global marketing 9

7/29/2019 Global Marketing 9

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Global MarketEntry Strateg es:

Investment, andra eg c ances

Global MarketingChapter 9

1

Chapter topics:

around the world

a strategy to enter worldmarkets

Starbucks has used

direct ownership,cens ng, an

franchising for shopsIn 2008, Starbucks had 12,000

cafes in 35 countries and sales of10.8 billion. Its oal is to reach

2011 Pearson Education, Inc.

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40,000 units worldwide.

Investment Cost ofMarketing Entry Strategies


Which StrategyShould Be Used?

Vision

Attitude toward risk

How much control is

desired


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A contractual agreement whereby onecompany t e censor ma es an assetavailable to another company (the licensee)n exc ange or roya t es, cense ees, orsome other form of compensation

Patent

Trade secret Brand name

Product formulations


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Provides additional profitability withe n a nves men

Provides method of circumventing

tariffs, quotas, and other export barriers

Low costs to implement cense agreemen s s ou ave cross-technology agreements to inequities


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Returns may be lost

Lack of control

Licensee may exploit company

resources


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Special LicensingArrangements

Contract manufacturing

to a subcontractor or local manufacturerAllows company to specialize in product

es gn w e con rac ors accepresponsibility for manufacturing facilities

Contract between a parent company-franchisor and a franchisee that allows the

ranc see o opera e a us ness eve opeby the franchisor in return for a fee and-


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Will local consumers buy your product? Does the government respect trademark and

Can your profits be easily repatriated?

Is commercial space available and are rents

Are your local partners financially sound and


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outside of home country

Foreign Direct Investment (FDI)

Forms

Joint ventures

Minority or majority

Outright acquisition


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, w a or a e urn ure anhousewares, spent $2 billion in Russia

Entr strate for a sin le tar et countr

in which the partners share ownership ofa newl -created business entit

Builds upon each partners strengths

,GM and Toyota, GM and Russian govt,

r csson s ce p ones an ony, or anMazda, Chrysler and BMW


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Advantages

Allows for risk sharing

Disadvantages

Requires morenanc a an po t ca

Provides opportunity to

nvestment t an alicensing agreement

Provides opportunity toachieve synergy by

well as risks

Requires strongcombining strengths of

partners

coordination

Potential for conflict ay e e on y way oenter market givenbarriers to entry

among par ners

Partner may become a


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Start-up of new operations reen e opera ons or Greenfield investment

Merger with an existing enterprise

Examples: Volkswagen, 70% stake in, ,Honda, $550 million auto assembly


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2011 Pearson Education, Inc. 2011 Pearson Education, Inc.


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Examples of Investmentto Establish New Operations

2011 Pearson Education, Inc. 2011 Pearson Education, Inc.

Possible terms:

Collaborativea reements

Strategic alliances

international

Global strategicup of twenty-seven airlines


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par ners ps


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Participants remain independento ow ng orma on o e a ance

Participants share benefits of alliance aswell as control over performance ofassi ned tasks

Participants make ongoing contributions, ,

strategic areas


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Two or more companies develop a joint long-

Relationship is reciprocal

artners v s on an e orts are g o a

Relationship is organized along horizontalno ver ca nes

When competing in markets not covered bya ance, par c pan s re a n na ona anideological identities


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Mission: Successful GSPs create win-win

,objectives on the basis of mutual need or

Strategy:A company may establish separate

be thought out up front to avoid conflicts

be the norms; partners must be viewed ase uals


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Culture: Personal chemistry is important, as is

values

designs may be needed to offset the

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Management: Potentially divisive issues must,

lines of authority established that will result incommitment by all partners


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Product or Service Alliance

Promotional Alliance

og s cs ance

Pricing Collaboration


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- -

Co-marketing: Formal links between two or more

E.g., computer manufacturer who puts Intel

Co-brandin : Partnershi between two or morecompanies that closely links their brand namestogether for a single product

E.g., Whirlpool appliances labeled KirklandSignature by Whirlpool made for and sold in


9-27 PhotoDisc

Costco s Out ets

Alliances with AsianCompetitors

Four common problem areas

Each partner had a different dream

each must depend on the other to a

Differences in management philosophy,,

No corporate memory


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Cooperative Strategies inJapan: Keiretsu

Inter-business alliance or enterprise groups in

for market share

blocks of stock and by cross-ownership of

non-financial suppliers

others boards, share information, andcoordinate rices


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Cooperative Strategies inSouth Korea: Chaebol

Com osed of dozens of com aniescentered around a bank or holding

,family

amsung

LG Hyundai


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Twenty-First CenturyCooperative Strategies

Targeting the Digital Future

Alliances between com anies in several industries that

are undergoing transformation and convergence Computers

Communications

Consumer electronics

nterta nment

ex s age o evo u on o e s ra eg c a ance Super-alliance


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rtua corporat on

Companies may decide to expand by:

Seeking new country markets for already


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