Why Go International

1
Why Go International?

• 1. Exploiting market potential and growth
• 2. Gaining scale and scope returns at home
• 3. Learning from a leading market
• 4. Pressuring competitors
• 5. Diversifying markets
• 6. Learning how to do business abroad

2
International Business Philosophies

• Multinational Mentality
• Focused on marketing to different countries with
  local adaptation of products and promotions
  production localized and technology less advanced
• Global Mentality
• Involves more standardization of products and
  integration across countries driven by strong
  foreign competition and growing homogenization of
  world markets

3
Ingredients for International SuccessDoes the
Company Have what it Takes to Succeed in
International Markets The Internal Corporate
Audit

• Capital To
• Cross Subsidize International Product Market
  Expansion
• Attack Competitors Profit Centers Worldwide if
  Needed
• Product Core Competency Important Different
  Attribute
• Risk Taking First Mover Advantage
• International Market Knowledge and Ethnocentrism
• Cross-Culturally Competent Management and Human
  Resources
• International Distribution Network
• Corporate Structure International Marketing
  Mentality
• Long-Term vs.. Short Term Orientation, Human
  Resources
• Global vs.. Multinational Mentality

4
MACROECONOMIC ENVIRONMENT

• Size
• GDP, GNP, Trade
• Population
• Growth Rates
• Exchange Interest Rates

• Affordability
• Per Capita GDP or GNP
• Personal Income
• PPP-measures
• Inflation, Unemployment

• Corporate Capabilities Objectives
• Develop The List Of Most Economically Optimum
  Countries Regions

• Need
• Economic Need
• social Need
• Maslows Concept
• Engels Law

5
MICROECONOMIC ENVIRONMENT

• Product
• New
• Differentiated
• Existing

• Demand
• Exists Is Satisfied
• Exists Is Unsatisfied
• Is Expected To Emerge

• Corporate Capabilities Objectives
• Determine The Actual Desired Product
  Positioning In Foreign Markets

• Competition
• Highly Competitive
• Niche Competition
• Non-Existent

6
Microeconomic Environment
Demand Structure in the Foreign Market
Satisfied Needs
Unsatisfied Needs
Emerging Needs

New To Them or New To All
Innovative Companies
Modified for Them- Differentiated
High Cash Companies
Your Product
Common or Me Too
7
Political, Economics the Time Factors
Democracy
USA
Sweden
Russia89
Capitalism
0
Time
Time 0
Socialism
Russia89
????
Cuba
Non-Democracy
8
Export Pricing Issues
Price quotes (Ex-Factory or Ex-Work) Exchange
rates Method of payment (Cash, LOC,
Countertrade) Government regulations
(Walmart-Germany) To whom you sell (Government
vs. Private Sector). Consumer affordability (per
capita income). Competition (domestic or
global). Country of origin and local consumer
perception.
9
Transfer Pricing
GM USA (Producing cars)
Opel division European Union
A C Delco USA
(Battery, stereo, auto parts)
Transfer Pricing
Vietnam (export)
GM-JV Shenyang, China
Export pricing
10
East-West Distribution Mentality
Large Wholesaler
Medium Wholesaler
Small Wholesaler
Manufacturer
Retailer
Import House
End Buyer
Cost 25-50 higher for consumers in Japan
East Japan- Basic Marketing Objective
Relationship-permanency-pay per existence
Wholesaler
Retailer
End Buyer
Manufacturer
West USA- Basic Marketing Objective
Efficiency-Pay Per Performance
11
Determinants of Choice of Channel
1. Product Requirements (Perishable lettuce,
sensitive apples, fine china, scratched cars,
beer without freshness, moldy cakes,...) 2.
Logistic Feasibility (Equipment by DHL, autos by
air, faxes of newsletters, freezer railroad cars,
shock-absorbent packaging, vacuum-packed,...) 3.
Demand Factors (Importance of speed for repairs,
timing of raw materials for inventory, customers
need for immediate gratification, quality
standards of middleman and final user,...) 4.
Competitive Factors (How fast is fast? How good
is good? What are the alternatives for the
buyer? Strategic importance of the market?) 5.
Middlemen Resources (Storage capability? Credit
or consignment or cash? Motivating with fast
delivery? Just-in-time system? Promised
supplies? Ability to support the marketing
effort?) 6. Own Resources (Financial, manpower,
production capacity)
12
Components of Global Advertising Strategy

• Message (content) and Creative (form- the way the
  message gets across)
• Media (radio, TV, outdoor, print, point of
  purchase, cinema. internet)
• Target Audience (cross-cultural, provincial,
  demographic)
• Product Nature (industrial.consumer, durable,
  non-durable)
• Corporate Mentality (global, multinational)
• Advertising Objective (awareness, understanding,
  interest, purchase)

13
International Communications Process
Awareness Understanding Interest
Purchase
Producer/marketer/advertiser Sets objectives
and advertising budget(s) worldwide
Mass Media Carries themessage (Available
Acceptable Media In Each Country)
Advertisingagency Develops the message(Cultural
Encoding)and selectsthe media
Target Market Receives themessage andinterprets
its content from media/ peers (Cultural Decoding)
Recipients Think feel (Cognition Emotion)
act react to the message (hierarchyof effects)

Marketing coordinationand control
Generatefeedbackon effects
Revisit Ads Objectives
Results Vs. Ad Objectives