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GLOBAL MARKETING Most countries are in open economy India, China, Companies need to seek new markets 1. More & more costs in Research & Design; to recover, companies need huge market 2. For reducing costs, companies need to procure material from cheapest source, and also technology. With Internet, the world is just a click away 3.For technology based companies globalization is easy, since technology products not affected by cultural/national boundaries : Cell phones/TV & electronics, cars
HOW TO SELECT GLOBAL MARKET Regional Free Trade Zone; Companies can enter a group of countries rather than one. Eg. ASEAN, European Union, SAARC -economic growth -increased trade relations
-barriers to entry/exit, costs, raw material, unutilized capacity, number of competitors etc.
- ranking on profit potential, market share, margins, sales
IMPACT OF ENVIRONMENT
Political Environment Needs to be carefully analyzed; political stability, treatment of foreign firms, bureaucracy eg. Coke in 70s, FERA, Middle East today, ENRON Political system influences economic environment so trade barriers, rules regarding M & A, Red Tape need scrutiny eg. India, no FDI in retail
IMPACT OF ENVIRONMENT Economic Environment Most important GDP & GNP, disposable income, inflation, costs of energy etc. India is attractive because of high returns : FII 3 Categories of economics : Influenced by Capitalist Mixed Market Allocation Socialist Command Allocation Combination
Customer main focus Government decides goods & services for customer
IMPACT OF ENVIRONMENT
Social & Cultural Environment
Caused by differences in demographics, languages,
education, values & beliefs etc. Have major effect in personal items Promotion/distribution strategies have to be located because language/communications is different. Parker Cultural changes Amex Credit Cards
IMPACT OF ENVIRONMENT
Legal and Regulatory Environment
Sovereignty of nation, contractual agreements, dispute
settlement procedures, arbitration laws, trademarks & patents laws, tax structures, licensing, labour laws have to be studied Requirement for universalisation of trade laws GATT (1979) Required not just for increasing business in multiple countries, but also to protect companies and industries
IMPACT OF ENVIRONMENT
Technological Environment
Companies look out for better & cost effective
technologies all the time. The technically enhanced infrastructure in telecom, transportation, storage & warehousing are important for business
Haier
Aditya Birla Group
MERCOSUL
APEC ASEAN
SAFTA
China
South Africa
Indirect exporting
Direct exporting
Licensing
Joint ventures
Direct investment
The Reva Electric Car Company has actively pursued opportunities in export markets.
Indirect Exports :
Exporting goods to a new country with a domestic intermediary. Helps if exporter has little knowledge of new country
Licensing
Providing access to a patent/trademark by charging fee/royalty. Popular way of marketing strong brands w/o investment. Popular in Pharma, also in consumer goods, Arrow shirts, Walt Disney products
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For company and local partner become equity partners, majority or minority For sharing risk and having access to knowledge of local partner, sometimes to leverage technology of one partner, if foreign company is not allowed to set upon its own Sharing of responsibilities becomes a major issue : 53% fail, local partner should be given responsibility for implementation Strategic intents should be aligned; at negotiation phase there should be full understanding of each others position. Decision making & administrative authorities should be properly delineated Parent organization usually provides resources; Transfer pricing becomes an issue
Internationalization Process
Process started 20 years back has spread very fast 2. IP refers to companys entry modes & tuning : M &A, Strategic Alliances, Exports, Licensing & Franchising etc. 3. i) When a product is in maturity company thinks of exports ii) No knowledge of foreign markets so exporting is first step iii) When product goes to new country, that country tries to develop the product iv) When product reaches standardization a company thinks of licensing, or FDI or setting up wholly owned subsidiary v) Companies get into joint ventures if market in new country needs local know-how, they gain experience and then they terminate Joint Venture and starts 100% subsudiary
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Global Marketing
Advantages Economies of scale Lower marketing costs Power and scope Consistency in brand image Ability to leverage Uniformity of marketing practices Disadvantages Differences in consumer needs, wants, usage patterns Differences in consumer response to marketing mix Differences in brand development process Differences in environment
Labeling
Colors Materials Sales promotion Advertising media
Packaging
Advertising execution Prices Advertising themes
Balance standardization and customization Balance global and local control Establish operable guidelines Implement a global brand-equity measurement system Leverage brand elements
Communications
Price Choices
Set a uniform price everywhere Set a market-based price in each country Set a cost-based price in each country
Seller
International headquarters Channels between nations Channels within nations Final buyers