global business management

GLOBAL MARKETINGGLOBAL MARKETING

• THE GLOBAL MARKETING IS THE PROCESS OF FOCUSSING THE THE GLOBAL MARKETING IS THE PROCESS OF FOCUSSING THE RESOURCES & OBJECTIVES OF A COMPANY ON GLOBAL MARKET RESOURCES & OBJECTIVES OF A COMPANY ON GLOBAL MARKET OPPORTUNITIES OPPORTUNITIES

COMPANIES ENGAGE IN GLOBAL MARKETING FOR TWO COMPANIES ENGAGE IN GLOBAL MARKETING FOR TWO BASIC REASONS:BASIC REASONS:

• TO TAKE ADVANTAGE OF OPPORTUNITY FOR GROWTH & TO TAKE ADVANTAGE OF OPPORTUNITY FOR GROWTH & EXPANSIONEXPANSION

• TO SURVIVETO SURVIVE

Deepali Goel MBA (G)Deepali Goel MBA (G)

POTENTIAL ADVANTAGES AND LIMITATIONS POTENTIAL ADVANTAGES AND LIMITATIONS OF A GLOBAL MARKETING STRATEGYOF A GLOBAL MARKETING STRATEGY

ADVANTAGES OF GLOBAL MARKETINGADVANTAGES OF GLOBAL MARKETING

1.1. UNIT COST REDUCTION:UNIT COST REDUCTION:• Consolidation of the global marketing functionConsolidation of the global marketing function

• Economies of scaleEconomies of scale

• Dilution of R&D and other fixed costs, etc..Dilution of R&D and other fixed costs, etc..

2.2. IMPROVED QUALITY OF PRODUCT:IMPROVED QUALITY OF PRODUCT:• Through concentration on key marketing activitiesThrough concentration on key marketing activities

• Uniform productsUniform products

3.3. ENHANCED CUSTOMER PREFERENCESENHANCED CUSTOMER PREFERENCES• Through global knowledge of products Through global knowledge of products

• Global availability Global availability

• Global serviceability Global serviceability


4.4. INCREASED COMPETITIVE LEVERAGE:INCREASED COMPETITIVE LEVERAGE:

By focusing resources and unifying the approach to By focusing resources and unifying the approach to competitioncompetition

5.5. RISK REDUCTION:RISK REDUCTION:

• Through dependency on local demandThrough dependency on local demand

• Wider access to capitalWider access to capital

6.6. GLOBAL KNOWLEDGE AND INFORMATION GLOBAL KNOWLEDGE AND INFORMATION TRANFERS:TRANFERS:

• Transfer of experience, practices, etc…


LIMITATIONS OF GLOBAL MARKETINGLIMITATIONS OF GLOBAL MARKETING

1.1. Company specific factors:Company specific factors:• Lack of resources and global orientationLack of resources and global orientation

• Higher costs of coordinationHigher costs of coordination

2.2. Environmental factors:Environmental factors:• Technology,Legal,CulturalTechnology,Legal,Cultural

3.3. Market factors:Market factors:• Customer need differencesCustomer need differences

• ChannelChannel

4.4. Product factorsProduct factors::• Over standardization may result in nobody’s satisfactionOver standardization may result in nobody’s satisfaction


INDUSTRY GLOBALIZATION DRIVERSINDUSTRY GLOBALIZATION DRIVERS

1.1. MARKET GLOBALIZATION DRIVERS: MARKET GLOBALIZATION DRIVERS: It depends on the nature of customer behavior and the It depends on the nature of customer behavior and the structure of channels of distribution. Some common market structure of channels of distribution. Some common market drivers are:drivers are:

• Common customers needsCommon customers needs• Global customers and channels Global customers and channels

2.2. COST GLOBALIZATION DRIVERS:COST GLOBALIZATION DRIVERS:

It depends on the economies of the business. These drivers It depends on the economies of the business. These drivers affect production location decisions, as well as global market affect production location decisions, as well as global market participation and global product development decisions. participation and global product development decisions. Some of these cost drivers are:Some of these cost drivers are:

• Global economies scaleGlobal economies scale• Fast changing technologyFast changing technology• Differences in country costsDifferences in country costs• High product development costsHigh product development costs


3.3. GOVERNMENT GLOBALIZATION DRIVERS: GOVERNMENT GLOBALIZATION DRIVERS:

Rules set by national governments can affect the use of Rules set by national governments can affect the use of global strategic decision making, such asglobal strategic decision making, such as

• Favorable trade policies Favorable trade policies

• Compatible technical standards Compatible technical standards

4.4. COMPETITIVE GLOBALIZATION DRIVERS: COMPETITIVE GLOBALIZATION DRIVERS:

It raises the globalization potential of their industry and spur It raises the globalization potential of their industry and spur the need for a response on the global strategy levels. the need for a response on the global strategy levels. Common competitive drivers include:Common competitive drivers include:

• High exports and imports High exports and imports

• Competitors from different continents and countries Competitors from different continents and countries

• Interdependent countries Interdependent countries

• Global competitorsGlobal competitors


MERGERS AND ACQUISITIONMERGERS AND ACQUISITION

DEFINITIONS:DEFINITIONS:

• MergerMerger: : Two organizations agree to join together Two organizations agree to join together and pool their assets in a new business entity. Both and pool their assets in a new business entity. Both of the previous ‘disappear’ into the new of the previous ‘disappear’ into the new organization. Shares in the previous entities are organization. Shares in the previous entities are commuted into new stock, usually revalued to commuted into new stock, usually revalued to account for the new market value.account for the new market value.

• AcquisitionAcquisition:: It is a joining of unequal partners. It is a joining of unequal partners.A large organization purchases all (or a controlling A large organization purchases all (or a controlling share interest ) in a smaller business and then share interest ) in a smaller business and then subsumes it into its structure.subsumes it into its structure.


DifferenceDifference

In the pure sense of the term, a In the pure sense of the term, a merger merger happens when two firms, often about the happens when two firms, often about the

same size, agree to go forward as a new same size, agree to go forward as a new single company rather than remain separately single company rather than remain separately

owned and operated. This kind of action is owned and operated. This kind of action is more precisely referred to as a "merger of more precisely referred to as a "merger of

equals." Both companies' stocks are equals." Both companies' stocks are surrendered, and new company stock is issued surrendered, and new company stock is issued

in its place. For example, both Daimler-Benz in its place. For example, both Daimler-Benz and Chrysler ceased to exist when the two and Chrysler ceased to exist when the two

firms merged, and a new company, firms merged, and a new company, DaimlerChrysler, was created.DaimlerChrysler, was created.

•CHRYSLER WD AMC—acquisitionCHRYSLER WD AMC—acquisition

•DAILMER N CHYRSLER---mergerDAILMER N CHYRSLER---merger


• When a company takes over another one and clearly becomes the new owner, the purchase is called an acquisition. From a legal point of view, the target company ceases to exist and the buyer "swallows" the business, and stock of the buyer continues to be traded.

Few E.g. of successful M&As:• P&G Acquires the Gillette CompanyP&G Acquires the Gillette Company: Under terms of the : Under terms of the

agreement, unanimously approved by the board of agreement, unanimously approved by the board of directors of both companies on January 27,2005 P&G has directors of both companies on January 27,2005 P&G has agreed to issue 0.975 shares of its common stock for each agreed to issue 0.975 shares of its common stock for each share of Gillette common stock. The transaction is valued at share of Gillette common stock. The transaction is valued at approximately $57 billion (USD) making it the largest approximately $57 billion (USD) making it the largest acquisition in P&G history acquisition in P&G history

• TISCO acquires Nat steel:TISCO acquires Nat steel: Tata Iron and Steel Company Ltd Tata Iron and Steel Company Ltd (TISCO) has acquired Singapore-based steel company Nat (TISCO) has acquired Singapore-based steel company Nat steel ltd by subscribing to 100 per cent equity of its steel ltd by subscribing to 100 per cent equity of its subsidiary Nat steel Asia PTE Ltd (Nat steel Asia). subsidiary Nat steel Asia PTE Ltd (Nat steel Asia).

• SBC Acquires AT&T:SBC Acquires AT&T: SBC Communications Inc. has acquired SBC Communications Inc. has acquired AT&T Corp. in a $16 billion deal that would create the AT&T Corp. in a $16 billion deal that would create the nation's largest communications companynation's largest communications company


Varieties of AcquisitionsVarieties of Acquisitions• Agreed AcquisitionAgreed Acquisition:: It is where the directors of

the target company accept that the offer for the shares are in the best interest of the share-holders and they accordingly recommend that shareholders accept the price offered . e.g -walls n Heinz….Colgate n Palmolive…hotmail n Microsoft

• Hostile Acquisition: : It is an attempt to acquire a It is an attempt to acquire a controlling shareholding in a public limited company which is controlling shareholding in a public limited company which is not recommended by the target company’s directors. In this not recommended by the target company’s directors. In this case, acceptance of the offer price by shareholders case, acceptance of the offer price by shareholders represents a difference of opinion(….future capital structure represents a difference of opinion(….future capital structure or leveraging on debit equity structure…voting rights e.g.: or leveraging on debit equity structure…voting rights e.g.: acquisition of ITC by BAT…R&D e.g. d attempted acquisition acquisition of ITC by BAT…R&D e.g. d attempted acquisition of RANBAXY by ELI LILY …German remedies acquisition of of RANBAXY by ELI LILY …German remedies acquisition of septica Indonesia between directors and shareholders, and septica Indonesia between directors and shareholders, and questions are often raised as to the extent to which directors questions are often raised as to the extent to which directors are or are not acting in the shareholders’ best interests.are or are not acting in the shareholders’ best interests.


Advantages of M&AsAdvantages of M&As

• Market EntryMarket Entry: : M&As are often used as a method for entering M&As are often used as a method for entering and servicing a new national marketand servicing a new national market..

• Market ShareMarket Share: : M&As can increase market share by combining M&As can increase market share by combining the market shares of the two businesses…e.g.-> lakme n lever LLL the market shares of the two businesses…e.g.-> lakme n lever LLL converted to TRENTconverted to TRENT

• PProduct and Market portfolioroduct and Market portfolio: : M&As can be used to M&As can be used to increase an organization’s product portfolio, thus rendering the increase an organization’s product portfolio, thus rendering the business more robust in the event of trauma in one or more of its business more robust in the event of trauma in one or more of its product or market sectors….glaxo smith Kline beechamproduct or market sectors….glaxo smith Kline beecham

• Reduction of competitionReduction of competition: : Competition can be reduced Competition can be reduced if the integration target is a competitorif the integration target is a competitor……coke over to Parlecoke over to Parle

• Leveraging of core competencesLeveraging of core competences: : Control can be Control can be gained of key inputs and brand names can be leveraged…glaxo gained of key inputs and brand names can be leveraged…glaxo smith Kline beecham…. ARZOO was sold to sabeer bhatiasmith Kline beecham…. ARZOO was sold to sabeer bhatia

• Access to supply or distribution channelsAccess to supply or distribution channels: : Backward Backward and forward integration can improve access to resources and and forward integration can improve access to resources and customers respectively.customers respectively.


• Product developmentProduct development: : New products can often be New products can often be acquired more rapidly than could be achieved by the internal R&D acquired more rapidly than could be achieved by the internal R&D function.function.

• Technology AcquisitionTechnology Acquisition: : New technology can be New technology can be acquired, such as that employed in production or IT acquired, such as that employed in production or IT applications….new Holland acquired CAT subsidy of Germanyapplications….new Holland acquired CAT subsidy of Germany

• Economies of scale and scopeEconomies of scale and scope: : these can be these can be achieved, especially if the integration involves an increase in achieved, especially if the integration involves an increase in capacity.capacity.

• Resource utilizationResource utilization: : Resources can be successfully Resources can be successfully and fruitfully deployed, such as underused cash deposits.and fruitfully deployed, such as underused cash deposits.

• Reputation enhancementReputation enhancement: : Reputation can be Reputation can be enhanced if the acquisition or merger is with a business of some enhanced if the acquisition or merger is with a business of some repute in a key market or with a key stakeholder group.repute in a key market or with a key stakeholder group.


What causes Failure?What causes Failure?• Lack of researchLack of research into the internal and external into the internal and external

environmental features of the target company( and hence environmental features of the target company( and hence incomplete knowledge).incomplete knowledge).

• Cultural incompatibilityCultural incompatibility between the acquirer and the between the acquirer and the target-especially important when the two parties are in different target-especially important when the two parties are in different countries… COMPAQ n Hp lead to cultural diff leading to resigncountries… COMPAQ n Hp lead to cultural diff leading to resign

• Lack of communicationLack of communication within and between the two within and between the two parties.parties.

• Loss of key PersonnelLoss of key Personnel in the target company after the in the target company after the integration.integration.

• Paying too much for the acquired companyPaying too much for the acquired company and hence overexposing the acquiring company to financial risk…and hence overexposing the acquiring company to financial risk…standard chartered n ANZ grindleystandard chartered n ANZ grindley

• Assuming that growth in a target Assuming that growth in a target company’s market will continue company’s market will continue indefinitely-indefinitely- market trends can fall as well as rise…. market trends can fall as well as rise…. Smirnoff US are are in losses…Smirnoff US are are in losses…

global business management

Marketing