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32.1 GLOBAL MARKETING

Main Functions in Global Marketing
Choosing the Basic Route for Global Marketing: As an entry strategy,
there are 5 basic routes to enter a foreign market:

Exports, Licensing of technology/know-how, Multinational trading,

Joint ventures & Full-fledged global operation

Market/Product Selection: The opportunities afforded by various overseas

markets must be carefully evaluated, keeping in view the resources, distinctive
capabilities & constraints of the firm. Market segmentation & Market
targeting are concepts useful in global marketing. The opportunities should be
fully exploited & the risk involved in global business should be minimized.

Selection of Distribution Channels: Choice of the right distribution

channel in the selected foreign markets is the next task. Some of the
possible alternatives in this regard are:

Appointing an important house of buying country as sole dealer

Appointing a few selected importers instead of a sole dealer
Going through an export house of ones own country
Operating ones own branches in the foreign countries
Operating subsidiary companies in foreign countries
Tie-up with an MNC

Pricing: Like domestic marketing, firms, which have only a short-term interest in
the foreign markets, may opt for a cost-plus pricing strategy. Firms with longterm interest have to adopt a market-oriented pricing policy.
Marketing Communications: Broadly, media choice has to be from:

Transnational media offering multinational coverage

National media of the chosen country
Local media in chosen market segments

Mastering Procedural Complexities: The firm has to master areas like

export-import licenses, customs, foreign exchange, modes of payment,
documentation, shipping/air procedures, insurance, and QC &
packaging regulations.
Organizational Adaptations: Shift - domestic to international commerce
Handling Business Ethics: Familiar with ethical aspects of the business

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32.2 CULTURAL DYNAMICS
How Cultural Dynamics Vary Between Countries
USA: US people & institutions want things to happen faster; they exert
more pressure on results; they believe in direct communication.
UK: Business in UK is still very much top-down & hierarchical. In
business negotiations, they tend to avoid confrontation &
disagreement, one reason why they may be indirect, reserved &
tactical.
Germany: Germans have a high regard for authority & structure; it
takes a longer time to communicate. They check everything is in order
before moving to the next phase. They are work-oriented; they do not
like to mix business & pleasure. In time-conscious Germany, you
should never arrive late even by a few minutes.
Sweden: Corporate Sweden flattened its organizations 20 years ago
drastically collapsing the organizational hierarchy. So, Swedes work
with a great degree of authority.
China: Chinese emphasize maintaining order & avoiding chaos.
Japan: The Japanese meeting style is unique; meetings go through 4
general stages getting acquainted phase, information exchange
sessions, and negotiations & reaching the final agreement. Several
sittings may be necessary to accomplish each stage. In Japan, you
dont talk about profit but a long-term business relationship.

Attributes Shaping a Nations Competitive Advantage

Factor Conditions: In sophisticated industries, this means more than factor
costs, the availability of infrastructure & specifically skilled labor. They are basic
conditions for competing in an industry & they influence the nations competitive
advantage.
Demand Conditions: The nature (quality & quantity) of demand at home for
the relevant product will influence the nations competitive advantage.
Related & Supporting Industries: The presence of strong related industries
with high degree of competitiveness influences a nations competitive advantage in
the specific industries. A particularly relevant issue is whether there exist in the
nation suppliers of international class.

Strategy, Structure & Rivalry of Firms: These are the last attribute.

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32.3 GLOBAL MARKETING
Issues Indian Firms Have to Reckon in Global Marketing
Indias Competitive Advantage as a Nation: Companies going global have to
size up their national competitive advantage & develop their strategies on the
strength of this competitive advantage.
Concept of Competitive Advantage of Nations: Competitive advantage of
nations is not a vague idea. Nations do demonstrate in concrete terms their
superiority in select industries. Different countries have different advantage.
Nations build this through planned effort over time. For ex, Germany for
engineering, Japan for consumer electronics, Switzerland for banking, Italy for
leather & US for commercial aircraft.
Attributes that Decide a Nations Competitive Advantage: Certain
attributes create the national environment in which domestic companies learn to
compete. How are firms created, organized & managed? And what are the terms
of domestic rivalry? Competitive advantage of nations will depend on them.
A favorable & supportive home environment created by the government, people &
institutions of the country add strength to the process of competitive advantage
building in the particular industry. All these attributes also intrude upon each
other. Porter places these attributes at corners of a diamond, which is a mutually
reinforcing system. Nations are most likely to succeed in industries where the
national diamond is the most favorable.
As a Nation, India Lacks Competitiveness: Though in the availability of
skilled labor, India is better off, her rating in the area of infrastructure is down.
When we consider the attribute of demand, in most sectors, it was never given free
play; it was artificially pegged at given levels by the government policies governing
overall investment. The result is that in many industries, India does not have
business firms with world-class operations. Indian enterprises are far too small.
The sales of top 10 world companies are 200 times the sales of Indias top 10
companies. In automobiles, Telco is less than 1% of GM. In cigarettes, Philip
Morris of the US is 147 times ITC. In tires, Goodyear of the US is 65 times MRF.
In steel, Nippon Steel of Japan is 31 times Tata Steel.
Wrong policies, paucity of foreign exchange resources, poor technology base &
lack of international marketing competence had left India for years as an exporter
of mere commodities, leaving the benefits of value additions to other countries.

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32.4 FACILITATING GLOBAL MARKETING PVT/GOVT

Tasks to be handled by the government

Providing a conducive policy package
Improving the infrastructure
Promotion

Tasks to be handled by individual companies

Selecting the entry route
Bridging the technology gap
Productivity improvement
Improving product quality, packaging & delivery
Brand promotion

Recent policy formulations to enhance Indias competitiveness

Creation of a stable macroeconomic environment
Liberalization of industrial licensing
Providing production units in the identified thrust sectors
Progressive exchange rate policy
Liberal approach in importing technology
Ensuring availability of imported raw-materials
Exempting export units from domestic duties
Lowering duty on import of capital goods
Providing export credit at reasonable interest rates
Allowing exporters to use their export profit in promotions abroad
Simplifying custom procedures
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32.5 GLOBAL MARKETING INDIAS COMPETITIVE ADVANTAGE

US retail majors outsource from India

US retail chains, like Wal-Mart & JC Penny, doubled their
purchases from India. Basmati rice from Punjab, bathroom mats
from Panipat & coir mats from Cochi are all outsourced from India
JC Penny, India, says, India is fast emerging as a regional strength. We
outsource goods to the tune of $ 130m from India. It was just $ 40m 3 years ago

Currently, garments constitute a major portion of the goods

outsourced from India. A substantial chunk of the in-house brands
of Wal-Mart, JC Penny & May Company are made in Tirupur in
TN & Lower Parel in Mumbai
The US firms import fabrics at cheaper rates from China & provide them to
their dedicated garment suppliers in India, mostly based in Mumbai, New
Delhi & TN, who manufacture them at a cost, much below the international
rates. The mark-up available for the finished product is very high & is
available for foreign firms.

Indias competitive advantage in textiles

Indian textile industries are one of the largest in the world. A vast
fiber base, low labor costs & growing domestic market support the
huge textile infrastructure. These factors render Indian textile
products cheaper & competitive.
Today, in the international market, fabrics from natural fibers are being
preferred. India, with the largest area under cotton crop in the world, is well
placed to be a big player in cotton textiles. Once the country improves its yield,
it can emerge as the largest producer of cotton in the world.

The quota system, which was a handicap to India, is on its way out.
With the new WTO initiatives, the world market for textiles may be
more open & India with her traditional strength can tap the
markets better.
Indias export markets are better spread out & distributed over a large
spectrum of countries, thus reducing vulnerability. A good # of Indian textile
exporters, especially garment exporters, are men of Indian origin staying
abroad. As such, they are better placed to be in touch with market trends.
By improving quality, India can increase her textile exports much more; and
her price realization can also go up through same route The governments
recent decision to de-reserve the garment sector from the SSI sector should
help bring in more investment, better technology & modernization.

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32.6 INDIAN FIRMS WITH GLOBAL POTENTIAL
India has a stock of large enterprises in a variety of industries.
Properly nurtured, these companies can become MNCs

SAIL, Indian Oil & ONGC already find a place in Fortune 500.
Mittals has got established as a global player in steel.
Bajaj is the 2nd largest producer of 2-wheelers in the world.
Reliance has world-size plants for synthetic fiber.

The Aditya Birla group is the worlds largest producer of rayon fiber, 2nd
largest producer of palm oil, 6th largest producer of carbon black & 5th largest
producer of insulators. The group already has over 20 ventures abroad.

Essar Gujarat is another firm with global potential. It is already setting up JVs
abroad to make cold rolled coils.
Blowplast is the worlds 2nd largest producer of molded luggage.
Usha Martins expertise in wire ropes is of global standard.

In IT, companies like TCS, Wipro & Infosys have already emerged as global
players. All of them are sharpening their strategies to capture a better share of
the global opportunity in IT.

In pharmaceuticals, there are quite a few firms who can play the global game.
Ranbaxy already has companies in Canada, HK, Malaysia, Nigeria, Thailand,
and the Netherlands & China. Now exports account for 50% of Ranbaxys
turnover. The objective is to raise the overseas share to 70%.
Ranbaxy has entered into # of JVs with foreign partners for establishing
manufacturing & marketing presence abroad. Ranbaxy is poised to emerge
as one of the top 5 generic companies in the world.
Cipla, Sun Pharma, Dr Reddys & Lupin are expanding their business in
world markets. One-time big exporters of bulk drugs, they have graduated
to smart players in formulations.
Lupin is the world-leader in the anti-TB drug Ethmbutol, with 70% of the
world market. The company currently exports to 60 countries.
These pharma companies are aggressively working to improve product
portfolio. They have already targeted products to be launched in the global
market when they become off patent & are busy setting up facilities.
They are making huge investments in R&D to develop new molecules,
drug delivery systems & to re-engineer molecules, which may go off patent.
They are getting their units approved by the US FDA to access the lucrative
European & US markets.

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32.7 GLOBAL MARKETING OTHER PROBLEMS/NUANCES
Conducting international advertisement campaigns:
Marketing communications is one area that bristles with
complexities due to the cultural dynamics of different markets.
Handling an international advertising campaign is a difficult task.
Problem of transferability of advertisement:
A successful ad in one country cannot be simply copied &
transferred to another countrys market, without understanding its
peculiarities & the nuances of its language.
For ex, a large MNC once made an attempt to sell its baby food in an African
nation. On the package of the baby food, it used the same copy that it used in the
home market the picture of a baby & a caption explaining the nature of the
baby food inside the package. African consumers were horrified at the picture &
the message. They thought the baby food was made of powdered babies

Dearth of multinational media:

The vastness of the territory involved in international marketing &
the limited territorial reach of various media vehicles adds to the
complexity of multinational advertising. Periodicals, radio & TV
are the main media that reach several countries simultaneously.
Handling host government who are becoming bargainers:
In nations undergoing political & economic reforms, the
governments become powerful bargainers with the MNCs, who
desire access to their markets. The government demands # of things
such as local equity participation, technology transfer, local
manufacturing facility, research facilities & export obligations,
apart from employment to the locals.
Going global, no easy task:
Globalization implies that individual Indian companies have to
achieve a global presence by getting across to different markets in
the world, matching their global competencies in every respect.
Indian companies, with global ambition, will have to take on the
worlds best; and be as good as the best company operating in the
chosen field.
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