Global Marketing Management –

Planning and Organization

And

CHAPTER # 11 and 16
Compiled Together
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1. Planning for Global Markets
• Planning is the job of making things happen that might not otherwise occur.
• Planning allows for rapid growth of the international function, changing
markets, increasing competition, and the turbulent challenges of different
national markets.
• Planning relates to the formulation of goals and methods of accomplishing
them, so it is both a process and philosophy.
• Corporate planning – long-term generalized goals for the organization –
corporate philosophy, international commitment etc.
• Strategic planning – Dealing with products, capital and research and
long/short term allocation of strategic resources.
• Tactical planning – specific actions and tactics in local markets.
• Successful planning is evaluating company objectives, including management’s
commitment and philosophical orientation to international business.

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• Company objectives and resources
• Each new market can require a complete evaluation,
including existing commitments, relative to the parent
company’s objectives and resources.
• Defining objectives clarifies the orientation of the
domestic and international divisions, permitting
consistent policies.
• International commitment
• Commitment in terms of:
• Dollars to be invested
• Personnel for managing the international organization
• Determination to stay in the market long enough to
realize a return in investments.
• The degree of commitment to an international marketing
cause reflects the extend to a company’s involvement
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 2. The Planning Process - International Planning Process
• Phase 1: Preliminary Analysis and Screening – Matching Company and Country Needs.
• Phase 2: Adapting the Marketing Mix to Target Markets.
• Phase 3: Developing the Marketing Plan
• Phase 4: Implementation and Control

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3. Alternative Market-Entry Strategies

• An entry strategy into the international market should reflect on analysis of

market characteristics such as:
• Potential sales
• Strategic importance
• Strengths of local resources
• Cultural differences
• Country restrictions
• Companies most often begin with modest export involvement.
• A company has four different modes of foreign market entry from which to
select:
• Exporting
• Contractual agreements
• Strategic alliances
• Direct foreign investments
• Global Acquisitions

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Exporting
• Exporting accounts for some 10% of global activity.
• Direct exporting - the company sells to a customer in another country.
• Indirect exporting – the company sells to a buyer (importer or distribution) in the home
country, who in turn exports the product.
• The Internet
• Initially, Internet marketing focused on domestic sales, however, a surprisingly large
number of companies started receiving orders from customers in other countries,
resulting in the concept of international Internet marketing (IIM).
• Direct sales
• Particularly for high technology and big ticket industrial products.

Direct exporting and Importing Indirect exporting and Importing

Knowledge and control.
Relationships and growth opportunities.
Learn about markets and competitive
advantages.
Obstacles in identifying segments,
promotions etc.
No involvement or commitment.
Very little control.
Less Market Knowledge and knowhow.
No opportunity to develop relations
with foreign customers or markets.
International Intermediaries:
For initial market entry or long term strategic collaboration –

Export management companies - EMC’s

As an agent - commission based,
establishing contacts and developing
sales strategies.
As a distributor- takes title, more risk,
higher profits.

An EMC is the specialist for manufacturers who want export profits but does
not have the experience or resources to directly sell abroad.

EMCs generally act as the firm’s export department.

In short, the EMC takes full responsibility for the export end of the business.

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 Services Provided by EMCs

• Research foreign markets for a client’s products

• Travel overseas to find the best method of distributing the product
• Appoint distributors or commission representatives, frequently within an
already existing network
• Exhibit the client’s products at international trade shows
• Handle the routine details in getting the product to the foreign customer –
export declarations, shipping & customs documents, insurance, banking,
and instructions for export packing and marking
• Prepare advertising/sales literature & adapt it to overseas requirements
• Correspond in the necessary foreign language
• Handle LOC details

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Informal Cooperation & Contractual Agreements
Informal cooperation - No binding agreement, Exchange information,
management knowhow, and personnel.
Contractual agreements are long-term, nonequity association between a
company and another in a foreign market.
Contractual agreements - Cross-marketing or R&D., Outsourcing, Licensing,
Franchising, Contract manufacturing, Management Contract (turnkey
operation).
Cross-Marketing - E.g., Nestle and General Mills – Honey nut Cheerios and
Golden Grahams made in US plants by GM and shipped in bulk to Europe for
packaging by Nestle – Complimentary Marketing or Piggybacking.
Outsourcing – General Motors buys cars and components from Daewoo;
Siemens buys computers from Fujitsu.

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Contractual Agreement - Licensing
Licensing
• A means of establishing a foothold in foreign markets without large capital outlays.
• A favorite strategy for small and medium-sized companies.
• Legitimate means of capitalizing on intellectual property in a foreign market.
Licensing - Patents, trademarks, copyrights, technology, technical knowhow, business
skills.
Less resources, less commitment, govt. regulations, test market, preempt market -
requires little depth of market knowledge, can be put in place fairly quickly, is relatively
little investment.
Risks associated with Licensing - “Leakage” -- The dissipation of one’s proprietary
advantage; Your reputation now depends on another’s performance; Creation of a new
competitor.
• Franchising
• Franchiser provides a standard package of products, systems, and management
services, and the franchise provides market knowledge, capital, and personal
involvement in management.
• Despite temporary setbacks, franchising is still expected to be the fastest-growing
market-entry strategy.
• Two types of franchise agreements:
• Master franchise – gives the franchisee the rights to a specific area with the
authority to sell or establish subfranchises.
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• Licensing
Franchising.
Franchising - Unique product, systems (mgmt./Mktg. knowhow), brands or
unique selling propositions. Capital, market knowledge, personal
involvement.
Manufacturer-retailer (car dealerships); Manufacturer-wholesaler (soft
drink companies); and service firm-retailer (Fast food or hotels)

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Strategic International Alliances
• A strategic international alliance (SIA) is a business relationship established by two or more
companies to cooperate out of mutual need and to share risk in achieving a common
objective
• SIAs are sought as a way to shore up weaknesses and increase competitive strengths.
• Firms enter SIAs for several reasons:
• Opportunities for rapid expansion into new markets
• Access to new technology
• More efficient production and innovation
• Reduced marketing costs
• Strategic competitive moves
• Access to additional sources of products and capital
• International Joint Ventures
• A joint venture is a partnership of two or more participating companies that have joined forces to create
a separate legal entity.
• Four Characteristics define joint ventures:
• JVs are established, separate, legal entities
• The acknowledged intent by the partners to share in the management of the JV
• There are partnerships between legally incorporated entities such as companies, chartered
organizations, or governments, and not between individuals
• Equity positions are held by each of the partners
• Consortia
• Consortia are similar to joint ventures and could be classified as such except for two unique
characteristics:
• They typically involve a large number of participants
• They frequently operate in a country or market in which none of the participants is currently
active. 12
• Consortia are developed to pool financial and managerial resources and to lessen risks.
Direct Foreign Investment

• Factors that have been found to influence the structure and performance of direct
investments:
• Timing
• The growing complexity and contingencies of contracts
• Transaction cost structures
• Technology transfer
• Degree of product differentiation
• The previous experiences and cultural diversity of acquired firms
• Advertising and reputation barriers

Global Acquisitions:
• Acquisition may make most sense when you want to….
• Diversify your product line
• Access new technologies, skills, distribution channels
• Overcome barriers to entry (e.g., local content, quotas, subsidy)
• Reduce market/competitive risk
• Get immediate results (e.g., competitive response)
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END OF THE CHAPTER

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