Global Global Marketing Marketing

EnvironmentEnvironment

Jan Surya Jan Surya SharmaSharma

INTERNATIONAL MARKETING ENVIRONMENT

MACRO – MICRO & INTERNAL MACRO – MICRO & INTERNAL ENVIRONMENTENVIRONMENT

THE MACRO-ENVIRONMENT includes all factors influencing organization & out of its direct control. Laws competition and rivalry in a market new entrants ever changing needs changes in culture, politics, economics &technology

THE MICRO-ENVIRONMENTinfluences the organization directly.

includes suppliers, consumers & customers, and other local stakeholders.

THE INTERNAL ENVIRONMENTinternal factors or the 'internal environment‘

include ‘5 Ms'

Men, Money, Machinery, Materials & Markets.

INTERNATIONAL MARKETING ENVIRONMENT

Environmental ScanningProcess of collecting information about the marketing environment in order to identify and interpret potential trends.

Three Questions of Determining a Competitive Strategy:

-Should we compete?-If so, in what markets?-How should we compete?

MARKETING ENVIRONMENT MARKETING ENVIRONMENT & &

COMPETITOR ANALYSISCOMPETITOR ANALYSIS

SWOT analysisPEST analysisFive forces analysis

SWOT analysisSWOT analysis

Strengths Weaknesses OpportunitiesThreats

Internal

External

SWOT ANALYSIS - Strengths & Weaknesses - Internal Factors

Strength:- Your competencies & expertise - New, innovative product or service- Location of your business - Quality processes and procedures- Other aspect that adds value

Technical Skills – Competent HR - Production process – Inputs & RM

Weakness:- Lack of mkting expertise- Undifferentiated products/services- Location of your business- Poor quality goods or services- Damaged Image/ Reputation

No Prior Experience – Financial

Contraints

SWOT ANALYSIS contd…Opportunities & Threats - External factors

Opportunities:- Developing market/High Growth Mkts.- Mergers, Jt. Vent. or str. Alliances- New profitable market segments - A new international market- Mkt vacated by ineffective competitor.

Threats:ew competitor in home market

- Price wars with competitors- Entry of new innovative product/service- Superior access to channels of distribution - New Trade barriers Tarrifs non-tariffs

PEST Analysis

Political factorsEconomic factorsSocio-cultural factorsTechnological factors

Political/legal - EST

Monopolies legislation Environmental protection laws Taxation policy Employment laws Government policy Legislation Others?

Political/legal Laws, rules, and standards The political environment

Ideology Nationalism Stability International relations The legal environment

International law Terms of access: Tariff systems & Non-tariff barriers Monetary controls & Exchange rate policies

Restrictive administrative and technical regulations Other Issues:

1."Institutional environment" - made up of political, social & legal ground rules.

2. Property rights - patents, trademarks. 3. Taxation & taxation schemes abroad? 4. Recourse - possibility & length of action for image damaging & arbitration. 5. Movement of equity & expropriation threatsThe three basic principles are: i) nondiscrimination ii) open markets iii) fair trade prohibiting subsidies etc.

P Economic Factors - ST

Inflation Employment Disposable income Business cycles Energy availability and cost Others?

Economic FactorsMajor Changes in Global Economy Capital movements than Trade is driving force:

World Trade - US$ 3 trillion; London Eurodollar market - US$ 75 tr.paFOREX Transactions - US$ 35 trillion p.a.

Production become "uncoupled" from employment:Mfring share at 20-25% of GNP while employment is on decline

Primary products "uncoupled" from industrial economy:Finished products prices gone down while basic is up or vice-versa

World economy is in control - individual nations are not, - Developing countries export primary products & at the mercy of world supply and demand movements- Rapid globalization let to global competition pushing up quality. Developed worlds on industrial & service products of high value addition while opportunities is left for developing countries to produce and export low value added items of basic necessity.

Economic Factors World trade

Composition of world trade Patterns of trade Comparative costs - comparative advantage Balance of payments Government policy World Institutions Regionalism The international financial system Individual economies a) Population b) Income c)The nature of economy d)The nature of economic

activity e) Infrastructure f) Urbanisation g) Size of market Stages of market development

i) Preindustrial countries - incomes > US$ 400 GNP per capita ii) Less developed countries - between US$ 401 and US$ 1,635 iii) Developing countries - between US$ 1,636 and US $ 5,500 iv) Industrialised countries - US$ 5,501 and US$ 10,000 v) Advanced countries - + US$ 10,000 per capita income

CONTD…

Economic FactorsWorld Bank classification GNP per capita. Low income economies: US$ 675 or less. 41 nations – China, India, Tanzania,

Kenya etc. Middle income: US$ 676 - US$ 2,695. 40 nations - Zimbabwe, Mexico, Thailand

etc. Upper middle: US$ 2,676 - US$ 8,355. 17 nations - Brazil, Portugal, Greece etc. High income economies: US$ 8,356 or more 24 nations – USA, Germany,

Japan, UK, France, and other OECD members Other economies - communist bloc.

Rostow (1971) five stage model of economic takeoff: Stage 1- Traditional society, little increase in productivity, no modern science

application systematically, low level of literacy Stage 2 - Preconditions of takeoff, modern techniques in agriculture and

production, developments in infrastructure and social institutions Stage 3 - Takeoff, normal growth patterns, rapid agricultural and industrial

modernisation, good social environment. Stage 4 - Drive to maturity, modern technology applied to all fronts,

international involvement, can produce anything Stage 5 - Age of high mass consumption, production of durable goods and

services, large amounts of

PEPE S Socio-cultural ocio-cultural Factors Factors TT

Demographics Distribution of income Social mobility Lifestyle changes Consumerism Levels of education Others?

SSocio-Cultural factorsocio-Cultural factors Maslow approach The self reference criterion (SRC) Diffusion theory High and low context cultures

The elements of culture : material culture language aestheticseducation religion attitudes & values social organization.

Hofstede's contribution Cultural Variables "Power distance" - endorsement and its inverse for inequality. "Individualism" "Masculinity" - assertive or competitive orientation, sex role distribution and

caring attitude towards others "Uncertainty Avoidance" "Confucian Dynamism" - legitimacy of hierarchy & valuing of perseverance and

thrift. "Integration" - Degree of tolerance, harmony & friendship at the expense of

competitiveness "Human Heartedness" - Open-hearted patience, courtesy & kindness. "Moral Discipline" - Rigid distancing from affairs of the world.

PES Technological

New discoveries and innovationsSpeed of technology transferRates of obsolescenceInternetInformation technologyOthers?

Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980, p. 4.

Threat ofThreat ofsubstitutessubstitutes

POTENTIAL entrants

Threat ofThreat ofentrantsentrants

SUPPLIERS BargainingBargaining

powerpower

SUBSTITUTES

BUYERS

BargainingBargaining powerpower

COMPETITIVE RIVALRY

FIVE FORCES ANALYSIS

Five Forces Analysis: Key Questions and

Implications What are the key forces at work in the competitive

environment? Are there underlying forces driving competitive

forces? Will competitive forces change? What are the strengths and weaknesses of

competitors in relation to the competitive forces? Can competitive strategy influence competitive

forces (e.g. by building barriers to entry or reducing competitive rivalry)?

ANALYZING COMPETITION

Porter’s 5force Model

SUPPLIER POWER SUPPLIER POWER Supplier concentration Importance of volume to supplier Differentiation of inputs Impact of inputs on cost or differentiation Switching costs of firms in the industry Presence of substitute inputs Threat of forward integration Cost relative to total purchases in industry

BARRIERS TO ENTRYBARRIERS TO ENTRY

Absolute cost advantages Proprietary learning curve

Access to inputs Government policy Economies of scale Capital requirements

Brand identity Switching costs

Access to distribution Expected retaliation Proprietary products

THREAT OF THREAT OF SUBSTITUTESSUBSTITUTES -Switching costs

-Buyer inclination to substitute

-Price-performance trade-off of substitutes

BUYER POWER BUYER POWER Bargaining leverage

Buyer volume Buyer information

Brand identity Price sensitivity

Threat of backward integration Product differentiation

Buyer concentration vs. industry Substitutes available

Buyers' incentives

DEGREE OF RIVALRYDEGREE OF RIVALRY

-Exit barriers -Industry concentration

-Fixed costs/Value added -Industry growth

-Intermittent overcapacity -Product differences

-Switching costs -Brand identity

-Diversity of rivals -Corporate stakes

RIVALRY

POTENTIAL ENTRANTSBARRIERS TO ENTRY Absolute cost advantages Proprietary learning curve Access to inputs Government policy Economies of scale Capital requirements Brand identity Switching costs Access to distribution Expected retaliation Proprietary products

SUBSTITUTES

THREAT OF SUBSTITUTES Switching costs Buyer inclination to substitute Price-performance Trade-off of substitutes

SUPPLIERS POWER

SUPPLIER BARGAINING POWER Supplier concentration Importance of volume to supplier Differentiation of inputs Impact of inputs on cost or

differentiation Switching costs of firms in the industry Presence of substitute inputs Threat of forward integration Cost relative to total purchases in

industry

BUYERS POWERBUYER POWER Bargaining leverage Buyer volume Buyer information Brand identity Price sensitivity Threat of backward integration Product differentiation Buyer concentration vs. industry Substitutes available Buyers' incentives

COMPETITIVE RIVALRY

DEGREE OF RIVALRY -Exit barriers -Industry concentration -Fixed costs/Value added -Industry growth -Intermittent overcapacity -Product differences -Switching costs -Brand identity -Diversity of rivals -Corporate stakes

Porter’s Diamond of National Advantage: As Applied to India

Thanks!Thanks!