nations also called “Diamond Model”.
Advantage of nation is dependent on:
Factor Conditions
Demand conditions
Strategy/ rivalry/ infrastructure
Related and supporting industry
Chance
Government
IM- Theory of competitive advantage
IM- Theory of competitive advantage
Factor Conditions/ Inputs- includes HR, Natural resources, physical &
administrative infrastructure, IT & Tech Infrastructure, natural resources etc.
Demand Conditions: Domestic demand decides on the development of goods
and services.
Related and Supporting Industry: Eg: IT clusters, Textile clusters.
Strategy/Structure & Rivalry: Increases competitiveness
Chance: occurrence beyond firm’s control.
Government: It keeps control on Industry.
Eg: Cognizant vs Hysoft AND Foxconn vs BPL
IM- Theory of competitive advantage
However,

Innovation in Developing countries (R&D in India for MS, Adobe, SAP, GE….)
Reverse & Frugal Innovations
Born Global…

https://opentext.wsu.edu/cpim/chapter/2-1-international-trade/#:~:
text=Country%20Similarity%20Theory&text=In%20this%20firm%2Dbased%20the
ory,the%20most%20potential%20for%20success
IM- The Internationalization Process
What trends did you see in Coco-Cola Internationalization?
Geographic trends
Mode of entry
IM- The Internationalization Process
IM- The Internationalization Process
IM- The Internationalization Process
Internationalization is based on knowledge of market
Knowledge comes from experience
Leading to a virtuous cycle of Experience – Knowledge – Risk Mitigation – Increased
Commitment
Knowledge & Experience is not transferable
There is increasing international Market Commitment & Geographic/ Psychographic
commitment over a period of time – Increasing internationalization.
Internationalization is a unilateral & intra-organizational process
IM- The Internationalization Process
However,
Information and knowledge is more open & transferable (through business networks)
Value-chain is giving rise to value-networks
JV & Alliances are becoming more prominent – replacing the need for first-hand experience
So organizations ‘network of relationships’ become more prominent in internationalization
It is a multi-lateral process of developing relationships
Links & position in global value network decides internationalization (network theory)
Organizations need only to follow/ mimic best practices to learn (vicarious/ social learning)
https://walton.uark.edu/insights/network-theory.php#:~:text=Network%20theory%20provides%20
ways%20to,the%20structures%20that%20are%20involved
.
IM- The Internationalization Process
IM- The Internationalization Process
So what matters is
Knowledge Opportunities & not market knowledge
Network Position & not Market Commitment
Relationship Commitment Decision & not commitment decision
Learning, creating & trust building & not current activities
IM- The Internationalization Process
IM- The Internationalization Process
What were the triggers and motives for Cokes
internationalization?

https://www.youtube.com/watch?v=VAFSDywH_vc
IM- The Internationalization Process
Unique product
Perceptive management (Robert Woodruff)
Physical & psychological closeness
Profit and growth motives
Perceptive management
Market demand
Existing customers…
IM- The Internationalization Process
Proactive motives
Profit & Growth motives
Managerial Urge
Unique products / Technical competence
Foreign market opportunities / information
Economies of Scale / Learning curve
Tax benefits…
IM- The Internationalization Process
Reactive motives
Competitive pressure
Saturation / small domestic market
Over production / excess capacity
Unsolicited overseas orders
Physical / psychological closeness
Seasonal reasons
IM- The Internationalization Process
Internal Trigger
Perceptive management – Jack Welch
Specific internal event – RIL
Inward – Outward Internationalization
IM- The Internationalization Process
External Trigger
Market demand – pharmaceuticals
Competing firms – Samsung / LG
Existing customers – automotive industry
Trade associations
Governments
IM- The Internationalization Process
IM- The Internationalization Process