International Business

Islamia University of Bahawalpur

Delivered by:

Tasawar Javed

This talk includes: Development of Global program Implementing Global program

International Business

Developing Global Program 4 steps Product offering Marketing Approach Location of Value Added Activities Competitive Moves

Stage 3 Development of Global Program

Product Offering

Product standardization may result in significant cost saving

1. Product offering Standardize manufacturing process to reduce costs

and increases globalization of company Differentiate at end of production to suit different

segment preferences (handsaw) Example: whirlpool use common platforms for US and

European markets to reduce costs by sharing technology and suppliers

At the end stage they will add components which will differentiate between the “top of the line” and the “no Frills” versions

Product Offering

Uniformity is sought especially in elements that are strategic (positioning) in nature, whereas care is taken to localize necessary tactical elements (distribution)

Marketing Approach

Glocalization

2. Marketing Approach Glocalization: is when marketeers balance the

need for production uniformity against the needs of customers in different regions

In the way a globalised manufacturer localises the selling of his product

Example: Unilever use the same marketing theme and symbol (teddy bear) when advertising fabric softener throughout the world. But in different regions the bear is given a different name and there are different bottle sizes

Stage 3: Development of Global Program

Cost Reduction

Location of Value-Added Activities

Pool Production

Concentrate Activities

Exploit Factor Costs

3. Location of Value-Added Activities1. the location R&D is crucial to globalization.Ensure R&D is located close to factory floor.Ensure R&D centres have joint projects and are in real-time contactThis interlinks each R&D centre and prevents doubling up2. have one specialist unit for after sale customer care to cover a whole number of countries rather than one in each country (Sony)

This can be done to improved transportation links

Stage 3: Development of Global Program

Global companies may have to respond to competitive moves in a variety of markets

Cross-subsidization may offer competitive advantage

Competitive Moves

4. Competitive Moves

Competition = war/game of strategy

Be ready to react to attacks in any region and counterattack – may be in different region

Example: Fuji attacked Kodak’s market share in US, Kodak reacted by attacking the Japanese market

Stage 3: Development of Global Program

Cross-Subsidisation = using resources accumulated in one region to fight a competitive battle in another

Mobile Phone industry – the companies that will succeed in the future are those that can provide low cost phones in emerging economies while also offering internet based devices elsewhere eg Vodafone?

Stage 3: Development of Global Program

Successful Companies strive to balance local and global concerns

Too much local production may reduce import positioning

Too little planning involvement by the country organization may lead to NIH (not invested here Syndrome)

Implementing Global Programs

Ensure that local managers participate in the development of strategies and programs

Encourage local managers to generate ideas Maintain local and global product portfolios Allow local managers to control budget

Example: Tesco Ireland

Avoiding the Not-Invested-Here Syndrome

Stage 4: Implementing Global ProgramTrue globalization occurs when the groups within

an MNC co-ordinate their activities directly

Example: Coca-Cola in 1993 re-entered the Indian market advertising Coca-Cola as it does in the US Europe etc

It begun to lose market position to Pepsi, realised its mistake and changed focus to a local brand

Thus refocusing advertising on a brand more relevant to the local Indian consumer

Localizing Global Moves

The role of headquarters staff should be one of coordination, and leveraging the resources of the corporation

Executing Global account management programs builds relationship with customers and allow for development of internal systems & interaction

Decision-making in global companies support the goal of treating the world as a single market

SBU

In summary the challenges for Global prorammes are:

1. Insufficient research

2. Over standardization

3. Inflexibility in planning and implementation

4. Not-invested-here syndrome (NIH)

5. Glocalization issues “think globally, act Locally”

Internationalization, planning & developing Key management challenges of international business

1. Import duties/tariffs (+) sale price and (-) sales

2. Requirement for natural resources, either import or set up factory beside them

3. Competition pushed you to (+) efficiency and (-) costs of production. Move production to a country were the four factors of production are cheaper. These factors are Land, Capital and resources

4. Transfer capital and investment in FDI occurs to take advantage of another economy’s competitive advantage

Global Market Entry Strategies Typical entry strategies include:

Exporting & importing Licensing Franchising Expansion through alliances Joint venture Foreign Direct Investment

Internationalization, planning & developing Decision – making tree 5 steps to FDI Step 1 what market? Domestic v Foreign Step 2 produce where? Export or FDI Step 3 who produces? License v Own Step 4 with whom? JV v Wholly owned Step 5 what to invest in? existing v Greenfield

investment

Thank you!!! Q&A