marketing strategies master degree course in …...international marketing strategy /...

PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL

Marketing Strategies(910008)

Academic Year 2019/2020

Prof. Jan Freidank

Master Degree Course in International Management, Entrepreneurship and Finance


Table of contentInternational Marketing Strategy / Internationalization

1. Globalization as basis for international marketing strategy

2. Market, competitive and internal analysis

3. Competitive positioning and international segmentation

4. Development of an international marketing strategy

2


12 Worldwide Megatrends

3

Source: Zukunftsinstitut, 2019 - https://www.zukunftsinstitut.de/dossier/megatrends/

• Individualization

• New Work

• Globalization

• Gender Shift

• Health

• Urbanization

• Silver Society

• Neo Ecology

• Mobility

• Knowledge Culture

• Connectivity

• Security

Megatrends are driving future market development and consumer behavior


https://www.zukunftsinstitut.de/dossier/megatrends/


Dimensions of the global organizational environment

Strong increase of complexity through additional market players

4

Competitors

FIRM

Government Labor

Changes in society

Newtechnologies

Suppliers

Customers

Foreign governments

Foreign Labor

Foreign Competition

Foreign CustomersCompetitiors

Customers

Government Labor

FIRM

1950 - today

1900 - 1950



Global Digital Snapshot

5

Source: We Are Social global 2020



Internet Penetration 2020

6

Source: We Are Social global 2020


PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 7

Source: Wearesocial, 2020



Source: Wearesocial Report, 2020

Social media – Status now

Strong rise of new Platforms like Tiktok



Online platforms - Structure

9



The four functions of the platform business model

10

https://www.applicoinc.com/blog/what-is-a-platform-business-model/



Platform businesses in the S& P 500 over the last forty years

11



Online platforms - Structure

12



Media Adoption

13

Source: Annan, 2012



VUCA and the need for changemanagement

14

http://zwei2eins.de/en/what/leadership/vuca-world/Video VUCA World


https://www.youtube.com/watch?v=9jd4tq_mwlM


Influence of environmental changes on organizational dynamics

15

Increasing intensity due to fierce competition among all stake holders

Increasing complexity due to additional dimensions

Accelerated changedue to a fast change of

technologies and society

Growing dynamics within

business enterprises‘ environment



Examples of Companies „loosing theiredge“

16



Evolution of Strategic Management

17

Financial Budgeting

DCF-based capital budgeting

Financial Control through operating budget

Corporate Planning

Medium-term economic forecasting

Formal corporate planning

Diversification and quest for synergy

Creation of corporate planning departments

Strategy as Positioning

Industry Analysis

Market Segmentation

The experience curve

PIMS Analysis

Planning business portfolios

Quest for Competitive Advantage

Analysis of resources and capabilities

Shareholder value maximization

Restructuring and re-engineering

Alliances

Strategy for the New Economy

Strategic innovation

New business models

Disruptive technologies

Strategy in the New Millemium

CSR and business ethics

Competing for standards

Winner-take-all markets

Global strategies

1950 1960 1970 1980 1990 2000 2009

Source: Grant, 2012



Companies have to think and act globally because of …Domestic-market saturation in the industrialized parts of the world and marketing opportunities overseas (e.g., emerging markets!) are evident in global marketing.

Competition around the world – including new competitors from developing countries is intensifying.

Global competition also leads to global cooperation.

The Internet and electronic commerce (e-commerce) are bringing major structural changes to the way companies operate worldwide.

The term global refers to both the competitive pressure and expanding market opportunities.Companies (whether global or not) can no longer avoid competition from around the world.

Saturation of domesticmarkets

Global competition

Need for global cooperation

Internet revolution

Source: Kotabe/Helsen, 2015.

Why International Marketing is Imperative



„International Marketing is the performance of businessactivities that direct the flow of a company‘s goods and

services to consumers or users in more than onenation for a profit.“ (Ghauri/Cateora, 2014, p. 7)



Environmental uncontrollables

country market A


country market B


country market C

Source: Ghauri/Cateora, 2014.

The International Marketing Task1. Globalization as basis for international marketing strategy


Home country is superior to others

Sees only similarities in other countries

Assumes products and practices that succeed at home will be successful everywhere

Leads to a standardized or extension approach (export marketing)

Ethnocentric

Each country is unique

Each subsidiary develops its own unique business and marketing strategies

Often referred to as multinational

Leads to a localized or adaptation approach that assumes products must be adapted to local market conditions

Polycentric

Source: Keegan/Green, 2017.

Marketing Orientations: The EPRG-Framework



A region is the relevant geographic unit

E.g., the NAFTA or the EU

Some companies serve markets throughout the world but on a regional basis (decisions made regionally)

Standardize within regions, but not across

Regiocentric

Entire world is a potential market

Strives for integrated global strategies

Focus on standardization efforts (wherever it is culturally andcost effective), coordination across markets and global integration, e.g. global sourcing

Leads to a combination of extension and adaptation elements

Geocentric

Source: Keegan/Green, 2017.

Marketing Orientations: The EPRG-Framework



Process of international strategyformulation

Source: Czinkota/Ronkainen 2004, p. 404

Assessment and Adjustment of Core Strategy

Market/Competitive Analysis Internal Analysis

Formulation of International Strategy

Choice of Competitive Strategy Choice of Target Countries and Segments

Development of International Marketing Strategy

Implementation

Organisational structure Control

Process of international strategy formulation


23


Common elements in successful strategies

24

Simple, consistent goalsProfound understanding

of the competitive environment

Objective appraisal of resources

Effective Implementation

Source: Grant 2012

Successful Strategy



Model of comparative competitive advantage (CCA)

In addition to focusing on buyers the marketing has to be adjusted to all market players to gain a sustainable competitive advantage

25

CCAs

Needs and wants of buyers

Problem solving know-how of competition

Problem solving know-how of

supplier

Source: Adopted from Backhaus & Voeth, 2014



Model of comparative competitive advantage (CCA)

In addition to focusing on buyers the marketing has to be adjusted to all market players to gain a sustainable competitive advantage

26

CCAs

Needs and wants of buyers

Problem solving know-how of competition

Problem solving know-how of

supplier

Strengths & Weaknesses

Opportunities & Threats

Source: Adopted from Backhaus & Voeth, 2014



A framework for competitive analysis

27

StrategyHow is the firm competing?

Predictions What strategy changes will the

competitor initiate? How will the competitor respond to

our strategic initiatives?

Source: Grant 2012

ObjectivesWhat are competitor‘s current goals?Is performance meeting these goals?How are its goals likely to change?

AssumptionsWhat assumptions does the competitor hold about the industry and itself?

Resources and CapabilitiesWhat are the competitor‘s key strengths and weakness?



Model of competitive dynamics

28

New competitive action

Source: Dess et al. 2010

Threat analysis

Motivation & capability to respond

Types of competitive action

Likelihood of

competitive reaction




29

New competitive action

Reasons for launching new competitive action

› Improve market position › Capitalize on growing demand› Expand production capacity› Provide innovative solution › Obtain first mover advantage› Build reputation for innovativeness of

efficiency

Acts that might provoke competitors to react, such as new entry imitating successful products, price cutting expanding production capacity ….

Strengthen financial outcomes Capture extraordinary profits

that industry leaders enjoy Business growth




Model of competitive dynamics –New competitive action

30

Five “Hardball” Strategies

Description Example

Devastate rivals’ profit sanctuaries

Focus attacks on rivals most profitable segments

Wal-Martoffered extended warranties on home electronics after learning that Best Buy derived most of their profits from extended warranties

Plagiarize with pride

Successful imitation by observing how customers respond; make improvements; and launch a better version without all the market development costs

Blockbustercopied online DVD rental strategy of rival Netflix

Deceive the competition

Good gambit sends competition of in wrong direction. May cause rivals to

miss strategic shifts; spend money pursuing dead ends; orslow their responds

BoeingFor several years Boeing touted plans for new high speed airliner. After knowing customers value efficiency over speed, Boeing quietly shifted its focus




Model of competitive dynamics –New competitive action

31

Five “Hardball” Strategies

Description Example

Unleash massive overwhelming force

Full-frontal attack where a firm commits significant resources to a major campaign to weaken rivals position Necessary to have stamina and mass

to win before declaring „war“

Southwest Airlinestook on US Airways in Baltimore decrease of US market share from over 50% to 10%

Raise competitors costs

Having superior insights into complex costs and profit structure of industry as competitive advantage Compete in a way that steers rivals

into relatively higher cost/lower profit areas Use of deception

Ecolabencouraged competitor (Diversity) to go after low-volume, high margin customers. Only Ecolab knew that high servicing costs associated with this segment make this segment unprofitable





32

Environmental scanning and monitoring Assessing whether companies are close competitors

› Market commonality › Ressource similarity

Threat analysis

Firms awareness of its closest competitors and the kinds of competitive actions they might be planning





33

Actions taken to respond determined by resource capabilities and motivation for responding.

Types of competitive action

Motivation & capability to respond

Assessment of not only how to respond to a competitive attack, but also reasons for responding and ability to respond




Model of competitive dynamics –Types of competitive actions

34

Actions Example

Strategic actions Entering new markets Make geographical expansions Expand into neglected markets Target rivals‘ markets Target new demographics

New product introductions Imitate rivals’ products Address gaps in quality Leverage new technologies Leverage brand name with related products Protect innovation with patents

Changing production capacity Create overcapacity Tie up raw materials sources Tie up preferred suppliers and distributors Stimulate demand by limiting capacity

Mergers/Alliances Acquire/partner with competitors to reduce competition

Tie up key suppliers through alliances Obtain new technology/intellectual property Facilitate new market entry




Model of competitive dynamics –Types of competitive actions

35

Actions Example

Tactical actions Price cutting (or increases) Maintain low price dominance Offer discounts and rebates Offer incentives (e.g., frequent flyer miles) Enhance offering to move upscale

Product/service enhancements Address gaps in service Expand warranties Make incremental product improvements

Increased marketing efforts Use guerilla marketing Conduct selective attacks Change product packaging Use new marketing channels

New distribution channels Access suppliers directly Access customer directly Develop multiple points of contact with

customers Expand Internet presence





36

Factors determining how a competitor might respond› Market dependence› Competitor‘s resources› Actor‘s reputation

Likelihood of

competitive reaction

Evaluation of competitors reactions




Basic Questions of the SWOT-Analysis

37

Opportunities Threats

Environment What opportunities does the market offer? What risks does the market pose?

Consumer / Customer

What needs do consumers have?

What prohibits sales with consumers?

Competition What gaps/deficiencies does our competition have?What advantages does our

competition have?

Strengths Weaknesses

Own Strategy What strategic advantages does our company possess?What are our strategic

weaknesses?

Own Capabilities

What are our strongest resources?

Where do we have our most important needs for improvement?



Porter‘s Value added chain

38

Marketing& Sales

Incoming Logistics

Outgoing Logistics

Production Service

SecondaryActivities

Primary

Activities

Company Infrastructure (Leadership, Finance Management, etc.)

Purchasing (raw materials, Capital Equipment, Equipment, etc.)

Technology development (Research & Development, IT-Systems, etc.)

Personnel Management (Personnel Planning, -Recruitment, -Development, etc.)

• Incoming goods

• Ware-housing

• etc.

• Manu-facturing

• Packaging• etc.

• Pricing• Distribution• Advertising• Sales• etc.

• Warehouse Manage-ment

• Delivery• etc.

• Installation/Configuration

• Maintenance• Accessories• Aftersales• etc.

Source: Porter 2014



Analysis of the value added chain

39

Step 1: Mapping of business model through value added chain

Step 2: Analysis of cost positions and value added activities

Step 3: Identification of differentiation possibilities for each value added activity

Step 4: Analysis of technology level of value added activity

Step 5: Identification of value added activities which are critical for success

Step 6: Derivation of concrete action recommendationsSource: In Accordance with Eschenbach, 1996



Results of the value added chain analysis

40

Value Added Activity

Activity 1

Activity 2

Activity 3

…

Activity n

Competitive Advantage

Relative Cost Position

Differentiation Potential

Potential for Innovation

Source: Kerth et al, 2011



Definition core competence

41

A resource structure which ...

differentiates itself from competition and is highly market relevant,

cannot be substituted or can only be partially substituted, and

can therefore be used to gain long term competitive advantages,

... is the core competence of an organization.

Most firms therefore – if at all – have only one core competence



Identification and development of potential core competence

42

Existing success factors

Potential sucess factors

Customer value

Rareness

Protection from imitation

Specific to the organization / difficult to substitute

Core competence

Core competence analysis

Identification oforganizationalcompetences

Identification of core competence

Existing

Potential

Source: In accordance with Barney, 2010



Key questions regarding core competence

43

Competitive advantage

Corecompetence

What is providing future customer value?

What specific resources do we posses or do we need?

Where are our hard to reach competitive advantages?

Company view

Customer

Competition

Source: In accordance with Barney, 1997, p. 145



Identifying key success factors

44

Analysis of demand Who are our customers? What do they want?

Source: Grant 2012

Prerequisite for success

What do customers want? How does the firm survive competition?

Analysis of competition What drives competition? What are the main dimensions

for competition? How intense is competition? How can we obtain a superior

competitive position?

KEY SUCCESS FACTORS



Identifying key success factors –Steel

45

Source: Grant 2012

What do customers want?Analysis of demand

How do firms survive competition?Analysis of competition Key success factors

• Low price• Product consistency• Reliability of supply• Specific technical

specifications for special steel

• Commodity products, excess capacity, high fixed costs, excess capacity, exit barriers, and substitute competition mean intense price competition and cyclical profitability

• Cost efficiency and financial strength essential

• Cost efficiency requires: large-scale plants, low-cost location, rapid capacity adjustment

• Alternatively, high technology, small-scale plants can achieve low costs through flexibility and high productivity



Identifying key success factors –Fashion Clothing

46

Source: Grant 2012



• Diversity of customer preferences in terms of garment type, style, quality, color

• Customers willing to pay premium for brand, style, exclusivity, and quality

• Low barriers to entry and exit, low seller concentration, and buying power of retail chains imply intense competition

• Differentiation can yield substantial price premium, but imitation is rapid

• Combining differentiation with low costs

• Differentiation requires speed of response to changing fashions, style, reputation, and quality

• Cost efficiency requires manufacturing on low wage countries



Identifying key success factors –Supermarkets

47

Source: Grant 2012



• Low prices• Convenient location• Wide range of products

adapted to local preference• Fresh/Quality produce; good

service; ease of parking; pleasant ambience

• Intensity of price competition depends on number and proximity of competitors

• Bargaining power is a critical determinant of cist of bought in goods

• Low costs require operational efficiency, scale-efficient stores, large aggregate purchases, low wage costs

• Differentiation requires large stores (to allow wide product range),convenient location, familiarity with local customer preferences



Identification of success factors

48

…

Evaluation

poor neutral goodSuccess Factors Comments

9 8 7 6 5 4 3 2 1 0 1 2 3 4 5 6 7 8 9

…

…

…

…

…

…

…

…

…

Weighting

low medium high

Push Points to left or right according to their evaluation

Source: Kerth et al, 2011

x

x

x

x

x

x

x

x

x

x



Identification of potential core competence

49

Source: Kerth et al., 2011

Competencies derived from business processes (Step 1)•…

Competencies which need further

development (Step 2)

•…

Distinct competitive advantages (Step 1)

•…

Competencies derived from success factors (Step 1)•…

Leads for potential core competetencies

•…



Identification of potential core competence

50

Source: Adapted form Barney 1991 as quoted by Dess et al. 2010

Is the resource or capability ….

valuable? rare? difficult to imitate?

specific from the organization?

Implications for competitiveness?

No No No No Competitive disadvantage

Yes No No No Competitive parity

Yes Yes No No Temporary competitive advantage

Yes Yes Yes Yes Sustainable competitive advantage



Examples of companies that own de facto industry standards

51

Source: Grant 2012

Company Product category StandardMicrosoft PC operating systems Windows

Intel PC microprocessors X86 series

Sony/Philips Compact disks CD-ROM format

ARM (Holdings) Microprocessors for mobile devices ARM architecture

Oracle Corporation Programming language for web apps Java

Rockwell and 3Com 56K modems V90

Qualcomm Digital cellular wireless communication CDMA

Adobe Systems Common file format for creating and viewing documents

Acrobat Portable Document Format

Adobe Systems Web page animation Adobe Flash

Adobe Systems Page description language for document printing Post Script

Bosch Antilock braking systems ABS and TCS

IMAX Corporation Motion picture filming and projection systems IMAX

Apple Music downloading system iTunes / iPod

Sony High definition DVD Blu-ray



Choice of target countries and segmentsis a critical step in the international strategy formulation







Implementation




52


The Diamond – Four distinct strategic positions

53

System Lock-In System Economics Market Dominance Achieving Complementor Share

Best Product Product Uniqueness Technological Leadership Achieving Product Share

Total Customer Solutions Customer Economics Cooperation Achieving Customer Share

Source: Own Graphics in Accordance with Hax & Wilde, 2003

Cost Leadership Product Economics Efficiency Achieving Market Share




54






Ryanair

SAP

Amazon Thermomix




55









56






https://www.sap.com/germany/why-sap.html

Example: SAP

Current/Past Profile

Future Target Profile


https://www.sap.com/germany/why-sap.html


The Adaptive Processes –Linking Strategy with execution

57

Business Model

Customer TargetingOperational Effectiveness

Innovation The production and delivery of products and services to the customer

Should produce the most effective cost and asset infrastructure to support the chosen strategic position of the business

The process of new product development Should assure a continuous stream of new products and

services to maintain the future viability of the business Should define the most effective renewal infrastructure for

products and services

The management of the customer interface

Identification and selection of attractive customers and enhancement of customers’ performance

Should establish best revenue infrastructure for chosen strategy

Source: Adapted from Hax & Wilde, 2003



The Role of the Adaptive Process in supporting the Strategic Options of the Diamond

58

Cost Leadership Best Product

Customer Targeting Target Distribution Channels

Maximize coverage through multiple channels Obtain low cost distribution Cut slack within distribution channel Identify and enhance the profitability of each

product by Channel

Target Premium Lead Customers

Identify and exploit customer needs Increase customer value and possible alliances to

bundle solutions Select key vertical markets Examine channel ownership options

Innovation Process Innovation

Develop family of products based on common platform

Find optimum price value solutions Research on lowering resources input Solutions for simplification

Product Innovation

First to market, or follow rapidly — stream of Products

Rapid development of new products Outperform current standards Quality Leadership

OperationalEffectiveness

Best Product Cost

Identify product cost drivers Improve stand alone product Cost

Best Customer Experience

Improve customer economics Improve horizontal linkages in the components of

total Solutions

Source: In Accordance with Hax & Wilde, 2003



The Role of the Adaptive Process in supporting the Strategic Options of the Diamond

59

Total Customer Solutions System Lock-In

Customer Targeting Target Customer Bundles

Identify and exploit opportunities to add value to key customers by bundling solutions and customization

Increase customer value and possible alliances to bundle solutions

Select key vertical markets Examine channel ownership options

Target System Architecture

Identify leading complements in the system Consolidate a lock-in position with complements Expand number and variety of complements Whenever possible create ownership of direct

distribution Channels

Innovation Customer Service Innovation

Identify and exploit joint development linked to the customer value chain

Expand your offer into the customer value chain to improve customer economics

Integrate and innovate customer care functions Increase customer lock-in through customization

and Learning

System Innovation

Create customer and system lock-in, and competitive lock-out

Design proprietary standard within open architecture

Complex interfaces Rapid evolution Backward Compatibility

OperationalEffectiveness

Best Customer Benefits

Improve customer economics Improve horizontal linkages in the components of

total Solutions

Best System Performance

Improve system performance drivers Integrate complements in improving system

Performance

Source: Hax & Wilde, 2003



Definition and use of target groups

A target group reflects the particular segment of a total population on which a company focuses its product or service

The process of market segmentation leads to target groups

Members of the target group are highly homogeneous, but heterogeneous in comparison to other groups

The needs and preferences of the target group should differ sufficiently to warrant individual marketing mixes (4Ps)

Why is it so important to know your target group?

Definition:

60



Source: Bradley 2005, p. 208

Concentrated or differentiated strategy Company possesses information on relevant buyer

characteristics Company´s product appeals only to a limited group of customers Marketing efforts can be effectively focused on the chosen

segment Segments are large, profitable and stable

Undifferentiated strategy Market is so small that marketing to a portion of it is not profitable Heavy users constitute such a large proportion of sales volume

that they are the only relevant target (e.g. B2B) Own brand is the dominant brand in the market Product fulfills the needs of a broad customer base

Circumstances that influence the optimal degree of market segmentation

61


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Global Brand Strategy Standardized brand strategy and

markting mix in multiple markets Common brand name for many

products in all/various countries Marketing strategies are centrally

coordinated

Customized brand strategy and mix Use of local brands that address

country- or culture-specific needs Subsidiaries have significant

decision-making power

Multinational Brand Strategy

Global Brands … … are well-known

internationally … are available in

various countries

… are largelystandardized … have a global

status

Source: Exler, 2008.

International Branding StrategyGlobal vs. Multinational



Sources: Berndt/Fantapié Altobelli/Sander, 2010; Exler, 2008; Sattler/Völckner, 2007.

Pros (Global Brands)

Standardization leads to lower costs Globalness as a brand valueHigher brand awareness because of

cross-border brand recognitionGlobalness is associated with quality,

status and modernity Avoidance of consumer confusion

(e.g., of frequent travellers) andeffective targeting of global consumers Ability to leverage good ideas quickly

and efficiently Stronger bargaining power

towards retailers etc.

Differences in consumer needs, wants, and usage patterns for products cannot be met effectively Low flexibility, e.g. responses to

competitive actions in one market Resistance of consumers with anti-

globalization and/or ethnocentricattitudes and values Rapid cross-border dissemination of

corporate scandals Problem of counterfeiting

Cons (Global Brands)




Source: Kotabe/Helsen, 2015, exhibit 11-2.

Example: Anheuser-Busch InBev Brands




Example: Fabric Softener from Unilever




Buying behavior in different countries influences target group identification in international sales Socio-economic structures and values can differ between nations and

cultures

In some countries trend towards harmonisation of cultures/buyingbehaviour

Opposite trend: restistance against cultural harmonization

Country of origin-effect

Ethnocentrism

Specific product preferences in many countries such as food, beverages, household cleaning, personal hygiene

To what extend customers are homogenous across national boundaries depends on the specific country and specific product.

67



Who is more similar?

International Segmentation3. Competitive positioning and international segmentation


Possible Scenarios:


Universal or global segments: Segments transcend national boundaries global cross-country segmentation

Could also be a niche Examples: Global youth, international business travelers

Regional segments: Similarity in customer needs and preferences exists at the

regional level regional cross-country segmentation

Example: ERASMUS students, European aristocracy



Possible Scenarios:


Unique (diverse) segments: Gaps in cross-country customer needs and preferences

are too substantial that meaningful cross-national segments cannot be derived intranational segmentation

Marketing must be localized Examples: Segments related to food & beverages




Example: Benefit Segments of Toothpaste Markets:

International Segmentation3. Identifying growth strategies – Segmentation


Three choices of target groupidentification in international sales

1.Countries = market segmentsClustering of countries with homogenous buying behavior into segments.

2.Intranational market segmentationMarket segmentation within one country

3.Cross-country market segmentation Identification of market segments thatspan national boundaries

F G I

F G I

F G I

Source: Berndt/Fantapié-Altobelli/Sander 2005, Kutschker/Schmid 2008

72



Cross-Country Segmentation as part of thechoice of target country and segments

Source: Kutschker, M./Schmid, S. 2008, p. 979

Europe

Germany France Italy

Identical target groups across countries

1. Target Country Selection

2. Target Group Selection

Intranational Market segmentation

Cross-Country Market segmentation

73



Intranational market segmentation Overview of segmentation criteria

DemographicCriteria

Marital status

B2C• Gender• Age•• Residence

B2B• Place of head office • Lengths of business

relationship

Socioeconomic Criteria

B2C:• Income

Education•• Occupation

B2B• Turnover• Industry

GeneralPersonality TraitsB2C:• Lifestyle• Attitude• Interests

Criteria based on BenefitB2C• Price• Quality• Image• Service

B2B:• Price• Quality• Image• Service

Criteria related to

Choice of retailB2C•outlets

• Choice of product• Buying frequency

Distribution channelB2B:•• Buying frequency

Buying behavior

• Price sensitivity• Information seeking behavior

Source: Homburg/Krohmer 2009

Ideally, the criteria to identify target groups are measurable, stable, relevant to the buying behavior and enable the addressability of the target group.

74


Demographic

Criteria

Marital status

B2C

•

Gender

•

Age

•

•

Residence

B2B

•

Place of head office

•

Lengths of business

relationship

Socioeconomic

Criteria

B2C:

•

Income

Education

•

•

Occupation

B2B

•

Turnover

•

Industry

General

Personality Traits

B2C:

•

Lifestyle

•

Attitude

•

Interests

Criteria based on Benefit

B2C

•

Price

•

Quality

•

Image

•

Service

B2B:

•

Price

•

Quality

•

Image

•

Service

Criteria related to

Choice of retail

Buying behavior

B2C

•

outlets

•

Choice of product

•

Buying frequency

Distribution channel

B2B:

•

•

Buying frequency

•

Price sensitivity

•

Information seeking behavior


Cross-country segmentation:Euro-Socio Styles as an example of Life-Style-Typologies

Assumption: fundamental structure of value systems and consumer characteristics (lifestyles) - independent from social class and age

GfK Euro-Socio-Styles is a multi-dimensional, pan-European lifestyle typology

Eight identical clusters of consumers in every country, based on representative national surveys about value systems, behavior, habits, opinions, attitudes, motivation and emotions

Different cluster sizes reveal regional and national differences Clusters can be used as target groups

75



History and methodological background of the Euro-Socio-Styles®

International survey with 24.000 respondents in two waves.Started in 1989; since then measurement of value changes.Up to 6.000 questions in the basic survey(s) to identify value dimensions lifestyles a battery of indicators (Key Questions)

Link of the Euro-Socio-Styles® with ad-hoc studies and consumer panels for additional measurement and analysis of real consumer behaviour.

…based on extensive basic research

76



Source: GFK 2002, percentages for Germany

11%

9%

8%11%

19%

14%

15%

13%

Cross-country Segmentation:Description of the eight Euro-Socio Styles

77



Source: GFK 2002

Three approaches to international targetgroup identification

Germany France Great-Britain Netherlands Austria Switzerland Spain

Steady World 135 159 124

Secure World 142

Magic World 147 115

Crafty World 120 110

Cosy Tech World 160 203

New World 112

Authentic World 126 132 197

Standing World 122 114 133

Selected Indices of Euro Socio Styles, Europe = 100

The percentage of people belonging to „Authentic World“ is especially large in Germany, Austria and Switzerland

78



Euro-Socio-Styles® in the coffee marketOutput example: Usage and attitudes on the lifestyle map

Plain Coffee as preventive measure Industrial product

Fast lifeCoffee

as stimulating whip lash

Return to roasting based on the old recipe

Quantitynot expensive

brands at a relatively low price

supermarket

Excellent coffee for demanding

gourmets

Brand loyalty concerning

prestige brands

Healthy lifeCoffee as practical

cultural rite

Physicalstimulus

Friendly hospitality

Intellectual stimulus Quality of life

Qualityexpensive

authentic productcoffee shop

Waking you up

Due to pleasure

In the morning

Due to loyalty

Appeal of new products

79



Cross-country segmentation: Need todeliberate individual chances and risksChances

Existence and development of identical cross-country target groups essential for implementation of a standardised marketing mix

Standardised marketing mix across national boundaries offers cost and time benefits

Identical cross-cultural target groups allow fulfillment of specific consumer needs

Risks

Life-Styles-Typologies are more relevant to high involvement goods

Same lifestyle does not mean same product preferences, esp. with food, beverages, household cleaning, personal hygiene

Money- and time-consuming collection for data, especially when company applies specific surveys Source: Berndt/Fantapié-Altobelli/Sander 2005

80



Market/Customer target group

Concentration Diversification

Cou

ntry C

once

n-tra

tion

1 2

Div

ersi

ficat

ion

3 4

Market expansion matrix

Source: Ayal/Zif 1979, p. 84, Hollensen 2001, p. 200-207, Carpano/Chrisman/Roth 1994, p. 639. 649-652, Kutschker/Schmid 2008, p. 982

Four basic market expansion strategies:1. Few customer groups in few countries2. Many customer groups/segments in few countries3. Few customer groups/segments in many countries4. Many customer groups/segments in many countries

Choices about country and customersegmentation result in market expansionstrategies

81


http://www.mcdonalds.de/http://www.mcdonalds.de/http://www.mcdonalds.de/


Source: Ayal/Zif 1979, p. 84, Hollensen 2001, p. 200-207, Carpano/Chrisman/Roth 1994, p. 639. 649-652, Kutschker/Schmid 2008, p. 982

Market/Customer target group

Concentration Diversification

Cou

ntry C

once

n-tra

tion

1 2

Div

ersi

ficat

ion

3 4

Four basic market expansion strategies1. Few customer groups in few countries2. Many customer groups/segments in few countries3. Few customer groups/segments in many countries4. Many customer groups/segments in many countries

Market expansion matrix

Market expansion strategies - Examples

82


http://www.mcdonalds.de/http://www.mcdonalds.de/http://www.mcdonalds.de/http://upload.wikimedia.org/wikipedia/de/f/fa/McDonald's_ichliebees-Logo.svghttp://www.google.de/imgres?imgurl=http://weblogs.mki.fh-duesseldorf.de/greenci/archive/coca-cola-logo.jpg&imgrefurl=http://weblogs.mki.fh-duesseldorf.de/greenci/archive/cat_11_markenanalyse_sammlung.html&h=200&w=300&sz=41&tbnid=aTT_3i543_NmYM:&tbnh=77&tbnw=116&prev=/images?q=coca+cola+logo&hl=de&usg=__CrRUCtkQUXPryWMBRAdhpE6_kq8=&ei=FEEES-vUDKGOnQPpovBz&sa=X&oi=image_result&resnum=2&ct=image&ved=0CAkQ9QEwAQhttp://www.google.de/imgres?imgurl=http://joyloft.net/en/wp-content/uploads/2007/12/ikea_logo.jpg&imgrefurl=http://joyloft.net/en/&h=101&w=280&sz=28&tbnid=ZnUZPZXulKt_DM:&tbnh=41&tbnw=114&prev=/images?q=logo+ikea&hl=de&usg=__KUZLOlH3PG-8iAn9ClSbBBOTCcg=&ei=BEIES5jDC5-CmwPm6KF6&sa=X&oi=image_result&resnum=2&ct=image&ved=0CAkQ9QEwAQhttp://www.burnus.de/products/body/sibonethttp://www.google.de/imgres?imgurl=http://www.infomat.net/1/focus/foci/nivea/images/nivea_logo1.gif&imgrefurl=http://www.brandingyp.com/2009/03/nivea-skin-and-beauty-care-products.html&h=68&w=193&sz=3&tbnid=9r9o2RbeLtGnaM:&tbnh=36&tbnw=103&prev=/images?q=nivea+logo&hl=de&usg=__bujuC7qkb_Ierjave_LJXRr3iD8=&ei=9EcES_eiFo3ymQOBto1r&sa=X&oi=image_result&resnum=4&ct=image&ved=0CA8Q9QEwAwhttp://www.tesa.de/http://de-de.cunda.de/http://www.google.de/imgres?imgurl=http://madnews.files.wordpress.com/2008/02/gap-logo.png&imgrefurl=http://www.brandingyp.com/2009/04/gap-men-and-womens-clothing-and.html&h=150&w=150&sz=8&tbnid=Zuc9XgxnLXJ7rM:&tbnh=96&tbnw=96&prev=/images?q=gap+logo&hl=de&usg=__dtZyaFmX1b_cb6fYcLTpOcOuBnE=&ei=xE8GS4HaBpDwmwP2nfiyCg&sa=X&oi=image_result&resnum=2&ct=image&ved=0CAwQ9QEwAQ


Conclusion: Target group segmentation in international sales

The choice of target country and target group is highly interdependend

The right degree of market segmentation depends on the specific situation

There are three options for target group segmentation in international sales

There are chances and risks of using cross-cultural target groups

Choice of country and target group diversification vs. concentration strategy leads to the four basic market expansion strategies

83



Next step in international strategy process: Development of Global Marketing Strategy







Implementation



84



Alternative Growth Strategies

85

Existing New

Existing

New

ProductsServices

Markets

Market penetration: e.g. through pricing,

communication

Market development:e.g. internationalization,

new target group

Product development: e.g. product innovation, better serving of needs,

second brand

Diversification:- Horizontal (new target group

with differentiated products)- Vertical (pre- and post stages

of the value added chain

Source: In accordance with Ansoff, 1988, Ansoff, 1966




Source: In accordance with Ansoff, 1988, Ansoff, 1966

Product Existing New

Mar

ket

New

Exis

ting

Market Penetration

Market Development

Product Development

Diversification

Sausage in Germany

Sausage in Peru Vegetarian Sausage in Peru

Vegetarian Sausage in Germany

Alternative Growth Strategies4. Development of an international marketing strategy



Please develop ideas for growth startegies unsing Ansoff‘s Matrix.

- Starbucks- IKEA- Ramazotti




Source: http://www.livemint.com/Industry/LI85XqTas9YKRKSsssazvK/Starbucks-opens-its-first-store-in-India.html.

Tata Starbucks.




Starbucks Verismo.




Ramazzotti Rosato.




Source: http://www.youtube.com/watch?v=0Nm7-EuctOs.

IKEA.


http://www.mcdonalds.de/http://www.mcdonalds.de/http://www.mcdonalds.de/http://www.youtube.com/watch?v=0Nm7-EuctOs


Source: http://www.welt.de/wirtschaft/article106204452/Ikea-scheitert-mit-dem-Verkauf-von-Fertighaeusern.html.

IKEA.

Solar-energy

Student dormitories /

HotelsTurn Key Housing

Shopping Centers

(construction & management

Development of City

Quarters


http://www.mcdonalds.de/http://www.mcdonalds.de/http://www.mcdonalds.de/http://strandeast.com/


Goals of globally oriented companies

Striving for efficiency and standardization

Faster distribution of new conceptsSuccessful positioning against competitionEasier coordinationEasier cross country planningHarmonization of the market approachRealization of synergiesIncrease of the market volumeIncrease of the price rangesSpreading of risksImprovement of communication efficiencyReduction of distribution costsReduction of per unit product costsIncrease of traders’ willingness to cooperate

Goal dimensions important unimportant

Source: Meffert/Bolz 1998 Efficiency and Standardization

94



Differences of country markets

Dimensions Culture Language Currency Political system Legislation Climate Geography Taste Physiognomy

Requirements Higher level of uncertainty Increased and additional risks Increased need for information Increased need for coordination

Increase of complexity and potential need for differentiation through internationalization

95



Strategic solutions for the global location strategy

Driving for standardization to achieve economies of scale through

globalizationIncrease of complexity and potential need for individualization through international

locations

Solutions

Organizationstrategy

Production locationstrategy

Challenge of globalization

Sales & marketing location strategy

Adaptation of company strategy to location requirements

96




Sales & marketing location strategy: country selection

97




Reduction of complexity through selection of countries with similar characteristics

Legend: partial similarity high similarity

98

Sales & marketing location strategy: country selection




Waterfall strategySprinkler strategy

Country 2

Country 1

Home country

Home country

Country 2Country 1 Country 3

Standardized product: no need for individualization

Complex Product: need for individualization

Source: Becker according to Kreutzer 1998

99



Waterfall Strategy

Advantages Successive development and expansion of financial and human resources (including personnel with marketing skills) facilitated by learning effects

Temporal diversification of risks Marketing can be adjusted (if there are problems in a market) with respect

to a later entry into other markets Potential extension of product lifecycle

Disadvantages Risk of market entry by competitors (and establishment of market barriers) Unauthorized sales

SituationalFactors

Necessity for lead/reference markets (e.g., the USA is often a reference market for South America) Longer product lifecycles (since experience gathered in markets that were

exploited early on can be used for further product development and upgrades) Lower competitive intensity in international markets

Source: Homburg, 2015.

100

Sales & marketing location strategy4. Development of an international marketing strategy


Sprinkler Strategy

Advantages Establishment of market entry barriers

Regional/geographical diversification of risks

Disadvantages Increased short-term financial and human resource requirements

Major losses if the strategy fails

Situational Factors Short product and technology lifecycles

Long R&D times (since there is a higher chance to rapidly recuperate)

Universal segments

Source: Homburg, 2015.

101

Sales & marketing location strategy4. Development of an international marketing strategy


Product-/supply strategies

Specialized trade, z.B.: H&M

Fast Food, z.B.: Mc Donalds

Department store, z.B.: Karstadt

The bigger the supply‘s focus the better the potential applicability to globalisation

Applicability to globalisation

high

low

narrow broadChoice

e.g. consumer market

Soft Drink, z.B.: Coca Cola

102



Different levels of standardization –Example: International advertising

Same advertising message world wide(only change of language, colours and names)

Same advertising message but adaptation to local environment

Global pool of compatible advertising themes which are mutually compatible

Complete adaptation to local markets

Source: Kotler/Bliemel 2001, S. 640ff.

Standardization

Differentiation

R5

103


http://www.google.de/imgres?imgurl=http://weblogs.mki.fh-duesseldorf.de/greenci/archive/coca-cola-logo.jpg&imgrefurl=http://weblogs.mki.fh-duesseldorf.de/greenci/archive/cat_11_markenanalyse_sammlung.html&h=200&w=300&sz=41&tbnid=aTT_3i543_NmYM:&tbnh=77&tbnw=116&prev=/images?q=coca+cola+logo&hl=de&usg=__CrRUCtkQUXPryWMBRAdhpE6_kq8=&ei=m88HS53IM5vymwOftrDHCg&sa=X&oi=image_result&resnum=2&ct=image&ved=0CAkQ9QEwAQhttp://www.google.de/imgres?imgurl=http://vivi-car.com/imagenes/logo_goodyear.jpg&imgrefurl=http://vivi-car.com/imagenes/&h=231&w=1024&sz=32&tbnid=QbWSFjFGRf6mGM:&tbnh=34&tbnw=150&prev=/images?q=goodyear+logo&hl=de&usg=__epzC5YQc_XXwQ4xEdx1OyRidqgI=&ei=tNMHS7POGY3emAO-88DHCg&sa=X&oi=image_result&resnum=2&ct=image&ved=0CAwQ9QEwAQhttp://www.google.de/imgres?imgurl=http://www.thebicyclingguitarist.net/graphics/coincidences/newer_Schwinn_logo.jpg&imgrefurl=http://www.thebicyclingguitarist.net/philosophy/coincidences.htm&h=383&w=389&sz=40&tbnid=XXeG5qhiodvTKM:&tbnh=121&tbnw=123&prev=/images?q=schwinn+logo&hl=de&usg=__ugAz3I3BTa6HWJDjP1WBWy6YYLI=&ei=7tMHS9HmD4XkmgOupbTFCg&sa=X&oi=image_result&resnum=1&ct=image&ved=0CAcQ9QEwAAhttp://www.google.de/imgres?imgurl=http://www.renault-clio-williams.de/Renault/Logos/Renault%20Logo%20neu.jpg&imgrefurl=http://www.renault-clio-williams.de/Renault/Logos/Renault%20Logos.htm&h=205&w=300&sz=5&tbnid=SbPDc056bweqvM:&tbnh=79&tbnw=116&prev=/images?q=renault+logo&hl=de&usg=__Vvj4WW7R0Jc6O3OcXC32ICdaI3I=&ei=mtQHS_brIYb0mQOztOW1Cg&sa=X&oi=image_result&resnum=5&ct=image&ved=0CA8Q9QEwBAhttp://www.google.de/imgres?imgurl=http://www.7-forum.com/news/2007/technoclassica/bmw_logo_2007_p0034956-b.jpg&imgrefurl=http://www.7-forum.com/bild.php?bild=news/2007/technoclassica/bmw_logo_2007_p0034956-b.jpg&title=BMW%20Logo,%202007&cpy=bmw&h=590&w=800&sz=32&tbnid=Ez_VmiVcX4y9dM:&tbnh=105&tbnw=143&prev=/images?q=bmw+logo&hl=de&usg=__vMu0q-icBOh4pMAGkJL3FCE1Je4=&ei=Z0gKS9WOJ4mInQO-sZ3BCg&sa=X&oi=image_result&resnum=4&ct=image&ved=0CA0Q9QEwAwhttp://www.google.de/imgres?imgurl=http://i76.photobucket.com/albums/j4/cnrward/Misc%20Blog%20Pics/logo_loreal.jpg&imgrefurl=http://hipcandy.blogspot.com/2007/07/shame-shame-shame-loreal-france.html&h=225&w=300&sz=13&tbnid=mQZMK-8d8nzJTM:&tbnh=87&tbnw=116&prev=/images?q=loreal+logo&hl=de&usg=__Vw9IXBqmLaV0ohHOtMvGytACoLA=&ei=b88HS9ibIYvAmgPt2OGmCg&sa=X&oi=image_result&resnum=2&ct=image&ved=0CAwQ9QEwAQhttp://www.google.de/imgres?imgurl=http://www.goodlogo.com/images/logos/united_colors_of_benetton_logo_2892.gif&imgrefurl=http://www.goodlogo.com/extended.info/2892&h=117&w=350&sz=9&tbnid=dWrIWEmeJgTTqM:&tbnh=40&tbnw=120&prev=/images?q=benetton+logo&hl=de&usg=__g9k3IXZn8nTSlrIn7TtmVnGRb7s=&ei=9oEKS8fWEYaImwO31Yw_&sa=X&oi=image_result&resnum=1&ct=image&ved=0CAcQ9QEwAAhttp://www.google.de/imgres?imgurl=http://www.tenfoldhq.com/assets/images/uploads/projects_images/cache/levis_logo_705x530.jpg&imgrefurl=http://www.tenfoldhq.com/projects/client/select/exposure/P1/&h=529&w=705&sz=28&tbnid=yjU_iOtyQwtcxM:&tbnh=105&tbnw=140&prev=/images?q=levi%C2%B4s+logo&hl=de&usg=__b6687vHHkGW9fR-rD4i6n71Kvx8=&ei=IYIKS5SBBYqqmAOgt_XECg&sa=X&oi=image_result&resnum=2&ct=image&ved=0CA0Q9QEwAQ


„As global as possible – as national as necessary!“ - Example

Germany: Ja zum Leben, ja zur LiebeSpain: Oui la vie, Oui a l amour

104



Optimal degree of standardization ofcommunication depends on several factors

Efficiency / cost aspects

Effectiveness / sales aspects

Barriers for standardization

Overall goals and strategy of the organization

Competence profile of company

Degree of standardization of other marketing mix instruments (especially product policy)

Standardization

Differentiation

105



Production strategy

Retooling-optimisation, e.g.: Toyota

Platform strategy, e.g.: Volkswagen

Product differentiation, e.g.: General Motors

Low production sizes allow strategies in product differentiation

For break even

purposes required

batch size

small

great

1920

Considering as example automotive industryInternet distribution,z.B.: BMW high

low

Degree of customisation

industrial mass production, e.g.: Ford

1970 19901950 1980

Source: Piller, 1997

106



Production location strategy

low

high

high

difficult

stringent

low

significant

significant

significant

significant

significant

large

high

low

low

simple

permissive

low

LocalGlobal networkCentralizedAlternatives

Strategy depends on requirements of country marketsSource: Ansoff/McDonnell 1990

Economies of scale

Transportation costs

Tariff barriers

Balancing currency

Legislation enforcinglocal productionDifferential in labor costs

Variables

107



ServiceSalesMar-ke-ting

Organisation strategy

Source: McKinsey 1994

Global focus of corporate culture and local implementation autonomy

Pro-duct-ion

Con-struc-tion

R&D

Evolutionphase Home country Important foreign markets

Export

Local presence

Start of local production

Autono-mous country or-ganizations

Globalintegration

Total local integration, all functions are present locally

Local production

Sales & Service

Own sales organization

Trader

Personal

Joint R&D, finance, value systems, corporate identity

108



Business case: international strategy of H&M

Gross sales(in millions of SEK)

Sales outside Sweden

Operating profit (in m. SEK)

Total number of stores

Number of countries active

Average number of employees

210,400

95,5%15,493496864

123,283

Highly international and successful company Source: H&M annual report 2018

Business segment:Clothing Fashion Retailer

109




Source: H&M annual report 2004

110





111





112112



H&M country strategy

Market entries by year

113



H&M country strategySWE 1947


114




NOR 1964


115




NOR 1964

DEN1967


116




NOR 1964

DEN1967

GB1976


117




NOR 1964

DEN1967

GB1976

CH1978


118




NOR 1964

DEN1967

GB1976

CH1978

GER1980


119




NOR 1964

DEN1967

GB1976

CH1978

GER1980

NL1989


120




NOR 1964

DEN1967

GB1976

CH1978

GER1980

NL1989

B1992


121




NOR 1964

DEN1967

GB1976

CH1978

GER1980

NL1989

B1992

A1994


122




NOR 1964

DEN1967

GB1976

CH1978

GER1980

NL1989

B1992

A1994

L1996


123




NOR 1964

DEN1967

GB1976

CH1978

GER1980

NL1989

B1992

A1994

FIN1997

L1996


124




NOR 1964

DEN1967

GB1976

CH1978

GER1980

NL1989

B1992

F1998

A1994

FIN1997

L1996


125




USA 2000

SWE 1947

NOR 1964

DEN1967

GB1976

CH1978

GER1980

NL1989

B1992

F1998

A1994

FIN1997

E 2000

L1996


126





USA 2000

SWE 1947

NOR 1964

DEN1967

GB1976

CH1978

GER1980

NL1989

B1992

F1998

A1994

FIN1997

E 2000

L1996

P 2003

I2003

PL2003

CZ2003

127



H&M country strategyMarket entries by year

USA 2000Canada 2004

SWE 1947

NOR 1964

DEN1967

GB1976

CH1978

GER1980

NL1989

B1992

F1998

A1994

FIN1997

E 2000

L1996

P 2003

I2003

PL2003

CZ2003

SI2004

128




USA 2000Canada 2004

SWE 1947

NOR 1964

DEN1967

GB1976

CH1978

GER1980

NL1989

B1992

F1998

A1994

FIN1997

E 2000

L1996

P 2003

I2003

PL2003

CZ2003

IRL2005

SI2004

HU2005

129




USA 2000Canada 2004China 2007

SWE 1947

NOR 1964

DEN1967

GB1976

CH1978

GER1980

NL1989

B1992

F1998

A1994

FIN1997

E 2000

L1996

P 2003

I2003

PL2003

CZ2003

SI2004

IRL2005

HU2005

GR2007

SK2007

130






SWE 1947

NOR 1964

DEN1967

GB1976

CH1978

GER1980

NL1989

B1992

F1998

A1994

FIN1997

E 2000

L1996

P 2003

I2003

PL2003

CZ2003

SI2004

IRL2005

HU2005

GR2007

SK2007

Japan 2008Russia 2009

131






SWE 1947

NOR 1964

DEN1967

GB1976

CH1978

GER1980

NL1989

B1992

F1998

A1994

FIN1997

E 2000

L1996

P 2003

I2003

PL2003

CZ2003

SI2004

IRL2005

HU2005

GR2007

SK2007

Japan 2008Russia 2009

132

Australia 2014Philippines 2014Peru 2015Puerto Rico 2016New Zealand 2016Cyprus 2016Franchise 13 countries




133





134




H&M: Production location strategy

Economies of scale

Transportation costs

Tariff barriers

Balancing currency

Legislation enforcinglocal productionDifferential in labor costs

low

high

high

difficult

stringent

low

significant

significant

significant

significant

significant

large

high

low

low

simple

permissive

low

LocalGlobal networkCentralizedVariablesAlternatives

H&M production needs require a global network strategySource: own, Ansoff/McDonnell 1990

135



H&M: Global network as production location strategy

Around 900 suppliers in Asia (60%) and Europe (40%) 15 production offices in Asia and Europe


H&M global production network spans across Europe for speed and Asia for low costs

136



H&M Product Offer Strategy

Women‘s wear all ages

Source: Annual Report 2000

Focussing on the teenager segment forforeign markets

Children‘s wear Men‘s wear all ages Women‘s wear all

ages

Cosmetics Children‘s wear Men‘s wear all ages Women‘s wear all

ages


ages

Clothes forteenagers


ages

Clothes forteenagers

1947 1968 1975 1976 1995

Focus for GB andcontinental Europe

137



H&M Production StrategyTraditional value added process Product to market time 3-6 months Maximum number of collection cycles for break even 2-4 per year

Source: Annual Report 2000, Goldman Sachs 1997 Faster and more individual response to the market possible

Producer Wholesaler Retailer

Producer Wholesaler Retailer

control control control

control

H&M value added process Product to market time 3-8 weeks Maximum number of collection cycles for break even 8-10 per year

138



H&M organization strategy

Source: H&M annual report 2000, Goldman Sachs 1997

Sales

Store management

Logistics

Facility management

Customer services

Personnel

H&M head officeStockholm

Country 1 Country 2

...

Productionoffice

country 1

Productionoffice

country 2

...

Product design

Quality control

Product sourcing

Logistics

Production

Corporate strategy Finance Investor relations Product design Purchasing Marketing Store design IT Logistics

Corporate culture Corporate identity Trend scouting Personnel (career opportunities)

14 Country offices 21 Production offices

139



Strategic solutions for the global location strategy

Driving for standardization to achieve economies of scale through

globalizationIncrease of complexity and potential need for individualization through international

locations

Solutions

Organizationstrategy

Production locationstrategy

Challenge of globalization


Reduction of complexity through selection of countries with similar attributes

Assurance of: Global corporate identity Globally coordinated strategy Local execution autonomy

Adjustment of production locations to country and product requirements

140



Portfolio analysis: Boston Consulting Group matrix

141

Simple 2-component concept to generate 4 norm strategies

Relative market sharelow high

Market growth

?

Dog CashCow

high

low

Source: Boston Consulting Group, 1971



Portfolio analysis: Ashridge portfolio display

142

Source: Ashridge Strategic Management Centre, as quoted by Grant, 2012

LOW

HIGH

LOW HIGH

Potential for value destruction from misfit between needs of the business and parent’s corporate management style

Potential for parent to add value to the business

HEARTLANDbusinesses with high potential for adding value

EDGE OF HEARTLANDbusinesses where for value adding potential is lower or of negative risks higher

BALLASTtypical core business position:fit high, but limited potential to add more value

VALUE TRAPpotential for adding value is seldom realized because of problems of management fit

ALIEN TERRITORYexit: no potential for value creation

4. Development of an inte

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