Export problems (I) 1.Culture culture differs and is difficult to understand self-reference...
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Transcript of Export problems (I) 1.Culture culture differs and is difficult to understand self-reference...
Export problems (I)
1. Culture culture differs and is difficult to understand self-reference thinking sterotyping
2. Market factors distribution structure customs & duties specific norms, specifications, laws market information media habits
Export problems (II)
3. Financial factors securing payment exchange rates
4. Organisational factors finding labour force control and coordination
The seven deadly traps
1. Entering markets in order of size or growth of demand go where strategy will work best
2. Underestimate foreign competitors3. Expectations that customer motivations will be
similar worldwide the real world is not a global village
4. Entering markets at the wrong price5. Market entry without planning the expansion process6. Association with poor partners7. Losing brand exclusivity
(Simmonds 1999)
Key success factors
Planning and controlling Product strength and uniqueness Service Product adaptation Support to intermediaries International competence and experience Commitment Low price? High price?
Key success factors - 2
Service aspects Quality Brand image Export experience and scale Financial resources for export Information Physical distribution
International marketing management process
Strategic export decision
Market screening/country selection
Product/marketing strategy - entry strategy - attack strategy - competitive positioning - expansion strategy
Marketing-mix planning - adaptation vs. standardisation - coherence, synergy
Implementation & control
Reasons to go abroad
Proactive
managerial urge growth & profit unique product or competencies economics of scale
foreign market opportunities change agents preemptive move
Reactive
spreading risk extend sales of seasonal
product excess capacity
unsollicited orders follow key customer small home market stagnant or declining market (position) countercompetition
Internal External
A model for selecting foreign markets
Filter 1
preliminary opportunities +
Filter 2
potental opportunities +
Filter 3
Macro-level research (General market potential)- socio-economic statistics- geographical factors- political stability/openness
Product-class related factors- cultural framework- growth trends similar products- stage of development
Macro-level research (General market potential)- competition- customer buying behaviour- channels- key success factors vs. strengths/weaknesses- profit potential Target markets prority listing Entry strategy
- Rejectedmarkets
Rejectedmarkets
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+
Rejectedmarkets
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Strategy in Globalizing Markets
Preparedness for internationalization- international sales ratio- market presence in key markets- modes of operation: level of control and involvement- dominant market position
Industry globality- concentrated industry- homogeneity and cross-border demand- liberal trade & investment policy- market interdependence
Solberg, 1997
The Nine Strategic Windows Frame (Solberg, 1997)
Pre
pare
dn
ess
for
inte
rnati
on
aliza
tion
High
Middle
Low
Low Middle
High
Industry Globality
The Nine Strategic Windows Frame (Solberg, 1997)
Enter new business
Prepare for globalization
Strengthen your global
position
Consolidate your export
markets
Consider expansion in international
markets
Seek global alliances
Stay at homeSeek niches in international
markets
Prepare for a buy-out
Pre
pare
dn
ess
for
inte
rnati
on
aliz
ati
on
High
Middle
Low
Low Middle
High
Industry Globality
The European/Global challenge
CustomerCustomer Global Global
convergenceconvergence EfficienciesEfficiencies
Pan-European orPan-European or
Global ApproachGlobal Approach
- Economies of Scale- Economies of Scope
Risks of Pan-European marketing
Cultural differences persist Differences in market infrastructure Differences in competitive structure Different legal context Internal friction Costs of co-ordination
Adaptation required for:
Local Selling
Customized Service
Local Pricing
Local Distribution
Local PR and Sales Promotion
Adaptations due to:
Legal Differences Competition Buyer Behaviour Distribution Structure Market Position Market Development
The Belgian Compromise
Global Global Local Local
Glocal Glocal
- A subtle mix …- Coordination- A strategic frame but flexibility- Alliances when needed- Communication systems- Global management as team player
Standardization strategy toward CEE (1)
Typical elements of standardization strategy for CEE markets
- value-based positioning ( Q, image) - product and brand elements -pricing -pioneering strategy in high end
markets -exporting approach
Standardization strategy toward CEE (2)
Typical adaptations - non-core elements ( packaging, sales
promotion) - creative selection ( product-mix,
advertising) - regional management
Key problems identified by head-quarter executives
Lack of qualified local managers Operational focus , no long run view Lack of marketing competence ‘fire fighters’
Key problems identified by subsidiary executives
Short term goals block our strategic expansion
Reaching decisions takes too long due to bureaucracy and paper work
HQ feels that what works in one market should work everywhere
Too much marketing constraints
Comparison Matrix for Entry Modes
CriteriaModes Investment Sales Costs
ProfitContributi
on
MarketShare
Reversibility
Control Risk Other
IndirectExport
Agent/Distributor Export
Branch/Subsidiary Export
Licensing
Franchising
Other Contractual Agreements
Investment: NewEstablishment
Investment Acquisition
Joint Venture
Mixed
Evolution of a Manufacturer’s Decision on
Entry Mode
Branch export/subsidiary Sole
venture
Joint venture
Agent/distributor export
Licensing
Indirect export
Risk
TimeC
ontr
ol
0
Entry Strategies (I)
Experience
Entry strategy
Suitable type ofCountries/Situations
Do’s Dont’s
Export
Joint venture
Countertrade
Entry Strategies (II)
Experience
Entry strategy
Suitable type ofCountries/Situations
Do’s Dont’s
Licensing
Acquisition
Greenfield FDI
A process model of international market
withdrawal
PHASE 1 PHASE 2 PHASE 3 PHASE 4 PHASE 5 PHASE 6AccumulatingCommitment
IncreasingStress
ConflictingReactions
Power Play Vacuum versusFait Accompli
Beyond the withdrawal
Enactment
Executive
Increasingendogenous stress
Increasingendogenous stress
Increasingendogenous stress stress is high Withdrawal = Failure
Management
ActionsAnalysis of causes
Tactical measuresIncreasing commitment
Tactical measuresEscalation of commitment
Withdrawal as a reaction to strategic drift
No effects on theinternational market
portfolio
DriverInstitutionalization
Threat-rigidity behavior
Threat-rigidity behavior
Threat-rigidity behavior and
hierarchical power
Organizational de-commitment
None
Enactment
Challening
Increasingexogenous stress
Increasingexogenous stress
Increasingexogenous stress
stress -> 0 Withdrawal = Opportunity
Middle Managers
Actions
Analysis of causes
1. Passive rejection
2. Pro-active rejection
Fading out
Strategic alternative
- isolation of the venture- reallocation of resources
learning effects on the international
market portfolio
DriverInstitutionalization
Failure-inducedlearning
Failure-inducedlearning
Failure-inducedlearning and
knowledge powerNew strategic logic Institutionalization
Investing in the ventureand developing a
strategic logic
Investing in the ventureand implementing a
strategic logic
S t
r e
s s
T
h r
e s
h o
l d
W i
t h
d r
a w
a l
CONFRONTATION
TACTICAL WITHDRAWAL
STRATEGIC WITHDRAWAL
TACTICAL WITHDRAWAL
STRATEGIC WITHDRAWAL