challenges Use of assets

 Currency Global business

 Interest rates  Licensing of intellectual property
 Taxation systems  Royalty
 Government regulations  Patents
 Language  Trademarks
 Culture  Technology
 Uncertainties  Export of intangibles
• FDI-ADVANTAGES
LICENSING -ADVANTAGES • Locals partner knows the domestic
• Less risk business environments better
• No investment needed • Easy management
• Assured returns • Easy access to local market
• Less uncertainty –local licensee • Good image for both
• Less fear of govt. controls • Can abide by local rules and regulations
• Good for host country • RISK
• Local partner’s interference
LICENSING- DIS ADVANTAGES
• Quality cannot be assured • Difficulty to ensure quality
• Nurturing a competitor abroad • Supremacy of local partner
• Reduced opportunity to enter and • Repatriation limitations
establish business
• Technology sharing
• Technology theft
 Global Marketing
• Identifying goods and services that
customers outside the home country want
• Provide these at the right time and place
Marketing for different type of Consumer and
Product
• Consumer marketing -Supplying
consumers generally with branded
products
• Industrial marketing -Supplying
differentiated ingredients to processors
and manufacturers
• Commodity marketing -Supplying
undifferentiated raw materials
Standardization
High cost of adaptation
• Industrial products
• Convergence and similar tastes in divergent
• markets
• Predominant use in urban environments
• Marketing to predominantly similar
countries
• Centralised management and operations
• Country-of-origin effect
• Economies of scale
Adaptation
 Differences in technical standards
 Consumer and personal use product
 Variations in consumer needs
 Variations in conditions of use
 Variations in abilities to buy
 Independent national subsidiaries
 Cultural impact
 Government influence
 Export Pricing policies
 a) Cost-Plus Pricing: adds international costs
and a mark-up to the domestic manufacturing
cost. 
 b) Dynamic Incremental Pricing: only variable
costs and a portion of the overhead load
(incremental costs) should be recuperated.
• Exporting-related incremental costs
(manufacturing costs, shipping expenses,
insurance, and overseas promotional costs).
GLOBAL MARKETING
• Denotes the use of advertising and marketing on
a global basis.
• Marketing is at the threshold of a new and
exciting era: e-business, e-commerce and e-
marketing
• Business has two basic functions: marketing and
innovation (Drucker)
• New era of competition, demanding customers
• More stakeholders (customers, employees,
media).
 GLOBAL MARKETING-INTEGRATION
FORCES
Driving Forces Challenges
Technology • Markets can present higher profit opportunities than present
Culture markets.
• Markets can offer size but not profits.
Market Needs
• Company needs a larger customer base for economies of scale.
Costs
• Present customers are needing service and products as they go
Free Markets international.
Economic Integration DUMPING
Peace • WTO: Sale of an imported product at ‘less than fair value’ and
Strategic Intent causes ‘material injury to a domestic industry’.
Management Vision, • US: An unfair trade practice that results in injury, destruction, or
Strategy and Action the prevention of the establishment of an American industry.
Restraining Forces • US considers dumping when price is >5% below home market
price or,
Culture
• Price is below cost of production
Market Differences
Costs • 4P’S
National Controls • Place (distribution)
• Transportation to international freight carrier
Nationalism
Freight,
Peace vs. War/ Stability Insurance,
Management Myopia Documentation,
Organization History Customs clearance,
Domestic Focus Local transportation,
Logistic management “in the market”,
Currency risk
Product – usually controlled by the exporter, initially the least
impacted element of the marketing mix

• “localization” often required

• approvals and certificates
•  packaging & labeling
•  measures, etc
 
 Promotion – success at home leads to interest from
potential importers, licensors, joint venture partners
International strategic management
A comprehensive and ongoing management
planning process aimed at formulating and
implementing strategies that enable a firm to
compete effectively internationally.
  Strategic goals
• Strategic goals are the major objectives the
firm wants to accomplish through pursuing a
particular course of action.
• they should be measurable,
• feasible,
• time-limited,
• Five-Forces (developed by Michael Porter)
• forces that shape and influence the industry
or market the organisation operates in.
1.Strength of Barriers to Entry - how easy is
it  for new rivals to enter the industry?
2.Extent of rivalry between firms – how
competitive is the existing market?
3.Supplier power – the greater the power,
the less control the organisation has on
the supply of its inputs.
4.Buyer power – how much power do
customers  in the industry have?
5.Threat from substitutes – what alternative
products  and services are there and
what is the extent  of the threat they
Types of Strategy 
• Competitive Advantage – something which gives the
organisation some advantage over its rivals
• Cost advantage – A strategy to seek out and secure a cost
advantage  
of some kind - lower average costs, lower labour costs, etc.
• Market Dominance- Achieved through:
– Internal growth
– Acquisitions – mergers and takeovers
• New product development: to keep ahead of rivals and set
the pace
• Contraction/Expansion – focus on what you are good at
(core competencies) or seek to expand into a range of
markets?
• Price Leadership – through dominating the industry –
others follow your price lead
• Global – seeking to expand  global operations
• Reengineering – thinking outside the box – looking at news
ways of doing things to leverage the organisation’s
performance
• Downsizing – selling off unwanted parts of the business –
similar  to contraction
• Delayering – flattening the management structure,
removing bureaucracy, speed up decision making
• Restructuring – complete re-think  
of the way the business is organised
Home Replication Strategy
• a firm utilizes the core competency or firm-
specific advantage it developed at home as its
main competitive weapon in the foreign markets
that it enters.
• it takes what it does exceptionally well in its
home market and attempts to duplicate it in
foreign markets.
• Multidomestic strategy :
• Main aim is maximum local responsiveness
• Customize product offering, market strategy
including production, and R&D according to
national conditions
• Generally unable to realize value from
experience curve effects and location economies
• Possess high cost structure
• Transnational strategy  •
•  To meet competition firms aim to reduce costs,
transfer core competencies while paying
attention to pressures for local responsiveness
• Global learning
– Valuable skills can develop in any of the
firm’s world wide operations
– Transfer of knowledge from foreign
subsidiary to home country, to other
foreign subsidiaries
• Transnational strategy difficult task due to
contradictory demands placed on the
organization
Perceived Benefits of Strategic Planning 
– Coordinate and monitor operations
– Streamline product lines and supply chains
– Manage political, currency, and competitive risks
– Potential costs
Micromanagement of subsidiary operations
– Misallocation of time and staff resources
– Over-planning and lower profitability
• Global Integration
• Products and services homogeneous in terms of type and quality
• Customers have common taste preferences
• National Responsiveness
• Segmented regional markets
• Need to respond to differing national standards and regulations
• Adaptation of tools and techniques to manage local workforces
Pyramid” Strategies 
Engage in significant international activity a short time after being
established
• Successful firms leverage a distinctive mix of orientations and
strategies
• Global technological competence
• Unique-products development
• Quality focus
• Leveraging of foreign distributor competences
• Targeting emerging market
• Marketing requires smaller-scale strategies
• Building relationships with local governments, small entrepreneurs,
and nonprofits
• Less dependence on central governments and large local
companies
Pyramid” Strategies