The Difference Between Competing The Difference Between Competing Internationally & Competing GloballyInternationally & Competing Globally

A company will start to compete A company will start to compete internationally by entering just one or maybe a internationally by entering just one or maybe a select few foreign markets. Competing on a select few foreign markets. Competing on a truly global scale comes later , after a truly global scale comes later , after a company has established operations on several company has established operations on several continents & is racing against rivals for global continents & is racing against rivals for global market leadership. market leadership.

Political factorsPolitical factorsConsider:Consider:

The political stability of the nation. Is it a The political stability of the nation. Is it a democracy, communist, or dictatorial democracy, communist, or dictatorial regime? regime? Monetary regulations. Will the seller be Monetary regulations. Will the seller be paid in a currency that they value or will paid in a currency that they value or will payments only be accepted in the host payments only be accepted in the host nation currency? nation currency?

Economical FactorsEconomical Factors

Consider:Consider:

Consumer wealth and expenditure within the Consumer wealth and expenditure within the country. country.

National interests and inflation rate. National interests and inflation rate.

Are quotas imposed on your product. Are quotas imposed on your product.

Are there import tariffs imposed. Are there import tariffs imposed.

Does the government offer subsidies to Does the government offer subsidies to national players that make it difficult for you national players that make it difficult for you to compete?to compete?

Social Factors Social Factors ConsideConsiderr

Language.Language. Will language be a barrier to Will language be a barrier to communication for you? Does your host nation speak communication for you? Does your host nation speak your national language? What is the meaning of your your national language? What is the meaning of your brand name in your host country’s language? brand name in your host country’s language? CustomsCustoms: what customs do you have to be aware of : what customs do you have to be aware of within the country? This is important. You need to within the country? This is important. You need to make sure you do not offend while communicating make sure you do not offend while communicating your message. your message. Social factorsSocial factors: What are the role of women and : What are the role of women and family within society? family within society? ReligionReligion: How does religion affect behaviour? : How does religion affect behaviour?

ValuesValues: what are the values and attitudes of : what are the values and attitudes of individuals within the market? individuals within the market?

Technological FactorsTechnological Factors

ConsiderConsider::

The technological infrastructure of the market. The technological infrastructure of the market.

Do all homes have access to energy Do all homes have access to energy (electricity) (electricity)

Is there an Internet infrastructure. Does this Is there an Internet infrastructure. Does this infrastructure support broadband or dial up? infrastructure support broadband or dial up?

Will your systems easily integrate with your Will your systems easily integrate with your host country’s?host country’s?

Market entry methodsMarket entry methodsAfter assessing the environment in your selected country, how do After assessing the environment in your selected country, how do

you decide which are the best countries to enter? Following you decide which are the best countries to enter? Following factors to be considered before entering-factors to be considered before entering-

Speed – How quickly do you wish to enter your Speed – How quickly do you wish to enter your selected market?selected market?

Costs- What is the cost of entering that market?Costs- What is the cost of entering that market?

Flexibility – How easy is it to enter/leave your chosen Flexibility – How easy is it to enter/leave your chosen market?market?

Risk Factor – What is the political risk of entering the Risk Factor – What is the political risk of entering the market? What are the competitive risk? How market? What are the competitive risk? How competitive is the market?competitive is the market?

Payback period – When do you wish to obtain a Payback period – When do you wish to obtain a return from entering the market? Are there pressures return from entering the market? Are there pressures to break even and return a profit within a certain to break even and return a profit within a certain period?period?

Long- term objectives- What does the organization Long- term objectives- What does the organization wish to achieve in the long term by operating in the wish to achieve in the long term by operating in the foreign market? Will they establish a presence in that foreign market? Will they establish a presence in that market and then move onto others? market and then move onto others?

Trading overseasTrading overseas

There are a number ways an organization can start to There are a number ways an organization can start to sell their products in international markets.sell their products in international markets.

1. Direct export.1. Direct export.

The organization produces their product in their home The organization produces their product in their home market and then sells them to customers overseas. market and then sells them to customers overseas.

2. Indirect export2. Indirect export

The organizations sell their product to a third party The organizations sell their product to a third party who then sells it on within the foreign market.who then sells it on within the foreign market.

3. Licensing 3. Licensing Another less risky market entry method is licensing. Here Another less risky market entry method is licensing. Here the Licensor will grant an organization in the foreign the Licensor will grant an organization in the foreign market a license to produce the product, use the brand market a license to produce the product, use the brand name etc in return that they will receive a royalty name etc in return that they will receive a royalty payment.payment.

4. Franchising4. FranchisingFranchising is another form of licensing. Here the Franchising is another form of licensing. Here the organization puts together a package of the ‘successful’ organization puts together a package of the ‘successful’ ingredients that made them a success in their home ingredients that made them a success in their home market and then franchise this package to oversea market and then franchise this package to oversea investors. The Franchise holder may help out by investors. The Franchise holder may help out by providing training and marketing the services or product. providing training and marketing the services or product. McDonalds is a popular example of a Franchising option McDonalds is a popular example of a Franchising option for expanding in international markets.for expanding in international markets.

5.Contracting5.ContractingAnother of form on market entry in an overseas Another of form on market entry in an overseas market which involves the exchange of ideas is market which involves the exchange of ideas is contracting. The manufacturer of the product will contracting. The manufacturer of the product will contract out the production of the product to another contract out the production of the product to another organization to produce the product on their behalf. organization to produce the product on their behalf. Clearly contracting out saves the organization Clearly contracting out saves the organization exporting to the foreign market.exporting to the foreign market.

6.Manufacturing abroad6.Manufacturing abroadThe ultimate decision to sell abroad is the decision to The ultimate decision to sell abroad is the decision to establish a manufacturing plant in the host country. establish a manufacturing plant in the host country. The government of the host country may give the The government of the host country may give the organization some form of tax advantage because organization some form of tax advantage because they wish to attract inward investment to help create they wish to attract inward investment to help create employment for their economy.employment for their economy.

7.Joint Venture7.Joint Venture

To share the risk of market entry into a foreign To share the risk of market entry into a foreign market, two organizations may come together market, two organizations may come together to form a company to operate in the host to form a company to operate in the host country. The two companies may share country. The two companies may share knowledge and expertise to assist them in the knowledge and expertise to assist them in the development of company; of course profits development of company; of course profits will have to be shared out alsowill have to be shared out also

Types of International strategyTypes of International strategy

International strategyInternational strategy

MultiCountry Global

Multicountry competition strategy varies somewhat Multicountry competition strategy varies somewhat across nations, since –across nations, since –

Buyers in different countries are attracted to different Buyers in different countries are attracted to different product attributes.product attributes.

Sellers vary from country to country.Sellers vary from country to country.

Industry conditions & competitive forces in each Industry conditions & competitive forces in each national market differ in important aspects. national market differ in important aspects.

Multi Country strategyMulti Country strategyProduct customized for each market.Product customized for each market.

Decentralized control—Local decision making.Decentralized control—Local decision making.

Effective when large difference exists between the Effective when large difference exists between the countries.countries.

Advantageous product differentiation, local Advantageous product differentiation, local responsiveness, minimal political risk.responsiveness, minimal political risk.

With multicountry competition , rival firms battle for With multicountry competition , rival firms battle for national leadership & winning in one country does national leadership & winning in one country does not necessarily signals the ability to fare well in not necessarily signals the ability to fare well in other countries.other countries.

Global strategyGlobal strategy

Product is same in countries.Product is same in countries.

Centralized controlCentralized control

Effective when the difference between the Effective when the difference between the countries is small.countries is small.

Advantage cost, coordinated activities, fast in Advantage cost, coordinated activities, fast in product development.product development.

International Promotion StrategyInternational Promotion Strategy

As with international product decisions and organization can either As with international product decisions and organization can either adapt or standardize their promotional strategy and message. adapt or standardize their promotional strategy and message. Advertising messages in countries may well have to be adapted Advertising messages in countries may well have to be adapted because of language barriers or the current message used in the because of language barriers or the current message used in the national market may be offensive to overseas residents.national market may be offensive to overseas residents.

The use of certain colours may also need to be thought about. In The use of certain colours may also need to be thought about. In India red is the colour worn by the bride in weddings, white is the India red is the colour worn by the bride in weddings, white is the colour for mourning in Japan.colour for mourning in Japan.

The level of media development has to also be taken into account. The level of media development has to also be taken into account. Is commercial television well established in your host country? What Is commercial television well established in your host country? What is the level of television penetration? How much control does the is the level of television penetration? How much control does the government have over advertising on TV and radio? Is print media government have over advertising on TV and radio? Is print media more popular then TV? Many organization go for a strategy of more popular then TV? Many organization go for a strategy of adapting advertising messages to local markets to best meet adapting advertising messages to local markets to best meet consumer demand.consumer demand.

International Pricing StrategiesInternational Pricing Strategies

Pricing on an international scale is difficult. As Pricing on an international scale is difficult. As well as taking into account traditional price well as taking into account traditional price considerations considerations

Fixed and variable costs,Fixed and variable costs,

Competition,Competition,

Company objectives ,Company objectives ,

Proposed positioning strategies,Proposed positioning strategies,

Target group and willingness to pay,Target group and willingness to pay,