webster university introduction to global strategic planning & global market expansion mrkt 5980

Webster University

Introduction to Global Strategic Planning

&Global Market Expansion

MRKT 5980

04/19/2304/19/23 Webster University MRKT 5980Webster University MRKT 5980 Page 2

Global MarketingGlobal Marketing

“…“…the world is becoming more the world is becoming more homogenous…”homogenous…”

““...distinctions between national markets are ...distinctions between national markets are fading and may disappear…”fading and may disappear…”


Global Marketing EvolutionGlobal Marketing Evolution

Core Business StrategyCore Business Strategy

CountryA

CountryB

CountryC

CountryD

Develop CoreBusiness Strategy

Internationalizethe Strategy

Globalizethe Strategy

Source: Reprinted from “Global Strategy… In a World of Nations?” by George S. Yip, Sloan Management Review 31 (Fall 1989): 30, by permission of the publisher. Copyright 1989 by Sloan Management Review Association. All rights reserved.


Globalization DriversGlobalization Drivers

Market FactorsMarket Factors

• new consumer groups, developed infrastructures, new consumer groups, developed infrastructures, globalization of distribution channels, cross-border globalization of distribution channels, cross-border retail alliancesretail alliances

Cost FactorsCost Factors

• avoiding cost inefficiencies avoiding cost inefficiencies and duplicated effortsand duplicated efforts

Environmental FactorsEnvironmental Factors

• reduced governmental barriers, reduced governmental barriers, rapid technological evolutionrapid technological evolution

Competitive FactorsCompetitive Factors

• rapid product innovation, introduction, distributionrapid product innovation, introduction, distribution


The Strategic Planning ProcessThe Strategic Planning Process

Understanding and adjusting the core strategy begins Understanding and adjusting the core strategy begins with a clear definition of the business for which the with a clear definition of the business for which the strategy is to be developed.strategy is to be developed.

The Strategic Business UnitThe Strategic Business Unit

• Based on product market similaritiesBased on product market similarities Similar needs or wants to be metSimilar needs or wants to be met Similar end user customers to be targetedSimilar end user customers to be targeted Similar products or services used to meet needs Similar products or services used to meet needs

of specific customersof specific customers


The Strategic Planning ProcessThe Strategic Planning Process

Assessment and Adjustment of Core StrategyMarket/Competitive Analysis - Internal Analysis

Assessment and Adjustment of Core StrategyMarket/Competitive Analysis - Internal Analysis

Formulation of Global StrategyChoice of Target Countries, Segments, and Competitive Strategy

Formulation of Global StrategyChoice of Target Countries, Segments, and Competitive Strategy

Development of Global Marketing ProgramDevelopment of Global Marketing Program

ImplementationOrganizational Structure - Control

ImplementationOrganizational Structure - Control

Global Strategy Formulation


Market and Competitive AnalysisMarket and Competitive Analysis

First, understand the structure of the global First, understand the structure of the global market industry; the common features of market industry; the common features of customer requirements and choice factors.customer requirements and choice factors.

Internal analysisInternal analysis

• Examine the readiness and capability of Examine the readiness and capability of the firm to the firm to undertake strategic moves with its undertake strategic moves with its current resources.current resources.


Formulating Global Marketing StrategyFormulating Global Marketing Strategy

Formulation begins with a series of strategic decisionsFormulation begins with a series of strategic decisions Choice of Competitive StrategyChoice of Competitive Strategy

• Cost leadershipCost leadership• DifferentiationDifferentiation• FocusFocus

Country-Market ChoiceCountry-Market Choice

• Concentration or diversificationConcentration or diversification• Factors in country markets selectionFactors in country markets selection

The stand-alone attractiveness of the marketThe stand-alone attractiveness of the market Global strategic importance of the marketGlobal strategic importance of the market Possible synergies offered by the marketPossible synergies offered by the market


Competitive StrategiesCompetitive Strategies

CostLeadership

BroadDifferentiation

BroadDifferentiation

Source of Competitive Advantage

Low Cost Differentiation

Industry-wide

Single Segment

CompetitiveScope

Focus

SOURCE: Michael Porter, Competitive Advantage: Creating and Sustaining Superior Performance (New York: Free Press, 1998), chapter 1.


Bases for Global Market SegmentationBases for Global Market Segmentation

EnvironmentalVariables

EnvironmentalVariables

MarketingManagement

Variables

MarketingManagement

Variables

GeographicVariables

GeographicVariables

PoliticalVariables

PoliticalVariables

EconomicVariables

EconomicVariables

CulturalVariables

CulturalVariables

PromotionVariables

PromotionVariables

ProductVariables

ProductVariables

PriceVariables

PriceVariables

DistributionVariables

DistributionVariables

Bases for InternationalMarket Segmentation

Bases for InternationalMarket Segmentation


Global Marketing Program DevelopmentGlobal Marketing Program Development

Development DecisionsDevelopment Decisions

• Product offeringProduct offering The degree of standardization and adaptation in the The degree of standardization and adaptation in the

product offering.product offering.

• The marketing approachThe marketing approach The marketing program beyond the product variable.The marketing program beyond the product variable.

• The location and extent of value-adding activitiesThe location and extent of value-adding activities Pooling production.Pooling production. Exploiting factor costs or capabilities.Exploiting factor costs or capabilities. Strategic alliances.Strategic alliances. Concurrent engineering.Concurrent engineering.

• Competitive moves to be madeCompetitive moves to be made Cross-subsidization using resources accumulated in one Cross-subsidization using resources accumulated in one

market to wage a competitive battle in another.market to wage a competitive battle in another.


Implementing Global MarketingImplementing Global Marketing

Success will come from a balance between local Success will come from a balance between local and regional / global concerns.and regional / global concerns.

““Think globally, act locally” is the operative Think globally, act locally” is the operative phrase for global marketers competing in country phrase for global marketers competing in country markets.markets.

Product choices should consider individual Product choices should consider individual markets as well as transfer products from one markets as well as transfer products from one region to another.region to another.


Global Marketing Pitfalls to AvoidGlobal Marketing Pitfalls to Avoid

Insufficient local market research.Insufficient local market research. The tendency to over standardize the product.The tendency to over standardize the product. Inflexibility in planning and implementation.Inflexibility in planning and implementation. The “Not-Invented-Here” syndrome (NIH).The “Not-Invented-Here” syndrome (NIH).

• How to avoid the NIH syndromeHow to avoid the NIH syndrome Ensure that local managers participate in Ensure that local managers participate in

the development of global brand the development of global brand marketing strategies.marketing strategies.

Encourage local managers to develop Encourage local managers to develop ideas for regional or global use.ideas for regional or global use.


Localizing Global MarketingLocalizing Global Marketing

Achieving a balance between in-country Achieving a balance between in-country managers and global product managers at managers and global product managers at corporate headquarters will require action to corporate headquarters will require action to develop and implement a global strategy.develop and implement a global strategy.



Management processesManagement processes

• Enhance the global transfer of communications.Enhance the global transfer of communications.• Interchange personnel to gain experience abroad.Interchange personnel to gain experience abroad.• Headquarters should coordinate and leverage Headquarters should coordinate and leverage

resources.resources.• Permit local managers to develop their own Permit local managers to develop their own

programs within defined parameters Maintain a programs within defined parameters Maintain a product portfolio that includes local as well as product portfolio that includes local as well as regional or global brands.regional or global brands.

• Allow local managers control over marketing budgets Allow local managers control over marketing budgets to respond to local customer needs and counter to respond to local customer needs and counter global competition.global competition.



Organization structuresOrganization structures

• The shift to global account management.The shift to global account management.

Corporate cultureCorporate culture

• The world is not one single market.The world is not one single market.• Plan and execute programs on a worldwide Plan and execute programs on a worldwide

basis.basis.• A global Identity favors no specific country.A global Identity favors no specific country.


Foreign InvestmentsForeign Investments

Firms invest to enter markets or assure themselves of sources Firms invest to enter markets or assure themselves of sources of supply.of supply.

Foreign direct investmentForeign direct investment

• An equity investment to create or expand a An equity investment to create or expand a permanent interest in a foreign enterprise.permanent interest in a foreign enterprise.

Portfolio investmentPortfolio investment

• The purchase of stocks and bonds internationally.The purchase of stocks and bonds internationally. Major foreign investorsMajor foreign investors

• More than 45,000 multinational corporations with More than 45,000 multinational corporations with 280,000 affiliates globally.280,000 affiliates globally.

• The terms “foreign” and “domestic” may no longer The terms “foreign” and “domestic” may no longer apply.apply.


Reasons for Foreign Direct InvestmentReasons for Foreign Direct Investment

Marketing factorsMarketing factors

• Growth and profit motivations.Growth and profit motivations.• Circumventing government-erected barriers to Circumventing government-erected barriers to

trade.trade.• Access to low-cost resources and supply.Access to low-cost resources and supply.• Local customers preference for domestic goods Local customers preference for domestic goods

and services.and services.• Attempts to obtain low-cost resources and Attempts to obtain low-cost resources and

ensureensure their supply. their supply.


Categories of International FirmsCategories of International Firms

Resource seekersResource seekers

• are searching for natural and human resources.are searching for natural and human resources. Market seekersMarket seekers

• are searching for better opportunitiesare searching for better opportunities to enter or expand within markets. to enter or expand within markets.

Efficiency seekersEfficiency seekers

• are attempting to obtain the are attempting to obtain the most economic sources most economic sources of production.of production.


Reasons for Foreign Direct InvestmentReasons for Foreign Direct Investment

Derived demandDerived demand

• results when businesses move abroad and results when businesses move abroad and encourage their suppliers to follow them, creating encourage their suppliers to follow them, creating chain or pattern of direct investment in a market.chain or pattern of direct investment in a market.

Government incentivesGovernment incentives

• Fiscal incentivesFiscal incentives tax holidays, allowances, credits and rebates.tax holidays, allowances, credits and rebates.

• Financial incentivesFinancial incentives special funding for land or buildings, loans and special funding for land or buildings, loans and

guarantees, wage subsidies.guarantees, wage subsidies.

• Non-financial incentivesNon-financial incentives guaranteed purchases, protective tariffs, import quotas, guaranteed purchases, protective tariffs, import quotas,

local content requirements, infrastructure.local content requirements, infrastructure.


Foreign Direct InvestorsForeign Direct Investors

Positive perspectivesPositive perspectives

• Bring in capital, economic activity, and Bring in capital, economic activity, and employment.employment.

• Transfer technology and managerial skills.Transfer technology and managerial skills.• Competition, market choice, and Competition, market choice, and

competitiveness are enhanced.competitiveness are enhanced. Negative perspectivesNegative perspectives

• Drain resources from host countries.Drain resources from host countries.• Starve smaller capital markets.Starve smaller capital markets.• Discourage local technology development.Discourage local technology development.• Bring in outmoded technology.Bring in outmoded technology.• Create new competition for local firms.Create new competition for local firms.


Types of OwnershipTypes of Ownership

Ownership patterns may be based on past experiences with Ownership patterns may be based on past experiences with similar ownership models.similar ownership models.

Full ownershipFull ownership

• Full control, full assumption of all risks.Full control, full assumption of all risks.• May be desirable, but is not necessary for success May be desirable, but is not necessary for success

internationally.internationally. Joint venturesJoint ventures

• Shared control, shared investment risks.Shared control, shared investment risks.• Reasons for joint ventures:Reasons for joint ventures:

governmental pressure to join with local partners.governmental pressure to join with local partners. mutually beneficial commercial considerations in mutually beneficial commercial considerations in

sharing markets, pooling resources, and local suppliers.sharing markets, pooling resources, and local suppliers.


Joint VenturesJoint Ventures

ADVANTAGESADVANTAGES Pooling of resourcesPooling of resources Better relationships with Better relationships with

local organizationslocal organizations Knowledge the partner Knowledge the partner

brings of the local marketbrings of the local market Minimizing exposure risk of Minimizing exposure risk of

long-term capitallong-term capital Maximizing leverage of Maximizing leverage of

invested capitalinvested capital

DISADVANTAGESDISADVANTAGES Different levels of control Different levels of control

are permitted or requiredare permitted or required Difficulty in maintaining the Difficulty in maintaining the

relationshiprelationship Disagreements over Disagreements over

business decisionsbusiness decisions Disagreements over profit Disagreements over profit

accumulation, and accumulation, and distribution (profit distribution (profit repatriation)repatriation)

Recommendations for joint ventures• Find the right partner.• Negotiate the joint venture agreement carefully.• Maintain flexibility to adjust to changing market conditions.


Types of Ownership… continuedTypes of Ownership… continued

Strategic alliancesStrategic alliances

• “…“…more than the traditional customer-vendor more than the traditional customer-vendor relationship, but less than an outright relationship, but less than an outright acquisition.”acquisition.”

Government consortiaGovernment consortia

• Public-private relationship in a specific project.Public-private relationship in a specific project.• Typically government supported or subsidized.Typically government supported or subsidized.


Complementary Strengths Create ValueComplementary Strengths Create Value

SOURCES: “Portable Technology Takes the Next Step: Electronics You Can Wear,”The Wall Street Journal, August 22, 2000, B1, B4; Joel Bleeke and David Ernst, “Is Your Strategic Alliance Really a Sale?” Harvard Business Review 73 (January-February 1995); 97-105; and Melanie Wells, “Coca-Cola Proclaims Nesta Time for CAA.” Advertising Age, January 30, 1995, 2 See also http://www.pepsico.com; http://www.kfc.com;http://www.siecor.com;http:www.ericsson.com; and http://www.hp.com.


Contractual ArrangementsContractual Arrangements

Cross marketingCross marketing

• The parties agree to carry out activities which The parties agree to carry out activities which are complementary and non-competitive.are complementary and non-competitive.

Contract manufacturingContract manufacturing

• An arrangement that allows one part to An arrangement that allows one part to outsourcing product manufacturing to another outsourcing product manufacturing to another party while retaining control over research and party while retaining control over research and development. development.

Management contractingManagement contracting

• A supplier furnishes an integrated service (e.g., A supplier furnishes an integrated service (e.g., turnkey operation) internally to a client that is turnkey operation) internally to a client that is functionally important to the client. functionally important to the client.


Management Contracting AdvantagesManagement Contracting Advantages

CLIENT ADVANTAGESCLIENT ADVANTAGES Provide organizational Provide organizational

skills not locally skills not locally available.available.

Immediate availability of Immediate availability of skills.skills.

Management assistance Management assistance and support that is not and support that is not available locally.available locally.

SUPPLIER ADVANTAGESSUPPLIER ADVANTAGES Lower risk because no Lower risk because no

equity capital is at stake.equity capital is at stake. Exercise large amounts of Exercise large amounts of

operational control.operational control. The strategic advantage of The strategic advantage of

being on the “inside”.being on the “inside”. Opportunity to Opportunity to

commercialize “know-how”.commercialize “know-how”. Using experienced staff to Using experienced staff to

offset business offset business fluctuations.fluctuations.


Management Contracting RisksManagement Contracting Risks

Risks to the clientRisks to the client

• Over-dependence on the supplier.Over-dependence on the supplier.• Loss of control to the supplier.Loss of control to the supplier.

Risks to the contractorRisks to the contractor

• Bidding without fully detailed insight intoBidding without fully detailed insight into actual costs of delivering the service. actual costs of delivering the service.

• The effects of the loss or terminationThe effects of the loss or termination of the contract and resulting of the contract and resulting

personnel problems. personnel problems.

webster university introduction to global strategic planning & global market expansion mrkt 5980

Documents

strategy source

webster university mrkt

global market industry

distribution slide

strategic business unit

similar end user customers

country b country c

clear definition