International Marketing - Lecture 4

LECTURE 4
INTERNATIONAL MARKETING
Strategic Alliances in the Global Market
• As global competition intensifies and profit margins are squeezed,
companies need to look for ways to keep costs within range to
permit competitive pricing as well as allow profits to accrue! Global
sourcing, a major driving force behind companies producing goods
around the world, is done to minimize costs and risks.
• Worldwide sourcing also strengthens the reliability of supply and
quality, as also creates additional avenues to innovative technology.
• Worldwide sourcing also strengthens the reliability of supply and
quality, as also creates additional avenues to innovative technology.
• Sourcing in low wage countries and willingness to accept lower
margins are the traits set by global companies to remain competitive
in the present day market. The critical feature of this system is to
focus on minimizing costs, from the cost of manufacturing to design,
maintenance, and planning stages, and all subsequent stages
where costs are determined.
• The global company begins with a target price, with market research
telling them what the market is willing to pay, and then work
backward to make sure that this price is achieved. By beginning with
the price, design, engineering and supplier pricing – the three areas
most affected by the cost – are focussed and committed on cost
containment right from the beginning of the exercise. Initial
estimates may be higher than the target, but focussing on the target
price helps to achieve it by compromises and tradeoffs of various
departments, while maintaining the technical objective of the
market.
• The global company begins with a target price, with market research
telling them what the market is willing to pay, and then work
backward to make sure that this price is achieved. By beginning with
the price, design, engineering and supplier pricing – the three areas
most affected by the cost – are focussed and committed on cost
containment right from the beginning of the exercise. Initial
estimates may be higher than the target, but focussing on the target
price helps to achieve it by compromises and tradeoffs of various
departments, while maintaining the technical objective of the
market.
• The traditional cost plus approach with safety factor on safety factor
to cover inefficiencies of the system, would result in snowballing and
end up in upto double the “actual price”, sending the product back to
the drawing board for reassessment!
• More and more companies are working out international strategic
alliances to strengthen weak spots in certain areas, and result in
greater competitive strengths globally.
More and more companies are working out international strategic
alliances to strengthen weak spots in certain areas, and result in greater
competitive strengths globally.
A Strategic Alliance is a business relationship established by two or

more companies to cooperate out mutual need and share risk in
achieving common objectives. The alliance implies:
– There is a common objective
– One partner’s weakness is offset by the other’s strength
– Reaching the objective alone would be too time consuming, costly or risky
– The strength of the combined effort makes possible what would otherwise be
unattainable
In other words, this alliance is a synergistic relationship to achieve a

common goal that is beneficial to both parties.
Strategic Planning
Strategic Planning
Strategic Planning is a systematized way of relating to the future. It attempts
to manage the effects of external, uncontrollable factors on the firm’s
strengths, weakness, objectives and goals to attain a desired end. Planning
is making things happen that would otherwise not occur.
Strategic Planning
The Strategic Planning Process

Strategic Planning

While there can be innumerable successful plans, a four stage planning
process is outlined here as a systematic guide to the planning process of a
Global Organization:
Strategic Planning

While there can be innumerable successful plans, a four stage planning
process is outlined here as a systematic guide to the planning process of a
Global Organization:
– Preliminary analysis and screening – matching company/country needs
– Adapting the marketing mix to target markets
– Developing the marketing plan
– Implementation and Control
Strategies to Lessen Political Risks
• Joint Ventures: Typically less susceptible to Political Harassment, JVs
can be either with the Host Country nationals, or with third Country
Multinationals – in both cases limiting financial exposure of the company.
• Expanding the investment base to include several investors and
financial institutions from the Host Country. This strategy is especially
powerful when the Host Country Government threatens expropriation, and
the investing institution has substantial hold over the Government.
• Expanding the investment base to include several investors and
financial institutions from the Host Country. This strategy is especially
powerful when the Host Country Government threatens expropriation, and
the investing institution has substantial hold over the Government.
• Marketing and Distribution: By controlling the same, the Company
would have a strong hold on the Host Country, which could potentially lose
the World Market from the use of strong arm tactics with the Company.
• Licensing is a good strategy to eliminate all risks in the Host Country by
agreeing to Technology Transfer to a local partner for a Licensing Fee.
• Joint Ventures: Typically less susceptible to Political Harassment, JVs can be either
with the Host Country nationals, or with third Country Multinationals – in both cases
limiting financial exposure of the company.
• Expanding the investment base to include several investors and financial
institutions from the Host Country. This strategy is especially powerful when the Host
Country Government threatens expropriation, and the investing institution has
substantial hold over the Government.
• Marketing and Distribution: By controlling the same, the Company would have a
strong hold on the Host Country, which could potentially lose the World Market from the
use of strong arm tactics with the Company.
• Licensing is a good strategy to eliminate all risks in the Host Country by agreeing to
Technology Transfer to a local partner for a Licensing Fee.
The above strategies lead to methods of obtaining planned

domestication
in the long run, effectively, a win – win situation for both
the Home Country and the Host Country! !
Steps to achieving Planned Domestication
• Sell equity to Host Country Nationals at fair prices over a number of years.
• Prepare Host Country Nationals to get into top Decision Making Positions.
• INTEGRATE Host Country Companies into worldwide Marketing Programs.

• Develop Host Country Companies as sources of supply.

• Develop Host Country Companies as sources of supply.
• Build a sound economic base, or make necessary any Government

concessions initially needed for successful investment.
Global Marketing Management
The two central tasks of Global Marketing Management are:
• Determining the firm’s overall Global Strategy, and

• Shaping the Organization to achieve these Goals and Objectives.

The Company’s international orientation can be one of the following 3 types:


• Domestic Market Extension, where foreign markets are

considered extensions of the local market


• Multi-domestic Market Extension, where each market is
reviewed and served individually, and


• Multi-domestic Market Extension, where each market is
reviewed and served individually, and
• Global Market Concept, where the world is the market, and
wherever cost and culturally effective, a standardized marketing mix is
developed for entire sets of countries.
Global versus International Marketing
Global versus International Marketing
Global Marketing differs from International Marketing primarily in

orientation. The former views the world as one market, based on cross
cultural similarities, and not cross cultural differences. The latter, on the
other hand, is based on the premise of cross cultural differences, and is
guided by the belief that each foreign market requires its own culturally
adapted marketing strategy.
Benefits of Global Thinking
• Black and Decker Manufacturing Company reduced the number

of motor sizes for their tools from 260 to 8, and the number of
models from 15 to 8 by taking the Global approach in Europe.

• Unilever successfully introduced worldwide, two Global Brands

originally developed by two subsidiaries, in Europe and South
Africa.

• Unilever successfully introduced worldwide, two Global Brands

originally developed by two subsidiaries, in Europe and South
Africa.
• Philips International had an enormous impact with a Global

product image, when it sponsored the last World Cup football,
and the same advertisement was beamed in 44 countries with
voice over translations in six languages!
Competition in the Global Market
Competition in the Global Market
Global competition is placing new emphasis on some basic tenets of
business. It is reducing time frames and focussing on the importance of
quality, competitive prices and innovation. Strategic Planning today,
therefore, must emphasize quality, technology and cost control.
Total Quality Management
In most Global Markets, the cost and quality of a product are among the most
important criteria by which purchases are made. Further, with the opening up of
the global marketplace, it has gradually shifted from a seller’s market to a buyer’s
market. The customer the world over has more power because he has more
choices, and can get what he wants from wherever he wants to get it from.
Therefore customer preference in this situation is based more on quality than
price, leading manufacturers to embrace Total Quality Management.
Total Quality Management
In most Global Markets, the cost and quality of a product are among the most
important criteria by which purchases are made. Further, with the opening up of
the global marketplace, it has gradually shifted from a seller’s market to a buyer’s
market. The customer the world over has more power because he has more
choices, and can get what he wants from wherever he wants to get it from.
Therefore customer preference in this situation is based more on quality than
price, leading manufacturers to embrace Total Quality Management.
Total Quality Management is a corporate strategy that focusses total company

efforts on manufacturing products with continuous technological improvement and
zero defects to satisfy customer needs. Defining quality as customer satisfaction
means that the marketer has to ensure continuous monitoring of customer needs
and reacting to that, since if “you” fail to respond to customer needs, the
competition will, and take the job away from you.
Incremental improvements and Quality
Incremental improvements and Quality
For products where technology is an integral part of product

performance, the need to focus on continuous technological
improvements. The Japanese process of Kaizen aims at gradual,
continuous but unending improvements, doing little things better, setting
and reaching even better standards. This is imperative in the global
market context, where you cannot otherwise compete with other players
who are constantly doing this.

International Marketing - Lecture 4

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LECTURE 4

A Strategic Alliance is a business relationship established by two or

In other words, this alliance is a synergistic relationship to achieve a

The Strategic Planning Process

The Strategic Planning Process

The Strategic Planning Process

The above strategies lead to methods of obtaining planned

• INTEGRATE Host Country Companies into worldwide Marketing Programs.

• INTEGRATE Host Country Companies into worldwide Marketing Programs.

• Develop Host Country Companies as sources of supply.

• INTEGRATE Host Country Companies into worldwide Marketing Programs.

• Develop Host Country Companies as sources of supply.

• Build a sound economic base, or make necessary any Government

• Determining the firm’s overall Global Strategy, and

• Determining the firm’s overall Global Strategy, and

The Company’s international orientation can be one of the following 3 types:

• Determining the firm’s overall Global Strategy, and

The Company’s international orientation can be one of the following 3 types:

• Domestic Market Extension, where foreign markets are

• Determining the firm’s overall Global Strategy, and

The Company’s international orientation can be one of the following 3 types:

• Domestic Market Extension, where foreign markets are

• Determining the firm’s overall Global Strategy, and

The Company’s international orientation can be one of the following 3 types:

• Domestic Market Extension, where foreign markets are

Global Marketing differs from International Marketing primarily in

• Black and Decker Manufacturing Company reduced the number

• Black and Decker Manufacturing Company reduced the number

• Unilever successfully introduced worldwide, two Global Brands

• Black and Decker Manufacturing Company reduced the number

• Unilever successfully introduced worldwide, two Global Brands

• Philips International had an enormous impact with a Global

Total Quality Management is a corporate strategy that focusses total company

For products where technology is an integral part of product

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