Competing in global

markets
--abhay
Global markets--
 Companies--- competing globally

 1)Merger
 2)Acquisition
 3)Take over
 4)Joint ventures
 5)Strategic alliance
 6)Diversification
 7) Co –marketing

 8)Integration-vertical(virtually owning the entire

supply chain &
 Horizontal(internal expansion as well as mergers &

Acquisition )
GM--
 1)Merger—Two corporate entities joining forces and
becoming new business entity, with a new name.
 Involves two companies of the same size.& stature
joining hands
 eg—Glaxo—Burroj welcome
(Glaxo welcome),
 Glaxo welcome—Smith Kline
Beecham(SKB) Glaxo Kline

 Astra---- Zeneca (Astra Zeneca)
 Merger is different from acquisition
GM--
 2)Acquisition—Transaction through which
one firm buys a part or whole of assets of
another firm by paying compensation.
(preplanned & orderly manner) in which both
the companies feel that it is beneficial from
long term perspective.
 eg—Reliance buying part of
assets of Oberoi hotel chain,
 Pfizer –Warner Lambert (Outright
acquisition)
Gm-
 Take overs --
 are often paid in cash, the acquiring

company's stock or a combination of both

 Can be friendly or hostile

 Objective--- is to gain control over the

management.
GM--
 Friendly take over—approved by the management
of the target company.
 Eg--J& J took over Cru cell—a Dutch company
making vaccines.

 The bidder informs the board of the target

company.
Hostile take over—the board of the target company
is unwilling to a particular buyer
 Sanofi Aventis took over Genzyme—a biotech

company
GM-
 4)Joint ventures- Two or more firms
join together, share the stake and float the
business.

 Eg—GE capital with HDFC retail capital

 ------Ford Motors with M&M

GM--
 5)Strategic alliance— two or more
firms arrive at an agreement on certain issues
of mutual interest, no new firm is created.
Only working arrangements are agreed upon.

 Eg--In Fiji, Carpenters Motors distributes the

products of Mahindra tractors & McIntosh
Distribution delivers Mahindra tractors in
Western Australia.
GM--
 6)Diversification---

 Already discussed .
GM---
 7)Co –marketing----

 Glaxo, Unichem, Uni-UCB-co marketing

cetrizine

 Boehringer & Lupin had co marketing deal for

their anti-cancer drug Empagliflozin in India
Global markets--
 1)smart business st—corporations focus on developed countries
to sell their products and third world countries to manufacture
them.
 The benefit—maximize profits by minimizing input costs of
goods.
 Eg-cloth manufacturing done in Bangladesh, Vietnam, Cambodia

 2)Niche business st—create niche for themselves within

international industries.
 Eg—EXON MOBIL,
 Americans, British, Canadians &Russian firms specialized in
selling or leasing oil drilling machines
Global markets--
 3)consumer appeal st—alter their image depending
on the demands & values of their consumer base.

 Eg-Apple appeals to high end consumers of the

society in India & China.

 -----------------nurtures a modern image

 In north America & west Europe, they do not

advertise themselves as a premium brand. They go
for UNIQUE features coupled with mass appeal.
Global markets--
 Classification of world market
 1)industrial development of the countries

 2)population

 3)GNP

 4)Other characteristics
Global markets--
 Industrial development of the countries
 A)industrially developed economies

 B)more developed developing economies

 C)raw material exporting economies

 D)subsistence economies
Global markets--
 Industrially developed economies
 -----Little import restrictions
 ----insist on more R& D
 ---like to import goods of simpler technology &
simpler manufacturers
 --import labor intensive products like electronics
&light engineering goods because of the acute
shortage of labor they have & labor is costly as
well
 ---Import spare parts, raw materials to feed their
industries
Global markets--
 -- all are not rich in agricultural raw materials

 ---import decorative articles & craft articles

because of their affluence

 --also import anti-pollution equipment whose

production has been banned for risks of
pollution
 because their laws are very strict with
respect to preventing pollution
Global markets--
 More developed developing economies
 Eg—Brazil, Mexico, India, Thailand
 --scope for absorbing modern technology for
setting up new manufacturing units
 Eg—India teaming up with Russia & Japan for
import of modern technology & also set up
joint ventures in less developed countries like
Nepal & Bhutan
 -----import capital goods, energy generation
equipment, oil, gas , gold, defense equipment
Global markets--
 Raw material exporting economies
 Eg—gulf countries, African countries, Latin

American countries
 They export raw materials & purchase everything

like
 food, consumer durables, transport equipment,

service facilities
 --also buy turnkey projects like housing , schools,

hospitals

 --scope to set up new industries in these countries

Global markets--
 subsistence economies
 Produce nothing & depend very much on

imports
 Eg-Mongolia, Afghanistan, Latvia,
 --they need equipment to exploit their

untapped resources
 --need infrastructure like railways, roads,

buildings, transport equipment, power

generation equipment, transmission line
tower
Global markets--
 Segmentation of world markets on the basis
of population-------

 --the higher the population of a country, the

bigger is the market
 ---necessary to look at
 1)age group &sex 2)social class 3)educational

background 4)number of households 5)

geographic concentration 6)rate of change in
each of the above characteristics
Global markets--
 Segmentation on the basis of gross national
product
 (GNP)----

 --best markets

 USA, west Europe, Japan, Australia, Canada

for consumer goods, consumer nondurables,
medicines
Global markets-
 Other characteristics
 The size of population related to the income per
head of a country's inhabitants
 The marketer should devote a lot of time to study
this aspect
 --big countries may have different market
characteristics in different parts of the country
 --what may be sold in one part of the country
may not necessarily be sold in another part
 Eg—Indian food habits ,Nestle brewing variety of
coffee powder
Global markets--
 Product strategy—points to remember
 --cost reduction will always be an additional

advantage
 --should satisfy consumers
 --consumers will buy only what suits them
 --each foreign market is different
 (What is acceptable in Russia may not be

acceptable in America)
 --choices or tastes of consumers differ eg

Cuban cigars, cosmetics, liquor, clothes

Global markets--
 --product should have something special,
either in terms of attraction or advantage so
that the consumers prefer our brand over the
competition
 Eg—Fashion ware, consumer electronics

 --a slightly modified product may have a

better chance of success in getting a hold in
the market than a product which is similar to
the existing product in all essential aspects
Global markets--
 Perceptions –color
 Blue color—feminine &warm in Holland
 --masculine & cold in Sweden

 Green color—favorite color in Muslim world

 In Malaysia, it is associated with illness

 White color—death & mourning in china &

Korea
Global markets--
 Gestures & movements are culture specific

 Japan & UK, people do not show their

feelings

 Mexico, India, Netherlands—smile, laugh,

talk loudly when they are excited & greet
each other with great deal of enthusiasm
Global markets--
 Product adaptation strategies in IM
 1)one product-one message—world wide
 firms sell the same product in foreign markets

with the same advertising & promotional themes

& appeals which they use in home market
 Eg—Mercedes benz, Pepsi, coke
 Advantage—cost saving due to economies of

scale &
 elimination of R & D costs
 Promotion & packaging costs are also lower
Global markets--
 This strategy does not work in situations
where foreign consumers perception of a
product is different or the tastes & the
preferences differ from that of a domestic
consumer

 In such situations the marketer should try to

adjust or use new product strategy but only
after surveying the market
Global markets--
 2)same product—modified communication
 Product is same—promotional appeals / themes
differ in different markets
 Indian bicycles are advertised in Bangladesh for
their economy , durability whereas
 advertised in USA & western Europe for the pleasure
they give rather than for their transportation quality
because bicycles are used there only for fun &
pleasure
 Also a low cost strategy—costs associated with R&D,
manufacturing set-up, inventory & tooling avoided
Global markets--
 --the additional cost is only for reformulating the
communication strategy

 3)product adaptation—communication extension

 Adapt the product to suit foreign market
 Eg—Detergent manufacturers, Mahindra tractors
 Detergent mfgs change the formula to suit the

local water conditions or weather conditions but

the advertising theme is the same
 --promotional st is the same but additional costs

are involved in R& D & production

Global markets--
 4)product innovation– a low cost product
which people in the developing countries can
afford needs to be developed
 --the firm must follow the st to develop a

new product specially to suit their needs at a

price which the prospects can afford
 Highly rewarding st in IM because the payoffs

under this st are the highest

 Eg-Low cost artificial jewelry, low cost hand

tools, low cost medical eqiupments

Global markets--
 5)Dual adaptation—the marketer should adapt
the product & communication both to suit the
local markets & to increase the product
acceptability
 Eg—garment mfgrs who design their products
differently for different foreign markets and
adapt their communication accordingly.
 -eg— different Ac diffusers needed in
different countries
 -the st is based on differential approach
Global markets--
 Factors to be considered for choosing the correct
strategy--
 1)firms objectives—if the objective is profit
maximization, then the best st would be ------

 --the same product with the same

communication appeals may be sold in the
foreign countries

 --involves no expense & gains all economies of

scale
Global markets-
 2)product—market analysis
 —Who uses the product?
 When it is used ?
 For what purpose it is used ?
 How it is used ?
 Does the product require power sources,

linkage to other systems, maintenance ?

 Nature of demand of the product should be

analyzed in depth
Global markets--
 3)Company resources
 Financial & non financial resources
 Product adaptation involves costs. It may be

beyond what its financial resources can permit

 4)packaging– product may be differentiated in

different markets only by the size, design, color

and the language on the pack.
 other factors should also be considered in

packaging such as climate of the importing

country, transport hazard, custom requirements