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GlobalMarketingManagement:PlanningandOrganizationChapter9ChapterLearningObjectives1.Howglobalmarketingmanagementdiffersfrominternationalmarketingmanagement2.Theincreasingimportanceofinternationalstrategicalliances3.Theneedforplanningtoachievecompanygoals4.Theimportantfactorsforeachalternativemarket-entrystrategyIntroductionIncreasinglyfirmsareenteringforeignmarketsAcquiringaglobalperspectiverequiresexecutionrequiresplanning,organization,andawillingnesstotrynewapproaches—suchasengagingincollaborativerelationshipsThischapterdiscussesglobalmarketingmanagement,competitionintheglobalmarketplace,strategicplanning,andalternativemarket-entrystrategiesGlobalMarketingManagementGlobalMarketingManagementthoughthasundergonesubstantialrevisionInthe1970stheargumentwasframedas“standardizationvs.adaptation”Inthe1980sitwas“globalizationvs.localization”or“Thinklocal,actlocal”Inthe1990sitwas“globalintegrationvs.localresponsiveness”ThebasicissueiswhethertheglobalhomogenizationofconsumertastesallowedglobalstandardizationofthemarketingmixGlobalMarketingManagement:AnOldDebateandaNewViewTheNestleWayThe“Nestléway”istodominateitsmarketscanbesummarizedinfourpoints:thinkandplanlongtermdecentralizesticktowhatyouknow,andadapttolocaltastesNestlésellsmorethan8,500productsproducedin489factoriesin193countriesNestléistheworld’sbiggestmarketerofinfantformula,powderedmilk,instantcoffee,chocolate,soups,andmineralwaterBenefitsofGlobalMarketingEconomiesofscaleinproductionandmarketingcanbeimportantcompetitiveadvantagesforglobalcompaniesUnifyingproductdevelopment,purchasing,andsupplyactivitiesacrossseveralcountriesitcansavecostsTransferofexperienceandknow-howacrosscountriesthroughimprovedcoordinationandintegrationofmarketingactivitiesDiversityofmarketsbyspreadingtheportfolioofmarketsservedbringsanimportantstabilityofrevenuesandoperationstomanyglobalfirmsThemeritsofglobalmarketinginclude:PlanningforGlobalMarketsStructurally,planningmaybeviewedascorporate,(2)strategic,or(3)tacticalPlanningisasystematizedwayofrelatingtothefutureItisanattempttomanagetheeffectsofexternal,uncontrollablefactorsonthefirm’sstrengths,weaknesses,objectives,andgoalstoattainadesiredendInternationalcorporateplanningisessentiallylongterm,incorporatinggeneralizedgoalsfortheenterpriseasawholeStrategicplanningisconductedatthehighestlevelsofmanagementanddealswithproducts,capital,andresearch,andlong-andshort-termgoalsofthecompanyTacticalplanning,ormarketplanning,pertainstospecificactionsandtotheallocationofresourcesusedtoimplementstrategicplanninggoalsinspecificmarketsThePlanningProcess

Phase1:PreliminaryAnalysisandScreening–MatchingCompanyandCountryNeedsPlanning,whichoffersasystematicguidetoplanningforthemultinationalfirmoperatinginseveralcountries,includesthefollowing4phases:

Phase2:AdaptingtheMarketingMixtoTargetMarkets

Phase3:DevelopingtheMarketingPlan

Phase4:ImplementationandControlTheanswerstothreemajorquestionsaresoughtinPhase2:Arethereidentifiablemarketsegmentsthatallowforcommonmarketingmixtacticsacrosscountries?Whichcultural/environmentaladaptationsarenecessaryforsuccessfulacceptanceofthemarketingmix?Willadaptationcostsallowprofitablemarketentry?TheplanningprocessillustratedinExhibit11.1belowoffersasystematicguidetoplanningforthemultinationalfirmoperatinginseveralcountriesForeignMarket-EntryStrategiesmarketcharacteristics(suchaspotentialsales,strategicimportance,culturaldifferences,andcountryrestrictions)companycapabilitiesandcharacteristics,includingthedegreeofnear-marketknowledge,marketinginvolvement,andcommitmentthatmanagementispreparedtomakeWhenacompanymakesthecommitmenttogointernational,itmustchooseanentrystrategyThechoiceofentrystrategydependson:AlternativeMarket-EntryStrategiesexportingcontractualagreementsstrategicalliances,anddirectforeigninvestmentImportregulationsmaybeimposedtoprotecthealth,conserveforeignexchange,serveaseconomicreprisals,protecthomeindustry,orproviderevenueintheformoftariffsAcompanyhasfourdifferentmodesofforeignmarketentryfromwhichtoselect:ExportingExportingcanbeeitherdirectorindirectIndirectexportingthecompanysellstoacustomerinanothercountryIncontrast,indirectexportingusuallymeansthatthecompanysellstoabuyer(importerordistributor)inthehomecountrywhointurnexportstheproductTheInternetisbecomingincreasinglyimportantasaforeignmarketentrymethodContractualAgreementsContractualagreementsgenerallyinvolvethetransferoftechnology,processes,trademarks,orhumanskillsContractualformsofmarketentryinclude:Licensing:Ameansofestablishingafootholdinforeignmarketswithoutlargecapitaloutlaysislicensingofpatentrights,trademarkrights,andtherightstousetechnologicalFranchising:

Inlicensingthefranchisorprovidesastandardpackageofproducts,systems,andmanagementservices,andthefranchiseeprovidesmarketknowledge,capital,andpersonalinvolvementinmanagement

Contractualagreementsarelong-term,non-equityassociationsbetweenacompanyandanotherinaforeignmarketStrategicInternationalAlliancesSIAsaresoughtasawaytoshoreupweaknessesandincreasecompetitivestrengthsSIAsofferopportunitiesforrapidexpansionintonewmarkets,accesstonewtechnology,moreefficientproductionandmarketingcostsAnexampleofSIAsintheairlinesindustryisthatoftheOneworldalliancepartnersmadeupofAmericanAirlines,CathayPacific,BritishAirways,CanadianAirlines,Aer

Lingus,andQantasStrategicallianceshavegrowninimportanceoverthelastfewdecadesasacompetitivestrategyinglobalmarketingmanagementAstrategicinternationalalliance(SIA)isabusinessrelationshipestablishedbytwoormorecompaniestocooperateoutofmutualneedandtoshareriskinachievingacommonobjectiveThestepsoutlinedinExhibit11.3belowcanleadtosuccessfulandhighperformancestrategicalliancesInternationalJointVenturesInternationaljointventures(IJVs)havebeenincreasinglyusedsince1970sIJVsareusedasameansoflesseningpoliticalandeconomicrisksbytheamountofthepartner’scontributiontotheventureJVsprovidealessriskywaytoentermarketsthatposelegalandculturalbarriersthanwouldbethecaseinanacquisitionofanexistingcompanyAjointventureisdifferentfromstrategicalliancesorcollaborativerelationshipsinthatajointventureisapartnershipoftwoormoreparticipatingcompaniesthathavejoinedforcestocreateaseparatelegalentityJointventuresaredifferentfromminorityholdingsbyanMNCinalocalfirm.InternationalJointVentures(contd.)JVsareestablished,separate,legalentities;theyacknowledgeintentbythepartnerstoshareinthemanagementoftheJV;theyarepartnershipsbetweenlegallyincorporatedentitiessuchascompanies,charteredorganizations,orgovernments,andnotbetweenindividuals;equitypositionsareheldbyeachofthepartnersFourfactorsareassociatedwithjointventures:ConsortiaTheytypicallyinvolvealargenumberofparticipants,andTheyfrequentlyoperateinacountryormarketinwhichnoneoftheparticipantsiscurrentlyactiveConsortiaaresimilartojointventuresandcouldbeclassifiedassuchexceptfortwouniquecharacteristics:Consortiaaredevelopedtopoolfinancialandmanagerialresourcesandtolessenrisks.DirectForeignInvestmentCompaniesmaymanufacturelocallytocapitalizeonlow-costlabor,toavoidhighimporttax

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