4. ENTRY STRATEGIES

International marketing and management

2010 – SOCRATES PROGRAM

2

Major International Marketing DecisionsMajor International Marketing DecisionsMajor International Marketing DecisionsMajor International Marketing Decisions

Marketing aims and objectives?Marketing aims and objectives?Marketing aims and objectives?Marketing aims and objectives?

Strategic decision process:• Country selection• Target product/market• Goals of the target market• The mode of entry• Time of entry• Marketing strategy• Marketing mix plan• Control systems to monitoring the

performance in the entered market

Marketing aims and objectives?Marketing aims and objectives?Marketing aims and objectives?Marketing aims and objectives?

• Build up market position for product• Increase market share• Defense of the market • Introduction of new product• Harvesting from declining• Max. profit from product line• Market entry with product on new market

– but HOW?

• Strategy is:

• a plan - action agenda, an integrated course of action (strategy for restructuring)

• a pattern of apparent behavior that emerges from a series of action (Quality is No. 1 = Ford's strategy)

• a position or match between an organization & a product-market area (product differentiation strategy)

• describes perspective of an organization – concept (company is customer-driven or an innovator)...

• Strategy includes ability to decide WHERE, WHEN and HOW to compete. These decision require knowledge of market trends, competition & competitive advantage of corporation.

MMarketing strategarketing strategyyMMarketing strategarketing strategyy

What is strategy?What is strategy?What is strategy?What is strategy?

• ImaginationImagination about the way how to achieve about the way how to achieve objectives. objectives.

- - who?who? – how markets, how customers (need-– how markets, how customers (need-demand) - demand) - positionposition

- - HOW?HOW? (M. (M. mix – supply, M operations, intensity of mix – supply, M operations, intensity of operations, operations, relation to competitionrelation to competition...)...)

• „„Game plan - designGame plan - design““ – mix of – mix of manoeuvres, which give possibility to firm manoeuvres, which give possibility to firm achieve and keep projected position and achieve and keep projected position and objectivesobjectives. (What to do when will be change?. (What to do when will be change?

Strategic marketing decisionsStrategic marketing decisionsStrategic marketing decisionsStrategic marketing decisions

• Strategic – long time and resourcesStrategic – long time and resources• Sometimes creation of add slogan is strategic Sometimes creation of add slogan is strategic

decisiondecision• Strategic tasks inStrategic tasks in marketing planning: marketing planning:

environmental analysis, identification of environmental analysis, identification of opportunity and threats, objectives formulating, opportunity and threats, objectives formulating, definition of market position, USP, creation of definition of market position, USP, creation of marketing plans, organizing and marketing marketing plans, organizing and marketing management, selection of people, SBU, management, selection of people, SBU, financing, creation of distribution channels, financing, creation of distribution channels, branding... branding... To identify competition advantage To identify competition advantage

Market. strategy & competition advantageMarket. strategy & competition advantageMarket. strategy & competition advantageMarket. strategy & competition advantage

• Competition advantage – why customer will buy Competition advantage – why customer will buy our product, not other.our product, not other.

• Question: Question: How we compete? By what tool? – How we compete? By what tool? – customers needs are without borderscustomers needs are without borders

• We must have unimitated advantage (None We must have unimitated advantage (None competitive advantage is permanent.) competitive advantage is permanent.)

• Competition - me tooCompetition - me too• Sometime is enough lower price – but not for Sometime is enough lower price – but not for

long time and not for all customers.long time and not for all customers.• Better is non price competition (based on Better is non price competition (based on

product – beer alcohol free, on services, product – beer alcohol free, on services, communication, people, innovation...)communication, people, innovation...)

• How & where (market) and when... to How & where (market) and when... to competecompete??

• Company resources and Company resources and market supply for market supply for coconnsumer needssumer needs – possibility for competiting – possibility for competiting – ground for marketing strategy– ground for marketing strategy

• How to?How to?• Exploitation of resources:Exploitation of resources:

– Cost increasing? Decreasing? Cost increasing? Decreasing? – Focus of resources for actual supply? Supply Focus of resources for actual supply? Supply

new product? New market? Now? Later? If yes new product? New market? Now? Later? If yes – how resources?– how resources?

– Pull down actual supply from market? Now? Pull down actual supply from market? Now? When?When?

– How to entry in foreign market???How to entry in foreign market???

Market.strategy & competition advantageMarket.strategy & competition advantageMarket.strategy & competition advantageMarket.strategy & competition advantage

Entry strategiesEntry strategiesEntry strategiesEntry strategies

Home Home productionproduction

Abroad Abroad productionproduction

Consultancy engineering

Direct exporting

Indirect exporting

With investment

Without investment

Indirect exporting

Specialized exporter-agent

Export cooperative

Without investment

With investment

Direct exporting

-agent-for all customers-only privileged customers

-representation office - local branches- daughters:

without stock with stock with services

Home Home productionproduction

-pyggybacking-pyggybacking

Without direct invest.

With direct invest.

Abroad Abroad productionproduction

LicensingKnow-how

Franchising (master franchising)

Profession agreement

Joint ventures - synergy

Agreement about teach in

-minority-majority-parity

Ownerships

-montage-semi product-full production

- buy (aquistion) or- establish

Contract manufacturing

- LCC

Management contract

Strategic aliances-types

Joint Ownership

KFC entered Japan through a joint ownership venture with Japanese conglomerate Mitsubishi.

Market Entry Strategies

• Partner resources availability• Other resources availability• Contacts with local suppliers• Contacts with local customers• Entry to closed markets• Participation on costs• Dividing of risk• Know-how availability• Synergy effect...

WHY joint venture?

R I S KMinimum Maximum

I N S

P E

C T

I O

NM

axim

um

Min

imu

m Export Know-how Franchising Licensing Exclusive representation Joint venture Ownership with own management Ownership with foreign management

EXPORT

at home in abroadManagerial performance

100%

100%

LICENSING

DAUGHTERC

apit

al n

eed

sat

ho

me

i

n a

bro

ad

JOINTVENTURE

ABROAD REPRESENTATION

FRANCHISING

Risk of losing proprietary information

Selecting a foreign market entry modeSelecting a foreign market entry modeSelecting a foreign market entry modeSelecting a foreign market entry mode

Resources Control

High

Medium

Low

Factor

LicensingJoint venture

Exporting (own staff)Exporting

(middlemen)Direct investment

Direct investment

Joint ventureExporting (own staff)

LicensingExporting (middlemen)

Direct investmentExporting (own staff)

Joint ventureLicensing

Exporting (middlemen)

Le

vel

Direct investment

Undifferentiated

Approaches to developing Approaches to developing international marketing strategiesinternational marketing strategies

Approaches to developing Approaches to developing international marketing strategiesinternational marketing strategies

Product

Price

Promotion

Place

Undifferentiated market

Target 1

Target 3

Target 2

Approaches to developing Approaches to developing international marketing strategiesinternational marketing strategies

Approaches to developing Approaches to developing international marketing strategiesinternational marketing strategies

Product1

Price1

Promotion1

Place1

Product2

Price2

Promotion2

Place2

Product3

Price3

Promotion3

Place3

Market segmentation

Approaches to developing Approaches to developing international international marketingmarketing strategies strategies

Approaches to developing Approaches to developing international international marketingmarketing strategies strategies

Product1

Price1

Promotion1

Place1

Product2

Price2

Promotion2

Place2

Product3

Price3

Promotion3

Place3

Market segmentationBased on:Buyer motivationsBuyer preferencesBuyer behaviourBuyer price sensitivities

ReligionLifestyle IncomeAgeetc.

Profiled on:

Marketing strategy and BCGMarketing strategy and BCGMarketing strategy and BCGMarketing strategy and BCG

??

?? ??

??

Selecion of Selecion of segmentssegments

Invest - developmentInvest - development

Keep position-harvestKeep position-harvest

Invest–selectiveInvest–selective

Fall back - deinvestFall back - deinvest

Select invasionSelect invasion(slow skiming)(slow skiming)

Pri

ceP

rice

low

hig

hlo

w

h

igh

PromotionPromotionhigh lowhigh low

Intensive Intensive marketingmarketing

(fast skiming)(fast skiming)

Pasive Pasive marketingmarketing

(slow penetration)(slow penetration)

Wide invasionWide invasion(fast penetration)(fast penetration)

Entry strategies for new productEntry strategies for new productEntry strategies for new productEntry strategies for new product

Market development

s20/c400

PR

OD

UC

TP

RO

DU

CT

new

new

old

old

MarketMarketold newold new

Penetrations50/c100

DIVERSIFICATIONs5/c1400

PRODUCT developmnet

s33/c800

Conso-

lidation

Ansoff´s development strategiesAnsoff´s development strategiesAnsoff´s development strategiesAnsoff´s development strategies

KOMATSU StrategiesKOMATSU StrategiesKOMATSU StrategiesKOMATSU Strategies

QualityQuality

CostsCosts

DifferentiationDifferentiation

DiverzificationDiverzificationFuturistic Futuristic projectproject

„„A“ projectA“ projectTQC, TQMTQC, TQMFor suppliers For suppliers tootoo

ReductionReductionOf components - Of components - rationalisationrationalisation

1000 HP1000 HPRemote controlRemote controlProgram at terreneProgram at terrene

• Product – elimination, diversification, PLC, • Price – status quo, unique price, upper/lower

competition, penetration, skimming...• Distribution – intensive, selective, exclusive,

line price, INCOTERMS, complementary products, two-element...

• Promotion – pull vs. push

M – mix strategiesM – mix strategiesM – mix strategiesM – mix strategies

Competition strategiesCompetition strategiesCompetition strategiesCompetition strategies

- According position – attack/defend- According position – attack/defend

- Cost lCost leadereadership – Deavoo, KIAship – Deavoo, KIA

- Nicher – positionalistNicher – positionalist - Victorinox - Victorinox

- ChallengerChallenger

- Me too – to be the 2nd Me too – to be the 2nd

- Focus – Focus – R&RR&R

- DiDifferentiation - McD...fferentiation - McD...

Evaluation of strategiesEvaluation of strategiesEvaluation of strategiesEvaluation of strategies

Criterions:Criterions:

1. Synergy effect from M-mixu - (1+1=3)1. Synergy effect from M-mixu - (1+1=3)

2. Is clear for customer2. Is clear for customer

3. Is helping to company (profit, turnover...)3. Is helping to company (profit, turnover...)

4. Market share is increasing4. Market share is increasing

5. Possibility to find good market position5. Possibility to find good market position

6. Feasibility in company condition 6. Feasibility in company condition

(resources, skills...)(resources, skills...)

Orientation on foreign market

Orientation on domastic market

Weak competit. position

Strong competit. position

Weak exporter

Competionexportér

Home leaderSeparatist

Level of export orientation & competition position

Entry strategies to foreign market

Investment & delegation Investment & supervision

Delegation without investment Supervision without investment

Minority participation

Joint venture

FDI - majority

Daughter

Direct exporting

Technical support

Managment agreemet

Licensing

Franchising

Privileged representation

Výrobná pobočka

Local branche

Take and care about

I supervise my thingsCare about my money

I care about you

Comparation of JOINT VENTURE & 100 % OWNERSHIP

• Synergy effect• Common financing• Position of home firm• Image of home firm• Better contact with local market• Risk of conflict in firm goals• Agreement is necessary• Availability of inform.& know-

how• Risk of price problems• Better selection of employees• Risk of problems from history -

relation• Common participation on profit• Participation of home partner

• Independent entrepreneurship• Own financing• Position of foreign firm• Image of foreign firm• Worse contact with local

market• Independent decisions• Explicit decision• Full supervision• Own price policy• Problems with local employees• Risk of management leaving

• Own responsibility for profit/loss• In some countries prohibition of

100 % ownership