2010 - imm 1

8/8/2019 2010 - IMM 1

1/21

International Marketing

Management

Chapter I

8/8/2019 2010 - IMM 1

2/21

8/8/2019 2010 - IMM 1

3/21

Slide 2

A1 ABC, 6/22/2010

8/8/2019 2010 - IMM 1

4/21

11/14/2010 Presentation by Prof. H. Ganguly 3

Types of International Business

1. International Trade ( ForeignTrade ) -- Comprises of

imports and exports i.e., buying and/or selling products and

services abroad to fulfill needs and objectives of company.

2. International Investment When a company applies

capital beyond home country for production and/or other

functions to earn profit, it is calledInternational

Investment.

3. International Marketing -- When a company identifies

and fulfills need and wants of customers abroad through

suitable products or services at profit for company, it is

calledInternational Marketing.

8/8/2019 2010 - IMM 1

5/21


Role of International Business / Marketing

* International business puts an end to economic isolation of

nations, thereby improve national income and standard of

living.

* It facilitates mobility of factors of production excepting land

and it opens up competition.

*Like Janus (the two faced Roman God), international businessdeliver opportunities and benefits out of imports and exports to

nations.

8/8/2019 2010 - IMM 1

6/21


B. SilkRoute trade to Globalisation

-- Selling and buying of goods beyond national frontiers is

thousands of years old. From India, clothing, silk, spices etc.

used to be traded with Egypt, Persia, Rome from more than

five thousand years

-- Trading between India, China, Rome, Greece etc. wereestablished before Christian era which was the major

reason of their prosperity in those days.

-- World trade and investments gradually assumed increasing

proportion to the betterment of national income and living.

-- Finally in last century, appeared multinational corporations

in the scene carrying out manufacturing, marketing and other

functions in nations globally.

8/8/2019 2010 - IMM 1

7/21


Paradigm shifts

-- From latter half of last century international businessunderwent major changes when large companies from U.S.,

Europe, Japan started expanding their operation beyond their

home countries.

-- These companies started identifying needs and wants ofcustomers in different nations and then provided them with

suitable products and service to satisfy; known as

multinational approach by firms like IBM, GM, Bayer,

Unilever, Toyota, Suzuki etc.

-- Next, with advent of newer technologies in telecom,

transportation and travel, national markets started integrating

with each other, thus same products and services started

finding their way into different country markets called

globalisation.

8/8/2019 2010 - IMM 1

8/21


These trans-border transactions came to be segregated as :

International Trade -- When products, service, technology,capital etc. flow across national borders for profit, it is called

international trade with orientation called ethnocentric.

International Marketing -- When companys objective is to

satisfy customers needs and wants at profit, it is calledinternational marketing; it embracespolycentric orientation e.g.

MNCs like Ranbaxy, HLL, Samsung, Petronas etc.

Global Marketing -- A global companystandardises its

marketing mix elements as far as possible to delivermaximum value to customers. It treats whole world as a

single market e.g., Harley Davidson, Sonys Walkman,

Walmart etc. Orientation of Global companies is mixed of

ethnocentric and polycentric orientation.

8/8/2019 2010 - IMM 1

9/21


Glocal Operations -- Global companies are increasingly

adopting structure and strategies to suit global operations forgreater value addition for customers all over but with focus on

local environments, in order to maximise satisfaction of those

local customers.

--For example,

Nokia is marketing mobile handsets in Indiathat provides SMS facility in Hindi and other Indian languages at

competitive prices.

-- Of course it increases marketing and other operational

complexities for company.

-- Strategy of these companies is to Think Global but Act

Local so called Glocal.

8/8/2019 2010 - IMM 1

10/21


C. Opportunities & Challenges of International Marketing

--It is well known that international business creates wealthfor individuals, companies and nations. Formation and also

decline of Roman empire was linked to international business.

Rise ofBritish empire to eminence in nineteenth and decline

in twentieth century was again due to international business.

Opportunities

-- Firms go global broadly because of TWO reasons :

1. Pull Factors -- it comprises of proactive reasons that pull

the firm to foreign transactions for

*Profit -- Generally international marketing is more profitable

compared to domestic.

*Top-line Growth -- At times of domestic recession, foreign

sales keeps company going.

8/8/2019 2010 - IMM 1

11/21


*Economy of Scale in operations.

*Spreading of risks -- Foreign markets reduce dependence of

firm on domestic market, as China is thriving now on U.S.

and Europe market.

*Uniqueness of product or service -- Unique attributes mayoffer enormous opportunity and very less competition abroad,

e.g. Indian herbal medicines, Chinese Tiger-balm etc.

*Stage in life

cycle

*Cheapercost of factors of production -- like cheap raw

material, labour, land etc.

8/8/2019 2010 - IMM 1

12/21


2.Push Factors -- drives the firm to explore opportunities like

*Home & Host Govt. Policies Tax benefits, subsidies etc.

*Spin-off Benefits Success in foreign markets boost

companys image in home market, also helps in introducing

newer products and services with enhanced brand image.

*Sharing of R&D costs -- MNCs can embark into ambitious

R&D projects compared to single-country companies as their

research expenses are shared between various country markets

*Competition -- Intense competition in home markets push

companies out to markets abroad.

8/8/2019 2010 - IMM 1

13/21


Challenges

--Difference in environment, competition, national income etc.give rise to formidable challenges in international marketing

*Political and Legalchallenges Generally political and

legal framework differs from country to country so

marketing approach is required to be tailored accordingly.

* CulturalEnvironment -- Behaviour pattern, liking and

disliking of customers differ from nation to nation, these are

to be accounted in assorting marketing mix elements.

*EconomicEnvironment -- Marketing strategy at host country

should be designed keeping in mind host markets nature of

economy, scenario and other policies.

8/8/2019 2010 - IMM 1

14/21


* Demographic and Technological Factors -- Population, its

growth rate, composition and level of technologicaladvancement influences marketing strategy in host nations.

*Business Infrastructure -- Availability of suitable banking

system, stock exchanges, market research & advertising

agencies, intermediaries are to be viewed in advance.

*Money and Monetary System Exchange rate of currencies,

its perpetual fluctuation offer major challenges in marketing

planning.

*Logistic Support System -- Availability of transport, its cost,

time, warehousing , inventory management and their expenses

are matters of serious concern.

8/8/2019 2010 - IMM 1

15/21


D. Internationalisation of Emerging market trades

-- Business operation of firms both in philosophy and style

undergo change as those emerge to occupy salient positions in

global trade.

-- Their focus and strategy changes in specific stages as under

Stage I -- Domestic Companies

-- Majority of companies start operation in their home country.

Theirfocus, vision and activities remain limited.

-- These companies focus upon domestic market, domestic

supplies and domestic competitors.-- Mindset of these companies is If it is not happening in

home country , it is not happening anywhere, neither it is worth

happening. It is called ethnocentric orientation.

8/8/2019 2010 - IMM 1

16/21


Stage II -- International Companies

-- On being attracted by opportunities abroad or otherwise,

these companies then extend one or more of their functions like

marketing, procurement, manufacture etc. to foreign countries to

provide greater value to customers. Thus it becomes a second

stageInternationalcompany.

-- But the company adopts same products, policies and

strategies as they follow in their home country.

-- Its orientation continue to remain ethnocentric.

-- So for all practical purposes, International operations are

extension of domestic operation.

8/8/2019 2010 - IMM 1

17/21


Stage III Multinational Companies

-- Next the company identifies difference in environments and

demand pattern in host countries.

-- So learns to change their approach, marketing mix elements

and strategies to satisfy different country customers.

-- Thus companys overall strategy comprises of a collection ofindividual strategies called multidomestic approach.

-- This type of operation is called Multinational operation.

Mindset of company also changes to Polycentric orientation.

-- Multinationalcompanies respond to different environment in

hostcountries and evolve different strategies to deliver

satisfaction to customers at profit.

8/8/2019 2010 - IMM 1

18/21


-- That is why, McDonalds market McAlu Tikki in India in

place ofB

igM

c with beef or ham as in U.S

. and Europe.

-- MNCs view the World as coglomoration of markets which

individually are different. So MNCs make strategy for each nation

as necessary.

-- That is, MNCs assort marketing mix elements like product

(service), price, path and promotion in a manner to satisfy local

customers.

--Overall strategy of

MNCs is to generate competitiveadvantage over other players through:

Manufacturing at lowest cost

Differentiation of product (service) from competitors

Evolving and exploiting market protection.

8/8/2019 2010 - IMM 1

19/21


Stage IV Global Companies

-- Next, the company attempts to add greater value to their

product or service for enhanced satisfaction to customers.

-- By focusing on eitherglobal sourcingorglobal marketing

approachbut notboth. It is referred to as Global Operation.

-- So, Global companies try to satisfy customers located all

over globe by sourcing products from home country. As is

done by Sonys Walkman or Harley Davidson motorcycles.

-- In the process, Sony or Harley Davidson introduce benefitsof Economy ofScale leading to low cost manufacture at one

location at Japan or U.S., compared to competitors.

8/8/2019 2010 - IMM 1

20/21


-- Similarly, Walmart procures value-addedproducts from all

over world to provide greatest satisfaction to US

customers atlower price through more than13000 retail outlets by harnessing

global sourcing & logistics strategy.

-- In Global companies, key activities are logistics and

marketingorsourcing. The suppliers and customers maintain a

hub and periphery relationship among themselves.

-- Orientation of Global companies is mixedof ethnocentric and

polycentric mindsets.

8/8/2019 2010 - IMM 1

21/21


Stage V Transnational Companies

-- Next, companies integrate global resources with global

markets at profit carried out through transnational operation

without consideration of national borders.

-- Philosophy of a Transnational company is to add best value to

product or service by using resources from wherever those are

best and economical globally so as to provide greatest

satisfaction to customers universally.

-- For example, News Corporation (I) Ltd. (Star TV of Rupert

Murdoch), Caterpillars Ltd. and most of automobile giants are

shifting from MNC to the TNC way.

-- Orientation of TNCs is Geocentrici.e. vasudaiva

kutumbakammeaning that whole world is my family.

---------

2010 - imm 1

Documents