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INTERNATIONAL JOURNAL OF BUSINESS MANAGEMENT AND SCIENTIFIC RESEARCH

VOL : 8, August , 2015

INTERNATIONAL MARKETING: SCOPE & STRATEGIES FOR GLOBAL

COMPETITIVENESS

RAKESH KUMAR

Asstt Professor, P.G. Department of Commerce, S.G.G.S. Khalsa College, Mahilpur.

ABSTRACT

In the present scenario, almost every firms are eyeing at the global marketplace to improve their

competitiveness and all firms concentrates upon 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. The present paper highlight

the concept of international marketing and its scope. The paper also examine the theoretical aspects

of all those factors which are essentials for global competitiveness. In this paper, ideas from

available literature are integrated in a comprehensive conceptual framework in which strategies can

be formulated. The paper, further presents a basis for developing international marketing strategies

along with a comprehensive discussion on developing global competitiveness.

INTRODUCTION

Marketing is the process of focusing the resources and objectives of an organisation on

environmental opportunities and needs. It is a universal discipline. However, markets and customers

are different and hence the practice of marketing should be fine tuned and adjusted to the local

conditions of a given country. International Marketing can be defined as exchange of goods and

services between different national markets involving buyers and sellers. According to the

American Marketing Association, “International Marketing is the multi-national process of planning

and executing the conception, prices, promotion and distribution of ideal goods and services to create

exchanges that satisfy the individual and organizational objectives.”

It is concerned with the micro aspects of a market and takes the company as a unit of analysis. The

purpose is to find out as to why and how a product succeeds or fails in a foreign country and how

marketing efforts influence the results of international marketing.

Global Marketing consider the world as a whole as the theatre of operation. The purpose of global

marketing is to learn to recognize the extent to which marketing plans and programmes can be

extended worldwide and the extent to which they must be adopted.

Every country has a different set of customers and even within a country there are different sub-sets

of customers, distribution channels and media are different. If that is so, for each country there must

be a unique marketing plan. For instance, nestle tried to transfer its successful four – flavour coffee

from Europe to the united states lost a 1% market share in the us. Prof.Theodore Levitt thought that

the global village or the world as a whole was a homogeneous entity from the marketing point of

view. He advocated organisation to develop standardized high quality word products and market

them around the world using standardized advertising, pricing and distribution. The success of Coca

Cola was not based on total standardization of marketing mix. According to Kenichi Ohmae, Coke

succeeded in Japan because the company spent a huge amount of time and money in Japan to

become an insider. Coca Cola build a complete local infrastructure with its sales force and vending

machine operations. According to Ohmae, Coke’s success in Japan was due to the ability of the

company to achieve global localisation i.e. the ability to be an insider or a local company and still

reap the benefits of global operations. Think global and act local is the meaning of Globalisation and

to be successful in international marketing, companies must have the ability to think global and act

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local. International marketing requires managers to behave both globally and locally simultaneously

by responding to similarities and dissimilarities in international markets.

SCOPE OF INTERNATIONAL MARKETING

International Marketing constitutes the following areas of business:-

1. Exports and Imports: International trade can be a good beginning to venture into

international marketing. By developing international markets for domestically produced

goods and services a company can reduce the risk of operating internationally, gain adequate

experience and then go on to set up manufacturing and marketing facilities abroad.

2. Contractual Agreements: Patent licensing, turnkey operations, co – production, technical

and managerial know – how and licensing agreements are all a part of international

marketing. Licensing includes a number of contractual agreements whereby intangible assets

such as patents, trade secrets, know – how, trademarks and brand names are made available

to foreign firms in return for a fee.

3. Joint Ventures: A form of collaborative association for a considerable period is known as

joint venture. A joint venture comes into existence when a foreign investor acquires interest

in a local company and vice versa or when overseas and local firms jointly form a new firm.

In countries where fully owned firms are not allowed to operate, joint venture is the

alternative.

4. Wholly owned manufacturing: A company with long term interest in a foreign market may

establish fully owned manufacturing facilities. Factors like trade barriers, cost differences,

government policies etc. encourage the setting up of production facilities in foreign markets.

Manufacturing abroad provides the firm with total control over quality and production.

5. Contract manufacturing: When a firm enters into a contract with other firm in foreign

country to manufacture assembles the products and retains product marketing with itself, it is

known as contract manufacturing. Contract manufacturing has important advantages such as

low risk, low cost and easy exit.

6. Management contracting: Under a management contract the supplier brings a package of

skills that will provide an integrated service to the client without incurring the risk and

benefit of ownership.

7. Third country location: When there is no commercial transactions between two countries

due to various reasons, firm which wants to enter into the market of another nation, will have

to operate from a third country base. For instance, Taiwan’s entry into china through bases in Hong Kong.

8. Mergers and Acquisitions: Mergers and Acquisitions provide access to markets, distribution

network, new technology and patent rights. It also reduces the level of competition for firms

which either merge or acquires.

9. Strategic alliances: A firm is able to improve the long term competitive advantage by

forming a strategic alliance with its competitors. The objective of a strategic alliance is to

leverage critical capabilities, increase the flow of innovation and increase flexibility in

responding to market and technological changes. Strategic alliance differs according to

purpose and structure.

COMMONLY USED TECHNIQUES IN INTERNATIONAL MARKETING

1. Consumer Research- Part of the international marketing strategy is testing the product in foreign

markets and assessing the cultural preferences of the foreign country. For instance, a Thai customer

may be accustomed to flavours such as lemongrass and coconut, whereas a Tongan citizen may not.





Testing methods include issuing samples, performing focus groups and conducting surveys. From

these results, the product or packaging may be modified to fit the test group's preferences.

2. Promotion- Multinational corporations must exert caution when promoting products overseas. For

example, while a commercial showing scantily clad women holding bottles of body wash may be

perfectly acceptable in Western countries, the population in Arab nations might view the same

commercial and perceive it as crass and offensive. Strategies of product promotion include

researching a country's celebrities for use of product endorsement and using popular television shows

and songs for inclusion in brochures and magazine ads. Michael Czinkota and Ilkka Ronkainen,

authors of "International Marketing," state a common method of product promotion is incorporating

a cause with the marketing campaign. Unilever adapted this strategy when promoting washing

powder in Europe by including lesson plans on fitness activities for teachers.

3. Branding and Product Recognition Strategy- Getting the country to adopt a product can be

achieved using two different strategies. The first is assimilating the brand and product using cultural

icons and objects of familiarity. Frito Lay uses this strategy when using images and flavours similar

to those found in the country. Mexican potato chips may include spicy seasoning, for instance. The

second method is treating the product like an exotic foreign commodity. Evian water and luxury car

brands utilize this strategy by purveying their goods as rare and striking.

Industry Globalization Drivers

There are four broad groups of industry globalization drivers – market, cost, Government and

competition (Table-1 below). Together, these four sets of drivers cover all the major critical industry

conditions that affect the potential for globalization. Drivers are primarily uncontrollable by the

worldwide business. Each industry has a level of globalization potential that is determined by these

external drivers.

Table -1 Industry Globalization Drivers

Master Drivers Cost/Economic Drivers

Convergence of lifestyles & taste.

Increased travel creating global consumer.

Growth of global and regional channels.

Establishment of world brands.

Push to develop global advertising.

Shortening product life cycle.

Continuing push for economies of scale.

Accelerating technological innovation

Advances in transportation

Emergence of NIC

Increasing cost of product development

Government Drivers Competitive Drivers

Reduction of tariff barriers

Creation of trading blocs

Decline in role of government

Reduction in non-tariff barriers

Increase in level of world trade

Increase in foreign acquires of corporation

Companies becoming globally centred

Increased formation of global strategic

alliances

Globalization of financial markets

Source: Yip, G.S. (1991)

However, every industry cannot be a global industry, and some have to adopt ‘multidomestic strategy’. Table-2 lists five dimensions and their respective positions under pure multi-domestic

strategy and a pure global strategy. For each dimension, a multi-domestic strategy seeks to improve

worldwide performance by maximizing local competitive advantage, revenue or profits. On the other

hand, a global strategy seeks to maximize worldwide performance through sharing and integration.

Table-2 International Marketing Strategies

Dimensions Pure Multi Domestic Strategies Pure Global Strategies

Market Participation No Particular Pattern Significant share in major

markets





Product Offerings Fully Customized in each country Fully standardized world web

Location of Value

Added Activities

All activities in each country Concentrated one activity in

different country

Market Approach Local Worldwide uniform

Competitive Moves Stand-alone by country Integrated across country

Source: Henry Mintzberg, James Brian Quinn, 1996, The Strategy Process Concepts, Contests,

Cases

Strategy for Global Competitiveness

The research carried out in the past reveals that competitiveness depends upon internal as well as

external factors. It also depends on the macro-environmental factors such as the policies of the home

country Government (whether favouring competition, support offered to the industries in terms of

taxation, rebates and incentives, fiscal and credit policies, etc.), the degree of consumerism in the

home country, the nature of competition. However, there is lack of a single model for measuring

global competitiveness.

Competitiveness depends upon internal as well as external factors. However, there is a lack of a

single model for measuring global competitiveness. Various scholars have done research on global

competitiveness either on one or only on a few functional based competitiveness parameters.

According to Hoff, Fisher & Miller (1997), competitiveness is the ability to produce goods and

services that meet or exceed quality expectations of the customer; deliver these goods or services at

the time, place and price required by the customer; deliver these goods or services in the form and

quantity required by the customer.

To compete effectively, a company had to develop global competitiveness, multinational flexibility

and worldwide learning capability simultaneously.” Let’s elaborate each feature: (a) Global Competitiveness: To achieve global competitive advantage, cost and revenue have to be

managed simultaneously; efficiency and innovation are both important, since innovations can take

place in different parts of the organization, selective decisions have to be made instead of

centralizing or decentralizing assets.

Certain resources and capabilities are best centralized within the home country operation, not only to

realise scale of economies, but also to protect certain core competencies and to provide necessary

supervision of corporate management, such as R&D activities.

Some resources may be decentralized, on a local basis, either because of small potential economies

of scale compared to the benefits of differentiation or because of the need to create flexibility and to

avoid exclusive dependence on a single facility.

(b) Multinational Flexibility: The real challenge today is not only to be responsive, but also to build

the capability to remain responsive as tastes, technologies, regulations, exchange rates, and relative

prices change. Flexibility in sourcing, pricing, product design, and overall strategies is now the key

to maintaining differentiation.

(c) World-wide Learning: The pressure of competition has led companies to develop ability to

sense emerging trends, to develop creative responses, and to diffuse their innovations worldwide.

This has certainly been the case in the telecommunications industry. Learning is also rapidly

becoming the central game in consumer electronics and is emerging as a key competitive capability

in branded package goods. Centrally designed products

and processes still play an important global role, but innovations are created by the subsidiaries as

well.

ACHIEVING COMPETITIVENESS AT WORLDWIDE

Many companies today are struggling to achieve a global competitiveness and a globally integrated

organization retains the capability for local flexibility and responsiveness. Organization provides the

vehicle by which strategy can be formulated and implemented. The nature of organization also





affects the kind of strategy that can be developed. This is particularly true of global strategy.

Building the kind of company capable of formulating and implementing total global strategy is not

easy. The task is achievable if managers break it down into digestible pieces and if they relate

changes in organization to the specific changes needed in global strategy. The following four factors

affect a company's ability to formulate and implement global strategy (Yip, et. al 1988):

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 behaviour in a

corporation.

EXTERNAL DRIVERS OF INDUSTRY POTENTIAL FOR GLOBAL STRATEGY

(A) Market Factors

Homogeneous market needs

Global customers

Shortening product lifecycle

Transferable brands and advertising

Internationalizing distribution channels

(B) Economic Factors

Worldwide economies of scale in manufacturing or distribution

worldwide sourcing efficiencies

significant differences in country costs

Rising product development costs

(C). Environmental Factors

Falling transportation costs

Improving communications

Government policies

Technology change

(D)Competitive Factors

Competitive interdependence among countries

Global moves of competitor

Opportunity to pre-empt a competitor’s global moves

Source: Yip, et. al. (1988)

Besides these, to become globally competitive, the company needs to focus on the following:

1. Developing a marketing plan with universal appeal.

2. Help employees understand the company's global vision

3. Benchmark off mistakes that other have made in the past.

4. Select the right partners for joint ventures overseas.

Managers responsible for marketing in a multinational enterprise must design appropriate marketing

programs for each national market. To some extent, each country must be treated as a separate

marketplace because each has its own currency, legal and political requirements, and methods of

doing business. However, by coordinating operations on a regional or global scale, multinationals

can gain important competitive advantages.

CONCLUSION

Global competitors must have the capacity to think and act in complex ways. They must understand

and accept the fact that this is an era of competition and only those who are competitive will remain

in the race. They must, therefore, design their strategies such that they manage the cost and revenue

simultaneously. Due credit must be given to efficiency and innovations. Globally competitive firms

would know how to manage their resources globally and how to strike a balance between





centralization and decentralization, so that they take advantages of both - economies of scale and the

benefits of differentiation and adaptation. They will have to learn to adopt combinations of these

alternatives. The key to success is a careful analysis of the obstacles to this approach. Both should be

carefully evaluated on the basis of company's strength and the company's competitive advantage in

exploiting them before arriving at an international marketing strategy

REFERENCES:

Ali Abbas J. (2001), “Globalization of Business: Practice and Theory”. Jaico Publishing House..

G. Stalk, Jr. in C.A. Montgomery and M.E. Porter (eds) (1991): “Time – The Next Source of

Competitive Advantage”; Strategy – Seeking and Securing Competitive Advantage, A Harvard

Business Review Book Series, Boston, M.A.

Levitt T. (1983), “The Globalization of Markets”, Harvard Business Review, May-June, 92-102.

Porter M.E (1986), “Competition in Global Industries”; Harvard Business School Press. Porter M.E. (1990), “Competitive Advantage of Nations”; McMillan Co. T. Levitt in C.A. Montegomery & M.E. Porter (eds) 1991: “The Globalization of Markets”; Strategy –Seeking & Securing Competitive Advantage, A Harvard Business Review Book Series, Boston,

M.A.

Yip (1991) G.S. “Total Global Strategy – Managing for Worldwide Competitive Advantage”; PrenticeHall.

Yip, George S., Pierre M. Loewe, and Michael Y. Yashino (1988), “How to Take your Company to

the Global Market”, Columbia Journal of World Business, (winter), 37-47.


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