International Marketing Global Strategic Planning

International Marketing

Global Strategic Planning

Global Marketing Evolution

Core Business Strategy

CountryA

CountryB

CountryC

CountryD

Copyright © 1999 by Harcourt Brace & CompanyAll rights reserved

Globalization Drivers

• Market Factors

• Cost Factors

• Environmental Factors

• Competitive Factors

Global Strategy Formulation

Assessment and Adjustment of Core StrategyMarket/Competitive Analysis - Internal Analysis

Formulation of Global StrategyChoice of Target Countries, Segments, and Competitive Strategy

Development of Global Marketing Program

ImplementationOrganizational Structure - Control

Understanding and Adjusting the Core Strategy

• Similar needs or wants to be met

• Similar end user customers to be targeted

• Similar products or services used to meet needs of specific customers

The SBU: Based on Product Market Similarities

Analysis is the First Step

• Market Analysis

• Competitor Analysis

• Internal Analysis

Formulating Global Marketing Strategy Starts With a Series of Decisions

• Country-Market Choice

• Choice of Competitive Strategy

• Segmentation Choices

• Concentration

• Diversification

Factors in Country Selection

• The stand-alone attractiveness of the market

• Global strategic importance of the market

• Possible synergies offered by the market

Choice of Competitive Strategy Alternatives

• Cost leadership• Differentiation• Focus

Market Segment 3

Market Segment 1

Market Segment 2

Bases for Global Market Segmentation

EnvironmentalVariables

EnvironmentalVariables

MarketingManagement

Variables

MarketingManagement

Variables

GeographicVariables

GeographicVariables

PoliticalVariables

PoliticalVariables

EconomicVariables

EconomicVariables

CulturalVariables

CulturalVariables

PromotionVariables

PromotionVariables

ProductVariables

ProductVariables

PriceVariables

PriceVariables

DistributionVariables

DistributionVariables

Global Marketing Program Development Decisions

• The degree of standardization in the product offering• The marketing program beyond the product variable• The location and extent of value-adding activities• Competitive moves to be made

• The Product Offering :What degree of standardization or adaptation should be offered?

• The Location of Value-Added Activities– Pooling production ( single design center for each chip - Intel)

– Exploiting factor costs or capabilities– Strategic alliances– Concurrent engineering

• Competitive Moves: Cross-subsidization– “…resources accumulated in one part of the world and

used to fight a competitive battle in another…”• Implementing Global Marketing :Success will come from a

balance between local and regional / global concerns.• The Challenges of Global Marketing and the Pitfalls to be

Avoided: – Insufficient research– The tendency to overstandardize– Inflexibility in planning and implementation– The “Not-Invented-Here” Syndrome (NIH)

The Management Process• Enhancing the global transfer of

communications• Personnel interchange to gain experience

abroad• Headquarters should coordinate and leverage

resources• Permit local managers to develop their own

programs within defined parameters

Localizing Global Marketing :Achieving a balance between country managers and global product managers at headquarters.

How to Avoid the NIH Syndrome

• Ensure that local managers participate in the development of global brand marketing strategies

• Encourage local managers to develop ideas for regional or global use

• Maintain a product portfolio that includes local as well as regional or global brands

• Allow local managers control over marketing budgets to respond to local customer needs and counter global competition

Emerging Global Organization Structures

• Global Account Management• Changes in the Corporate Culture for Going Global:• The World is Not One Single Market.• Planning and Executing Programs on a Worldwide

Basis.• A Global Identity that Favors No Specific Country.• Product Choices Should Consider Individual Markets

as well as Transfer Products from One Region to Another.

International Marketing

Global Pricing Strategies

Copyright © 1999 by Harcourt Brace & Company

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Transfer Pricing

S u b s id ia ry AN orth A m erica

S u b s id ia ry BL a tin A m erica

S u b s id ia ry CA frica

Th e P aren t C orp ora tion


Objectives of Transfer Pricing

• Competitiveness in the international marketplace• Reduction of taxes and tariffs• Management of cash flows• Minimization of foreign exchange risks• Avoidance of conflicts with home and host

governments• Internal concerns - goal congruence or subsidiary

manager motivation


Use of Transfer Prices to Achieve Corporate Objectives


Three Philosophies of Pricing have Developed

• Cost-based philosophy– Every affiliate is a profit center

• Market-based philosophy– It takes local conditions into account

• Arm’s-length price


Transfer Pricing Challenges• Internal to the MNC

• External between the home and host country tax authorities

• Performance Measurement: The effects of manipulating intra-corporate prices will cause major problems.

• Taxation:Section 482 of the Internal Revenue Code (IRS has vast authority to reallocate income between controlled foreign operations and US parents)


Determining Arm’s Length Price under Section 482

• The comparable uncontrolled price method

• The resale price method

• The cost-plus method

• Any other reasonable method


Pricing Within Individual Markets is Determined by:

• Corporate objectives• Costs• Customer behavior and market

conditions• Market structure• Environmental constraints


Corporate Pricing Objectives

• Skimming

• Penetration Pricing

Why Prices Change?Foreign Exchange RatesMarket Strategies


Costs - Frequently used as the basis of price determination.

•Labor•Raw materials•Supplies•Utilities•Shipping • Demand and Market Factors:

– Price elasticity of consumer demand


Market Structure and Competition

• Competition sets the price within the parameters of cost and demand.– Competitors under selling your company– Eroding Market share– Strategic Alliances


• Environmental Constraints: Price controls

• Governments Influence Prices and Pricing Directly

• Under Price Controls, the International Marketer must Operate as if in a Regulated Industry


Arguments Against Price Controls

• the maximum price becomes the minimum price• the wage-price spiral advances• labor turns against restrictions• non-inflationary wage increases are forestalled• government controls are difficult to enforce• less tax is raised because less money is made• governments may need to bail out companies to prevent

bankruptcies and unemployment


Parallel Imports will Surface in Any Markets Where Price

Discrepancies Exist

Documents

International Marketing Global Strategic Planning