Who Are You?

Pick an Animal

Self-Reference Criterion

Spring 2017 1
What is Globalisation?
• A way of doing business?

• A process?
• Wider Implications

• Eight billionaires 'as rich as world's poorest half‘

http://www.bbc.co.uk/news/business-38613488

• “The process of increasing the connectivity and interdependence of

the world’s markets and businesses”
http://www.investorwords.com/2182/globalization.html

• Negative and Positive connotations/implications

• Anti-globalisation

• Internationalisation
Spring 2017 2
Driving Forces (of Globalisation, Global Integration and Global
Marketing – (17-23))

Spring 2017 3
Restraining Forces (of Globalisation, Global Integration and
Global Marketing - (17-23))

Spring 2017 4
Do you agree with the previous two
slides?

e.g. how about war?

PS: Movie - Lord of War

Spring 2017 5
 Global Marketing
• Course not about globalization, but about global marketing.

• Why then did we discuss globalization?

• International trade is nothing new but…

• BREXIT etc…are we staying together or moving apart?

• The world is in a state of flux

• Politics, Economics, Social Development – everything is playing a role

• Your news should look at how economics and politics link to global business and marketing

• Evolution of a firm….

Spring 2017 6
What is a Global Firm?

A global firm is one that, by operating in

more than one country, gains marketing,
production, R&D, and financial advantages
that are not available to purely domestic
competitors. (Kotler et al., 2010: 467)

So: the course should be about managing the

marketing operations of global firms only?

Spring 2017 7
No.

Why?

How many global Pakistani brands do you know?

Spring 2017 8
Global Marketing

• For this reason, the course will cover:

- Pakistani brands/companies entering foreign markets
- Foreign brands/companies entering Pakistani markets
- Brands/companies competing globally and regionally

We will not just focus on multinationals - in fact your final

project will focus on Pakistani companies trying to go
international/global and vice versa

This is NOT a course on technical aspects of export marketing.

Spring 2017 9
Levitt’s Story
• The debate between standardization and adaptation of marketing mix
elements

• Professor Theodore Levitt – HBR – The Globalization of Markets –

1983

• Advised developing standardized, high-quality world products and

marketing them globally using standardized advertising, pricing and
distribution.

• E.g. Parker Pen > failure

• Total Standardization of marketing mix elements across the globe> not

necessarily good business sense?

• E.g. Coke (world wide and in Japan) > success > global localization >
the ability to be as much of an insider as a local company but still reap
the benefits that result from world-scale operations. 10
Spring 2017
Video: Surgical Instruments

Spring 2017 11
Global Marketing (repeat from last class)

• For this reason, the course will cover:

- Pakistani brands entering foreign markets
- Foreign brands entering Pakistani markets
- Brands competing globally and regionally

We will not just focus on multinationals - in fact your final project

will focus on Pakistani companies trying to go international or
global

This is NOT a course on technical aspects of export marketing.

The course will focus on ethical and cultural issues.

Spring 2017 12
Another definition of a global firm… (21)

The global/transnational corporation or any business

enterprise that pursues global business objectives by linking
world resources to world market opportunity; is the
organization that has responded to the driving, restraining
and underlying forces in the world.

Spring 2017 13
Global Marketing (23)
• Global Marketing is the process of focusing the resources and
objectives of a company on global marketing opportunities.

• Companies engage in Global Marketing for two reasons:

• to take advantage of opportunities for growth and expansion, and
• to survive

Spring 2017 14
Terms:

Adaptation vs standardization

Localisation vs globalisation

Glocalisation (and others)

Economics, Legal, Political and Business merge – recall your other

core courses

Spring 2017 15
Adaptations vs Standardization
• Global localization – Think Globally, Act Locally (6)*

• …may include a combination of standard (e.g. the actual

product itself) and nonstandard (e.g. distribution or
packaging approaches) (6)

• A “global product” may be “the same” product everywhere

and yet “different”. (6)

• *G-local, g-localization, global localization, etc.

(): denotes the page number in Keegan.

Spring 2017 16
The 13 Ps of International/Global Marketing
http://www.helpdeskgonorth.eu/index.php?id=243
http://www.tradecommissioner.gc.ca/eng/document.jsp?did=118706#Mant (Source: Forum for International Trade Training, Going Global)
http://www.commerce.gov.lc/articles/view/25

Product - what is your product or service and how must it be adapted to the market?
Price - what pricing strategy will you use?
Promotion - how will you make your customers aware of your product or service?
Place - how and where will you deliver or distribute your product or service?
----------------------------------------------------------------------------------------------------

Payment - how complex are international transactions?

Personnel - does your staff have the necessary skills?
Planning - have you planned your business, market, account, and sales calls?
Paperwork - have you completed all the required documentation?
Practices - have you considered differences in cultural and business practices?
Partnerships - have you selected a partner to create a stronger market presence?
Policies - what are your current and planned policies?
Positioning - how will you be perceived in the market?
Protection - have you assessed the risks and taken steps to protect your company and its
intellectual property?

Spring 2017 17
• Before we proceed, I need to clarify some
boring concepts.

(): denotes the page number in Keegan.

Spring 2017 18
Management Orientation > A Company’s “Worldview” -

Spring 2017 19
Management Orientation > A company’s “worldview” – from Keegan (14)

Ethnocentric
Home country is superior;
sees similarities in foreign
countries
(international & centralised in
approach)
Spring 2017 20
Management Orientation > A company’s “worldview” – from Keegan (14)

Polycentric
Each host country is unique;
sees differences in foreign
countries
(multinational &
decentralised in approach)

Spring 2017 21
Management Orientation > A company’s “worldview” – from Keegan (14)

Regiocentric
See similarities and differences in a world region;
is ethnocentric or polycentric in its view of the rest of the world

Worldview on a regional scale (Keegan, 16)

Spring 2017 22
Management Orientation > A company’s “worldview” – from Keegan (14)

Geocentric
Worldview;
sees similarities and differences in home and
host countries

Creates a global strategy that is fully

responsive to local needs and wants
(Keegan, 16)

Spring 2017 23
Evolution of A Company….
• Domestic>Export>International>Multinational>Global>Transnational

• Multilocal, Multidomestic

• Born Global

• Note: a multinational company may have many local brands as well as international/global
brands

• Some say multinational is the company> with multi-domestic, global and transnational being
the strategies

• Centralized vs Decentralized structures

• Local vs Global brands

• In practice, most of the above words such as international, multinational, global and
Spring 2017 24
transnational are used interchangeably in terms of companies and brands.
 Examples of Global Marketing (Table 1.1: (8) in Keegan)

• A firm can compete globally based on:

• Brand Name
• Product Design
• Product Positioning
• Packaging
• Distribution
• Customer Service
• Sourcing
• etc……

Spring 2017 25
Self-Reference Criterion (Ghauri and Cateora, 2010: 16)

“The primary obstacle to success in international marketing is

a person’s self-reference criterion (SRC) in making decisions;
that is, an unconscious reference to one’s own cultural
values, experiences and knowledge as a basis for decisions.
The SRC impedes the ability to assess a foreign market in its
true light”.

My advice > be aware of your own “frame of reference” or “view of the

world/world view” before assessing your customers’ requirements

Spring 2017 26
A Cultural Universal?
• Is there such a thing as a cultural universal?

• A mode of behavior existing in all cultures (Keegan: 81)

• A cultural universal …global marketers can adapt to cultural

preferences in different countries or regions (Keegan: 81)

• Global products need to be localized keeping the cultural sensitivities

in mind.
Athletic sports, body adornment, cooking, courtship, dancing, education, family
feasting, religious rituals, language, etc.etc.etc.
(George P. Murdock, 1945)

Spring 2017 27
Reiterate:

A global product can be localised for use and can also be localised in
terms of ingredients and can also be localised via its marketing mix

e.g. A normal coke can have different ingredients.

Mcdonalds can have a customised menu

You can have local adaptations/variations in brands as well as in

products..

A number of companies use the word “conglomerates”

Spring 2017 28
Summary II:

- Some say multinational is the company> with multi-domestic,

global and transnational being the strategies

- Global Branding

- COO – may have started with the home country…….but…

- Words such as international, multinational, global and

transnational are used interchangeably in terms of companies
and brands.

Spring 2017 29
 Culture

- What is culture?

- Which cultures do u belong to?

- What’s bad about culture?

Spring 2017 30
Low Context versus High Context Cultures

Spring 2017 31
High-Context versus Low-Context Cultures (83-84)
Edward T. Hall came up with the concept of high-context and low-context cultures as a way of understanding different cultural
orientations; Trompenaars is another person working in this area, but using slightly different terminology than Hall.

• Low-Context > Messages are explicit and words carry

most of the information in conversation e.g. U.S.A.;
Germany

• High-Context > Less Information in verbal message;

much more communication resides in the context of
the information, including the background,
associations and basic values of the communicators
e.g. Japan, Middle East, China (guanxi > relationships)

Spring 2017 32
 High Context (Japan, Middle Low Context (U.S.A;
Factors/Dimensions
East, China) Germany)
Lawyers Less Important More important
Is not to be relied on; “get it
A person’s word Is his or her bond
in writing”
People maintain a bubble of
Space People breathe on each other private space and resent
intrusion
Are lengthy – a major purpose is
Negotiations allow the parties to get to know Proceed quickly
each other
Many overt and explicit
Many covert and implicit
Overtness of messages that are simple and
messages, with use of metaphor
messages clear.
and reading between the lines.

More focus on verbal

Use of non-verbal
Much nonverbal Spring
communication
2017 communication than body 33
communication
 High Context (Japan, Middle Low Context (U.S.A;
Factors/Dimensions
East, China) Germany)
Strong distinction between in-
Cohesion and Flexible and open grouping
group and out-group.
separation of groups patterns, changing as needed
Strong sense of family.

Strong people bonds with

Fragile bonds between people
People bonds affiliation to family and
with little sense of loyalty.
community

High commitment to long-term

Low commitment to
Level of commitment relationships.
relationship. Task more
to relationships Relationship more important than
important than relationships.
task.
Monochronic - Time is highly
Polychronic - Time is open and
Flexibility of time organized.
flexible.
Product is more important
Process is more important
Spring 2017 than 34
than process. Time as
Stereotypes, anyone? 

Spring 2017 35
When you go to meetings as a global marketer, be aware:

• Greeting and farewell etiquette (incl. handshake)

• Saying yes but meaning …………

• Body language (incl. eye contact and hand gestures)

He is a nice person once you get to know him

• Photos – to take or not to take, to sit or to stand, right or left

Spring 2017 36
When you go to meetings as a global marketer, be aware:
• Giving, Receiving, and opening gifts (and ensuring they are
not misconstrued as bribes)

• Restaurant meetings (breakfast meetings, where to sit, who

pays)

• Inviting someone into our homes

• Colours

• Work Hours

Spring 2017 37
When you go to virtual meetings as a global marketer, be aware:

• Length of emails
• Number of emails
• Greeting styles
• Humour
• Video conferencing
• Phone Manner (introductions, pauses, breathing, etc.)
• Etc…

Spring 2017 38
• We all belong to many cultures

• Internationally this gets even more complicated.

• Organisational vs national culture

Spring 2017 39
Culture and Language
• Language very important > promotion (advertising, personal
selling)

• Examples
• I stepped on a thorn
• You >u, je > aap, tum > vous, tu> je, u
• j, a, e, i, ij, x, g

• Concept of time as defined by language is also important >

In English half past eight: 8:30

• But in Dutch half acht – 7:30

Spring 2017 40
..is the extent to which products must be adapted to the culture-
specific needs of different national markets.

Spring 2017 41
High

Food

Product Adaptation

Computers

Integrated
circuits
Low
Low High
Environmental Sensitivity

Spring 2017 42
Maslow’s Hierarchy of Needs – Western versus the Asian Perspective
Keegan: 89-91
http://garettsenez.blogspot.com/2011/07/maslows-hierarchy-of-needs-and-asian.html

Esteem

Love, Belonging
Social

Maslow Schűtte

Spring 2017 43
Geert Hofstede

http://www.geert-hofstede.com/

" Culture is more often a source of conflict than of

synergy.
Cultural differences are a nuisance at best and often a
disaster."

Prof. Geert Hofstede

Spring 2017 44
These dimensions are talking about national cultures.

Spring 2017 45
Geert Hofstede – Cultural Dimensions
The following four stem from the original research
• Power Distance Index (PDI)
• Individualism (IDV)
• Masculinity (MAS)
• Uncertainty Avoidance Index (UAI)

• The following two were added later:

• Long-Term Orientation (LTO)
• Indulgence

Spring 2017 46
http://geert-hofstede.com/pakistan.html

http://geerthofstede.nl/dimension-data-matrix

http://www.clearlycultural.com/geert-hofstede-
cultural-dimensions/power-distance-index/

Spring 2017 47
Geert Hofstede – Cultural Dimensions I
http://www.geerthofstede.nl/dimensions-of-national-cultures

• Power Distance Index (PDI) - the extent to which the less

powerful members of organizations and institutions (like the
family) accept and expect that power is distributed
unequally >> Authority- Orientation

• Individualism (IDV) – as opposed to collectivism, that is the

degree to which individuals are integrated into groups >> “I”
versus “We” >> Self-Orientation

Spring 2017 48
Geert Hofstede – Cultural Dimensions II
http://www.geerthofstede.nl/dimensions-of-national-cultures

• Masculinity (MAS) versus its opposite, femininity, refers to

the distribution of roles between the genders. Is a culture
more “masculine” – assertive and achievement-oriented, or
more “feminine” – caring?

• Uncertainty Avoidance Index (UAI) deals with a society's

tolerance for uncertainty and ambiguity >> Risk-Orientation

Spring 2017 49
Geert Hofstede – Cultural Dimensions III
http://www.geerthofstede.nl/dimensions-of-national-cultures
http://www.clearlycultural.com/geert-hofstede-cultural-dimensions/long-term-orientation/

• Long-Term Orientation (LTO) versus short-term orientation:

• Values associated with Long Term Orientation are thrift, perseverance, and
having a sense of shame.
• Values associated with Short Term Orientation are respect for tradition, fulfilling
social obligations, and protecting one's 'face'.

Spring 2017 50
Geert Hofstede – Cultural Dimensions IV
http://www.geerthofstede.nl/dimensions-of-national-cultures

• Indulgence versus Restraint

Indulgence stands for a society that allows relatively free
gratification of basic and natural human drives related to
enjoying life and having fun.

• Restraint stands for a society that suppresses gratification of

needs and regulates it by means of strict social norms.

Spring 2017 51
 Culture is normally an influencing factor that
can act as a restraining force or a facilitating
force.

But culture is normally not a determining factor

on its own >always exceptions, though

Spring 2017 52
• Segmentation
• Targeting
• Positioning

Spring 2017 53
Generally speaking…

“When a company does business in more than one country there are two approaches
to the market. Target markets can be identified as:
- All consumers within the borders of a country

- Global market segments – all consumers with the same groups”

(Ghauri and Cateora: 198)

“Fundamentally, the international marketer is looking for an identifiable segment

of consumers who have the same (or at least mostly similar) needs and wants
across several country markets”
(Ghauri and Cateora: 198)

Spring 2017 54
Global Segmentation

Spring 2017 55
Segmentation: Geographic

• Divide the world into geographic subsets

• However, same geographic region does not guarantee similarity (e.g.

Japan and Vietnam in East Asia)

Spring 2017 56
Segmentation: Demographic

Segmentation based on measurable characteristics of populations such as age, gender, income,

education and occupation

If high income AND large population > great potential!

Remember > foreign exchange rates PLUS purchasing power

India and China > beware averages!

Demographic trends > emergence of global market segments > global teens, global elite <
global demand

Spring 2017 57
Segmentation: Psychographic
• Grouping people in terms of their attitudes, values and lifestyles

• [psycho]logy + demo[graphics]

• AIO studies (Activities, Interests and Opinions)

VALS, VALS2

• http://www.strategicbusinessinsights.com/vals/presurvey.shtml

• List of Values (LOV) developed by University of Michigan as an alternative to VALs

• In the 1990s, Porsche in North America had a clear demographic profile of its customers:
• 40+ male college graduates whose annual income exceeded $200,000

• However, a psychographic study showed that, demographics aside, Porsche buyers could be demarcated into five
distinct categories.

Spring 2017 58
Segmentation: Psychographic
Psychographic Profiles of Porsche’s American Customers (Keegan)

Category % of All Owners Description

Top Guns 27% Driven and ambitious; care about power and control; expect to
be noticed

Elitists 24% Old money a car – even an expensive one – is just a car, not an
extension of one’s personality

Proud Patrons 23% Ownership is what counts; a car is a trophy, a reward for
working hard; being noticed doesn’t matter

Bon Vivants 17% Cosmopolitan jet setters and thrill seekers; car heightens
excitement

Fantasists 9% Car represents a form of escape; don’t care about impressing

others; may even feel guilty about owning car

Spring 2017 59
Segmentation: Further Psychographic Studies

Broader-Scope studies by several global advertising companies such as:

• Backer Spielvogel & Bates (BSB) > called so at the time of the study

• D’arcy Massius Benton & Bowles (DMBB) > called so at the time of the study

• Young & Rubicam (now Y&R) > still exists

Etc. Etc.

Spring 2017 60
Global Segmentation: Behavior

Whether people buy and use a product, as well as how much and how
often they use it

Consumers categorized in terms of usage rate – e.g. heavy, medium,

light and non-user

Tobacco companies – targeting China as the Chinese are heavy users.

Financial institutions > how many cash dispensers per one million of
population; how much do people withdraw per withdrawal, etc.

Spring 2017 61
Global Segmentation: Benefit

V = B/P

Value = Perceived Benefits – Perceived Costs (e.g. switching costs)

Price

Understand the problem a product solves or the benefit it offers, regardless of geography

Spring 2017 62
Global Segmentation: Firmographics

Firmographics (think of it like demographics for firms)

http://www.wiglafjournal.com/marketing/2004/04/relevancy-of-market-research-in-business-
markets

B2B

Firmographic research is focused on providing high-level descriptions of the market.

This includes the industry definition, industry size, financial and business metrics, and geography.

Spring 2017 63
Global Targeting

Spring 2017 64
Global Targeting

You can target one market segment, or multiple market segments.

The three basic criteria for assessing opportunity in global target markets are the
same as in single-country targeting:

• Current size of the segment and anticipated growth potential

• Potential competition
• Compatibility with the company’s overall objectives and the feasibility of
successfully reaching a designated target

Spring 2017 65
Global Targeting
Standardised Global Marketing: Analogous to mass marketing in a single country

Coca Cola > appeal of youthful fun in global advertising <Sponsorship of soccer versus football, as appropriate,
Think Globally but Act Locally

Concentrated Global Marketing : reach a single segment of the global market

Prestige Cosmetics (Chanel) plus Hidden champions of global marketing Winterhalter (a German company) > ONLY
hotels and restaurants and provides dishwashers, water conditioners, detergents and service.

Narrow market definition> go for global depth rather than national breadth

Differentiated Global Marketing: A variation of concentrated global marketing

Target two or three different market segments with different marketing mixes > A variation of concentrated global
marketing

E.G. In the fashion industry, haute couture houses mostly have “second-lines” targeted towards fashion-conscious
consumers looking for more affordable clothing

Spring 2017 66
Global Positioning

Spring 2017 67
Positioning

The location of your product in the mind of your customer

Is there such a thing as global positioning???

If you do not use a “unified global positioning strategy”, what issues

can you encounter?

If you do use a “unified global positioning strategy”, what issues can

you encounter?

Spring 2017 68
Positioning
Some research suggests that global positioning is more
effective for product categories that approach either end
of a High-touch, High-tech continuum

Both High-Touch and High-Tech products have high user

involvement

High-touch appeals more to the senses than to the intellect

Spring 2017 69
High-Tech Positioning

Personal computers, laptops, video and stereo equipment, and automobiles > high-
tech positioning has proven effective

Frequently purchased on the basis of concrete product features, although image may
be somewhat important.

Buyers typically already possess or wish to acquire considerable technical information

Three categories of High-Tech (there are more, but these are what we will consider
here)

Spring 2017 70
High-Tech Positioning
1. Technical Products
Computers, chemicals, financial services > buyers have specialized needs requiring a lot of
product information. They share a common “language”

Marketing communications should be informative and emphasize features

2. Special-Interest Products

Less technical and more leisure and recreation oriented, but still characterized by a shared
experience and high involvement among users with common language and symbols
transcending language and cultural barrier

Fuji bicycles, Adidas sports equipment, Canon cameras > successful global special-interest
products

3. Products that Demonstrate Well/Speak for themselves

Spring 2017 71
High-Touch Positioning
Less emphasis on specialized information and more emphasis on image

Like high-tech products, high-touch categories are highly involving for

customers.

Buyers of high-touch products also share a common language and set

of symbols relating to themes of wealth, materialism, and romance

Three Categories of High-Touch Products

Spring 2017 72
High-Touch Positioning
1. Products that Solve a Common Problem
Benefits linked to ‘life’s little moments’ > Ads showing > friends talking over a cup of tea in a
café; Quenching thirst with a soft drink during a day at the beach

2. Global Village Products

Strongly cosmopolitan positioning > Chanel fragrances, pizza, mineral water, designer fashions
COO appeal > Japanese quality>Sony; German engineering > Mercedes;
American-ness > Levis, Marlboro, Harley-Davidson

3. Products that Use Universal Themes

Truly transnational themes/products such as materialism (keyed to images of well-being or
status), heroism, play (leisure/recreation), and procreation (images of courtship and
romance)

Spring 2017 73
High-Tech AND High-Touch Positioning

Some products can be positioned in more than one way

within either the high-touch or high-tech poles of the
continuum.

BMW can simultaneously be classed as both

High-tech > Special-Interest

Reinforcing High-touch aspect > BMW-Magazine for BMW

owners

Spring 2017 74
Difference between dark web and deep web

Spring 2017 75
Entry, Expansion and Exit Strategies: Marketing and Sourcing

Spring 2017 76
Why Does Your Firm Want to Enter? (Ghauri and Cateora: 267)

Market Seeking
Resource Seeking
Efficiency Seeking

So, How do you select a market?

Reactive Market Selection
Proactive Market Selection

Spring 2017 77
Should your firm enter/expand into a country?

Assess:
Political Risk
Market Access
Factor Costs and Conditions
Shipping Considerations
Country Infrastructure
Foreign Exchange (and Purchasing Power)

Spring 2017 78
So > How do you reach a decision?

• Create a Product –Market Profile

• Market Selection Criteria
• Visits to the Potential Market

Spring 2017 79
Questions to Ask when Entering or Expanding Into A New Country >> The Nine Ws

Create a Product-Market Profile

1. Who buys our product?

2. Who does not buy our product?
3. What need or function does our product serve?
4. What problem does our product solve?
5. What are the customers currently buying to satisfy the need and/or solve the
problem for which out product is targeted?
6. What price are they currently paying for the products they are currently buying?
7. When is our product purchased?
8. Where is our product purchased?
9. Why is our product purchased?

Think about the home and the host country!

Spring 2017 80
So > How do you reach a decision?

• Create a Product –Market Profile

• Market Selection Criteria
• Visits to the Potential Market

Spring 2017 81
Market Selection Criteria

Once you know your product-market profile, apply the

market selection criteria

1. Market Potential
2. Market Access
3. Shipping Costs and Time
4. Potential Competition
5. Service Requirements
6. Product Fit

Spring 2017 82
So > How do you reach a decision?

• Create a Product –Market Profile

• Market Selection Criteria
• Visits to the Potential Market

Spring 2017 83
Why?

Spring 2017 84
So > How do you reach a decision?

• Create a Product –Market Profile

• Market Selection Criteria
• Visits to the Potential Market

• After conducting the above activities, you are ready to make a decision and spring into
action.

• The above activities are not always sequential.

Spring 2017 85
Boston Consulting Group Portfolio Analysis Matrix

• Stars, question marks dogs, cash cows

• In global marketing, it is used to analyze each market/country (instead

of business of product), which is then put into the context of
competition and the company’s own capabilities

• Two determining factors:

• Country attractiveness
• Competitive strength of the company

Spring 2017 86
Dimensions of Country Attractiveness and Competitive Strength

Country Attractiveness Competitive Strength of the Company

Market size (total and segments) Market share

Market growth (total and segments) Marketing ability and capacity

Competitive conditions Product and positioning fit

Market uncontrollables (cultural, legal, and

Quality of distribution services
political environments)

Spring 2017 87
Market Portfolio Analysis: Country Attractiveness/Competitive Strength

High

Country Attractiveness
Invest . Joint Venture

. Selective
.
Strategy

. . Divest/license
Low
High Competitive Strength of the Company Low

Spring 2017 88
 • Invest >country is attractive due to size of market and growth.

• Divest/license > Company should not invest in this market. If company is already
there, it should divest and get out.

• Joint Venture > Market is quite attractive but difficult. If you cannot dominate a
market (have major market share), then better not to enter or enter through a joint
venture i.e. share the costs and local differences with a local partner.

• Selective Strategy > Markets that are moderately attractive but where there is fierce
competition and therefore difficult to maintain a stable market share.

Spring 2017 89
Deciding How to Enter the Market

Indirect Direct Exporting Direct Investment

Exporting Licensing Joint Ventures

Commitment, Risk, Control, and Profit Potential

Don’t forget the internet/web – remember “born global”

Spring 2017 90
 Many Other Decision Grids/
Matrices/ Models as well for country selection

Standardization versus Adaptation

Just remember “Think Globally but Act Locally” >
Glocal

Foreign Direct Investment

Spring 2017 91
Evaluating Potential Markets

Spring 2017 92
Major Decisions

Deciding Deciding which Deciding how to Deciding on the Deciding on the

whether to markets to enter enter the market marketing marketing
go abroad program organization

Spring 2017 93
Deciding on the Marketing Organisation

Spring 2017 94
 • Exporting
Contract Manufacturing
Organizing for Exporting-
Barriers/Restrictions
Anti-Dumping
Countervailing
Grey Marketing/Parallel Importing
Piggy Backing
Country of Origin (incl. Sourcing)
Exporting from Pakistan

• Licensing and Franchising

• Joint Ventures, Consortia and Strategic Alliances
• Manufacturing
• Acquisitions, Takeovers and Mergers
• Countertrade
• E-commerce/Internet
And More……!!!

95
Spring 2017
 Exporting

• Relatively easy and fast

• Common approach with relatively low financial risk compared to other strategies

• Mature companies may also use exporting.

• Easy to make a quick profit

• Export selling versus export marketing

96
Spring 2017
• Common in textile, surgical instruments, football industries
in Pakistan

• A form of outsourcing

• A company can buy, build or rent its own manufacturing

plant or it can sign a local contract manufacturer

• ‘sourced goods’

• Some very big companies also use it

Spring 2017 97
 Exporting

Harmonized Commodity Description and Coding System generally referred to as "Harmonized System" or
simply "HS“ – The World Customs Organisation
http://www.foreign-trade.com/reference/hscode.htm
http://ec.europa.eu/taxation_customs/customs/customs_duties/tariff_aspects/harmonised_system/index_en.htm
http://www.wcoomd.org/

Spring 2017 98
• Home Country > Organizing in the Exporter’s
country

- Host Country – Organizing in the Importing

country

• Direct Export versus Indirect Export

Spring 2017 99
In former times (till around 2006): Export Promotion Bureau (EPB) of Pakistan
Since then, Trade Development Authority of Pakistan (TDAP)
http://www.tdap.gov.pk/

EXCELLENT resource for anyone looking to start an export-import venture involving Pakistan

Additionally, Small and Medium Enterprises Development Authority (SMEDA)

http://www.smeda.org/

Trade Secrets – The Export Answer Book (SMEDA and International Trade Centre (ITC))
(Quality, Logistics, Culture, etc. > a plethora of information)
http://www.smeda.org/index.php?option=com_content&view=article&id=46:trade-secrets&catid=31:smeda-publications-research-books&Itemid=149

Karachi Chamber of Commerce and Industry (KCCI)

http://www.kcci.com.pk/

Board of Investment, Pakistan

http://www.pakboi.gov.pk/

Spring 2017 100

International Trade Centre (ITC)
ITC's mission is to enable small business export success in developing and transition-economy countries, by
providing, with partners, sustainable and inclusive development solutions to the private sector, trade support
institutions and policymakers.
Also has Trade and Tariff Graphs per country
http://www.intracen.org/about/mission-and-objectives/
http://www.intracen.org/country/pakistan/

Ministry of Commerce, Pakistan

http://www.commerce.gov.pk/

National Tariff Commission (NTC)

Including Anti-Dumping and Countervailing
http://www.ntc.gov.pk/

Sindh Board of Investment (SBI)

http://www.sbi.gos.pk/

State Bank of Pakistan

http://www.sbp.org.pk/

The Karachi Stock Exchange

http://www.kse.com.pk/
Spring 2017 101
• Tariff on Imports – very common barrier

• Tariff on Exports
• http://www.chinadaily.com.cn/china/2008-01/02/content_6365352.htm

• Non-Tariff Restrictions/Barriers > Exchange Permits (currency/capital controls), administrative roadblocks,

border-crossing delays, quotas on imports, boycotts and embargoes, voluntary agreements, standards and other
restrictions (health & safety, sanitation certificates, content labeling, packaging, country of origin)

• Quotas > permit importing until quota is filled; import licenses > limits quantities on a case by case basis.

Requirement of license to export or import

• Depends on the country you are exporting from and the country you are exporting to (from the perspective of
the country you are exporting to, this will of course be considered an import)
• Also depends on the commodity you are exporting (or importing)

Spring 2017 102

• French government barriers against Japanese VCRs

• Customs-Privileged Facilities (foreign-trade zones, free trade zones

(FTZs), Export Processing zones (EPZs) )
http://www.epza.gov.pk/index.html

• Letters of Credit >shifts the buyer’s credit risk to the bank issuing the
LC > Also protects the seller > the seller receives his money once he
has shipped the goods

• Contract signed > Buyer/Importer goes to local bank & arranges LC >
buyer bank notifies seller’s bank in the seller's country about LC >
seller/exporter draws draft against LC for payment of goods.

103
Spring 2017
• Export Documents (Export Declaration, Bill of Lading, Commercial Invoice, Insurance Policy/Certificate,
Licenses, Others)

• Terms of Sale (important to establish, especially as terms may mean different things in domestic and
international markets) > In some countries, it is customary to ship FOB (free on board, price established at
the door of the factory), while in others CIF (cost, insurance and freight) is more common > there are
others too.

• Complete list of terms available > Incoterms, a booklet published by the International Chamber of
Commerce. http://www.iccwbo.org/incoterms/id3040/index.html

• The Incoterms® rules are an internationally recognized standard and are used worldwide in international
and domestic contracts for the sale of goods. First published in 1936, Incoterms® rules provide
internationally accepted definitions and rules of interpretation for most common commercial terms

104
Spring 2017
- Packing and Marking,
- Export Shipping (Containerized Shipments > products are packed into container for transportation)
- Logistics,
- The Foreign-Freight Forwarder (a company that helps other companies in transportation and export/import
matters)

From the US Perspective: Export Administration Regulations (EAR)

“Export licensing controls apply to exports of commodities and technical data from the United States; re-exports of
U.S.-origin commodities and technical data from a foreign destination to another foreign destination; U.S-origin
parts and components used in foreign countries to manufacture foreign products for exports; and, in some cases,
Foreign products made from U.S-origin technical data.” (Cateora et al., 519)

From EU Perspective > within EU trade is easy but civil law codes vary across Europe >
so contract should still specify which country it is for.
There are concerns of trade suffering between EU member countries and non-members > the EU market may
become strongly protectionist
>Hidden barriers may still exist
Spring 2017 105
Anti-Dumping
http://www.wto.org/english/tratop_e/adp_e/adp_e.htm

If a company exports a product at a price lower than the price it

normally charges in its own home market, it is said to be “dumping”
the product.

Is this unfair competition?

The WTO agreement does not pass judgment. Its focus is on how
governments can or cannot react to dumping — it disciplines anti-
dumping actions, and it is often called the “Anti-dumping Agreement”.

Spring 2017 106

Note: some people also call it dumping if pricing is below the cost of
production

Spring 2017 107

Subsidies and Countervailing Measures
http://www.wto.org/english/tratop_e/scm_e/scm_e.htm

The WTO Agreement on Subsidies and Countervailing Measures disciplines the use of
subsidies, and it regulates the actions countries can take to counter the effects of
subsidies. Under the agreement, a country can use the WTO’s dispute-settlement
procedure to seek the withdrawal of the subsidy or the removal of its adverse
effects. Or the country can launch its own investigation and ultimately charge extra
duty (“countervailing duty”) on subsidized imports that are found to be hurting
domestic producers.

http://en.wikipedia.org/wiki/Countervailing_duties

Countervailing duties (CVDs), also known as anti-subsidy duties, are trade import
duties imposed under WTO Rules to neutralize the negative effects of subsidies

Spring 2017 108

A successful global company can source its product from anywhere > people trust the brand and do not care about
the country of origin > you agree?

The Good…
You may even be able to charge extra…
Ice-cream makers, natural cosmetics, mineral water, chocolateirs
Nationalism (?)
Tourism

The Bad & the Ugly…

Blood Diamonds
Kimberley Process Certification Scheme (KPCS) is the process designed to certify the origin of rough diamonds from
sources which are free of conflict funded by diamond production
http://en.wikipedia.org/wiki/Kimberley_Process_Certification_Scheme
Blood Diamond – movie

Cool Idea> Curators of Sweden

Football - Pakistan
Child Labour
Women being paid less than men for the same work
In some cases, may be illegal to source a particular product from a particular country > politics, embargoes,
restrictions, environmentalism
Spring 2017 109
The Art Of The Nations
http://gr8word.com/index.php/entry/the-art-of-the-nations

• The art of the Egyptians is in the occult.

• The art of the Chaldeans is in calculation.
• The art of the Greeks is in proportion.
• The art of the Romans is in echo.
• The art of the Chinese is in etiquette.
• The art of the Hindus is in the weighing of good and evil.
• The art of the Jews is in the sense of doom.
• The art of the Arabs is in reminiscence and exaggeration.
• The art of the Persians is in fastidiousness.
• The art of the French is in finesse.
• The art of the English is in analysis and self-righteousness.
• The art of the Spaniards is in fanaticism.
• The art of the Italians is in beauty.
• The art of the Germans is in ambition.
• The art of the Russians is in sadness.
Khalil Gibran

Spring 2017 110

GI versus COO

Spring 2017 111

 Piggybacking

One company (supplier) sells its product abroad using another company’s (carrier) distribution facilities.
(Note: carrier here doesn’t necessarily mean DHL, UPS, Fed-Ex, etc.!)

Complementary but non-competing products

Large retailers such as Tesco, Walmart etc. may carry broad product lines abroad to attract foreign customers

May share transportation costs or may do it for profits (make profit on other companies/suppliers products)

Some government/regional development agencies encourage their companies to use this method to
support small/weaker companies > can be seen as first step to “test the market” by small firms

Spring 2017 112

 Gray Market/Parallel Importing
http://www2.hull.ac.uk/hubs/pdf/memorandum38.pdf

• Widespread international practice > When gray marketing occurs across markets, such as in an
international setting, the term used most commonly is ‘parallel importing’.

• Parallel importing is not counterfeiting.

• Selling of trademarked goods through channels of distribution not authorized by the trademark holders .

• Only illegal when gray market goods violate either product regulations or a licensing contract for the
trademark's use in a specific country, or where the trademark owner is based in the country into which
parallel imports are intended to be shipped – but this entire area is the subject of intense debate.

• Source of supply, easy access from one market to another, and price differentials that are large enough to
make the venture financially viable.

• Bad impact on goodwill stablished by the 'official‘ distributor/trademark owner as no post-sale service
and warranty protection.

• Books, CDs, Electronic Goods, etc.

• Internet > online pharmacies

Spring 2017 113

• Local company uses a firm’s trade mark/patent for a fee > production/technological
processes, use of trade names/patents, or distribution of imported products.

• Advantageous if scarce capital, import restrictions, sensitive to foreign ownership, or

necessary to protect patents or trademarks against cancellation for non-use

• Firms of all sizes use it > may be less profitable but also less risky

• Licensees may be closely controlled or autonomous

• Burden of finding, inspiring, and supervising licensees

Spring 2017 114

• Franchising is the fastest growing market entry strategy

• The first McDonald’s in Moscow and the first KFC is in China.

• In Pakistan > petrol pump, fast food, educational

Spring 2017 115

• Legal arrangement; business agreement

• Government regulations may either require or restrict foreign

companies to enter into JV with domestic firms.

• More extensive form of participation in foreign markets than either

exporting or licensing.

• JVs may be established, separate, legal entities or just JV agreements

without a separate legal entity

Spring 2017 116

 Consortia (singular: Consortium)

• Similar to JV, but typically involve a large number of participants and frequently
operate in a country or market in which none of the participants is currently active

• Financial and managerial resources pooled > shared risk.

• Huge construction projects, WWW Consortium, etc.

Spring 2017 117

 Strategic Collaboration/Strategic International Alliances (SIA)

• Business relationship /partnership by two or more companies to cooperate out of mutual

need and to share risk in achieving a common objective > a synergistic relationship
established to achieve a common goal where both parties benefit.

Alliances very common in airlines > for frequent flyer miles, joint flights, code share, etc.

Spring 2017 118

 Manufacturing

• A wholly owned subsidiary within a foreign country

• Capitalize on low-cost labour, avoid high import taxes, reduce the high costs of
transportation to market, gain access to raw materials, and/or as a means of gaining
market entry.

• Seeking lower labour costs offshore > no longer an unusual strategy >offshoring,
outsourcing, offshore outsourcing

• Establishment of manufacturing operations throughout the world

Spring 2017 119

Foreign Direct Investment

Spring 2017 120

 Acquisitions, Takeovers, Buyouts and Mergers

• Happen frequently

• Good way to expand and enter

• BUT issues > legal, cultural (national and organizational),

structural

• Unilever rejects Kraft takeover bid (current status?)

http://www.reuters.com/article/us-unilever-m-a-kraft-
idUSKBN15W18Y
Spring 2017 121
 Countertrade

Oil for Food program > Iraq

(program started in the 90s, but allegations started coming to the front from 2003-ish onwards)

http://www.un.org/depts/oip/background/index.html
http://www.cfr.org/un/iraq-oil-food-scandal/p7631#p1
http://www.un.org/depts/oip/

Also called bi-lateral trade (when dealings are between sovereign states)

Countertrade deals on the increase

Noted US economist Paul Samuelson skeptical "Unless a hungry tailor happens to find
an undraped farmer, who has both food and a desire for a pair of pants, neither can
make a trade". (This is called "double coincidence of wants".)

Spring 2017 122

 Countertrade

Promotion of local exports, saving scarce foreign exchange, balancing trade flows and/or
ensuring guaranteed supplies.

Terms and conditions for counter trade are not standardized > may be different from market to
market

Holiday barter of homes

An entrepreneurial idea for you perhaps? > setting up a barter website focused on Pakistan

Spring 2017 123

 E-commerce/Internet

Just another way of exporting your product or whole new paradigm?

Two categories
• “e-” companies
• Companies for whom the internet is an extension of their trade

• Click only, Brick and Click, Brick and Mortar

• “Let’s make money from the internet” <

• ….but execution requires much more than just being internet-savvy

• “BORN GLOBAL”

Spring 2017 124

Entry Strategies

Spring 2017 125

For a particular product, a company can choose to enter in:

- a waterfall approach: one by one – e.g. developed countries first and

less developing later etc.

- a shower/sprinkler approach: all countries entered at the same time for

a particular product.

- a cluster approach: where it chooses different clusters across the world

and enters those.

Spring 2017 126

• Cluster Entry

• Waterfall Entry

• Sprinkler/Shower Entry

Spring 2017 127

Exiting - Divestments

Spring 2017 128

Commodity versus Value-added branding

http://www.producebusinessuk.com/purchasing/stori
es/2017/02/17/uk-goes-bananas-for-indian-on-the-go-
mango-and-pomegranate-snacks

Are we going to be only a raw material provider

(sourcing partner) rather than manufacturing value-
added products locally and developing our brands?

Are we slowly going to lose the capability to produce?

Spring 2017 129
Global Products

Spring 2017 130

Global Products

• Include both Goods and Services, Consumer and Industrial

Spring 2017 131

Quality

• Some industries have third party, independent and objective

(supposedly!) watch dogs

• Customer Satisfaction Indexes > first developed in Sweden; now

widely used

• Performance Quality – viewed internally from firm’s perspective –

flight arrives safely and on time

• Market-Perceived Quality – from customer’s perspective – fast check-

in, legroom, quick service, etc.

Spring 2017 132

Quality

• A product may leave the factory with good quality but may be damaged as it
passes through the distribution chain

• Especially a problem for global brands > production is distant from market and/or
control of the product is lost because of the distribution system within the market
e.g. Russia’s chocolate industry

• American Customer Satisfaction Index (ACSI) > focuses on result> quality as

perceived by product and service users > emphasis on consumer products

• Vegetarian/Vegan certification, Environmental Certification, Halaal/Kosher

Certification, Allergy Certification

Spring 2017 133

Physical or Mandatory Requirements & Adaptation

Meeting physical or mandatory requirements

• Product Homologation > used to describe changes mandated by local

product and service standards

• A common finding> mandatory adaptations were more frequently the reason

for product adaptation than adapting for cultural reasons

• Standardization versus Adaptation

• Some changes obvious> electrical goods’ voltage, multilingual labels, etc.

Spring 2017 134

Green Marketing

- Japanese car manufacturers taking advantage of this

- EU leading the way in the green movement > Eco labels in EU since 1992>
environmentally friendly products

- Under EU laws > packaging needs to be recyclable > not 100% but to
varying extent.

- Carbon emissions > factories; Carbon tax > a form of carbon pricing >
Environmental tax levied on carbon content of fuels

- Former VP AL Gore > done a lot of work on this

- Environment – whose problem is it anyway?

Spring 2017 135

Culture

• Islamic banking

• Most traditional Japanese homes don’t have ovens – cake mixes etc.

• Rice in Japan cooked in Rice cookers > sticky rice

• In addition, literacy rate is important, both in services and products

Spring 2017 136

 Deciding on the Marketing Programme

Product

Do Not Change Adapt product

Product Develop New Product
Communications

Do Not Change
Communications Straight Extension Product Adaptation Product Invention
(Backward Invention
(but beware of
Adapt dumping!) and
Communication
Communications Dual Adaptation Forward Invention)
Adaptation

Spring 2017 137

Global Brands
The worldwide use of a name, term, sign, symbol (visual and/or auditory), design, or
combination thereof intended to identify goods or services of one seller and to
differentiate them from those of competitors.

Impact of Internet and other technologies

Even useful for products that must be adapted to local market

Some companies – Nestle, Unilever > mix of National and Global brands >

Some multinationals may give different names to the same brand in different
countries

Use global brands where possible and local brands where necessary

Spring 2017 138

Country of Origin Effect and Global Brands
COO – any influence that the country of manufacture, assembly, or design has on a
consumer's positive or negative perception of a product

Stereotypes and generalizations, but oh so important!

French perfume, Chinese silk, Italian leather, Germany technology

A relatively recent change in US law >> any cloth “substantially altered” (woven, for
instance) in another country has to identify that country on its label. Gucci,
Versace, etc. > Now Made in China instead of Made in Italy as silk comes from
China

95% of all silk comes from China, which has a reputation for the finest silk but also a
reputation for cheap scarves. One buyer said “I don’t care if the scarves are made
is China as long as it doesn’t say so on the label” (Cateora et al. 2008, reprinted 2009: 439)

Strong brand name versus COO?

Spring 2017 139
Country of Origin Effect and Global Brands

Ethnocentrism > nationalism > buy American, buy Pakistani

During the Danish cartoon crisis > issues >

Some companies have reputation of producing the “best” of something

In Russia, world divided into two kinds of products > “ours” and “imported” > Russians
preferred fresh, homegrown food products but imported clothings and manufactured items

For Russians, country of origin is more important than brand name as an indicator of quality.
What about us?

The more technical the product…?

If a product is a luxury item…?

If someone told you they had a Swiss bank account…

Spring 2017 140

Own/Private Brands

Owned by retailers > as opposed to manufacturers’ brands

More important in Europe

Sainsbury’s own/Tesco’s own, etc.

Retailers gets high margins, receive preferential shelf space and strong in-store
promotion, quality products at low prices

Manufacturers’ brands > traditionally premium priced and offer retailers lower
margins than those they get from private brands

Growing globalization of markets gives rise to standardization > must be balanced

with the continuing need to assess all markets for those differences that might
require adaptation for successful acceptance.

Spring 2017 141

Industrial Products

Technology and Market Demand

Quality and Global Standards > varies between developed and

developing world

Also, Quality is defined by the buyer > do all companies need same PC?

Use of international standards varies; use of measurements also varies

Derived demand > demand dependent on another source

Spring 2017 142

Industrial Products

Business and After-Sales Services

Businesses also buy services not associated with products > advertising,
legal, transportation, call centres, etc.

Trade Shows and Relationship Marketing >

crucial to B-to-B marketing

Spring 2017 143

ISO Certification –designed originally by International Organization for
Standardization

Investors in People
http://www.investorsinpeople.com/

Spring 2017 144

Consider these: presentation in groups of 2
• BRICS (Arsal, Aalia) • CIVETS (Rohaan, Komal)

• Next-11 (N-11) (Sunaim, Maryam) • MIKTA (Atif, Noman)

• G-7/G-8 (Ali, Zunaira)

• G-20 developing nations (Waleed, Sadia)

• G-20 major economies (Ahsan, Fahad Ali)

• VISTA (Shahzeb, Noor)
• E-7 (Fahad Athar, Arsalan)
• Group of 77 (Faizan, Ashfaque)
• G8 + 5 (Faareha, Roman)
• MINT (Hasan,Obaid)
• G24 (Khizr, Sumaiya)

• D-8 (Emad, Mohsin)

Spring 2017 145