Chapter 21: Tapping Into Global Markets
1. What factors should a company review before deciding to go abroad?
A global firm is one that operates in more than one country and captures R&D, production,
logistical, marketing, and financial advantages in its costs and reputation that are not available to
purely domestic competitors.
Factors to Review
Some international markets present higher profit opportunity than domestic markets
Company needs a larger customer base to achieve economies of scale
Company wants to reduce dependence on any one market
Company decides to counterattack global competition in their home markets
Customers are going abroad and require international service
Risks
Company might not understand foreign preferences
Company might not understand foreign business culture
Company might underestimate foreign regulations
Company might lack managers with international experience
Foreign country might change its commercial laws, undergo economic or political crisis etc
Four Stages of Internationalization
No regular export activities
Export via independent agents
Establish sales subsidiaries
Establish production facilities abroad
2. How can companies evaluate and select specific foreign markets to
enter?
How many markets to enter: Waterfall (enter countries in a sequence) or sprinkler approach (enter
simultaneously)
Developed versus developing markets
Regional Free Trade Zones:
• European Union
• NAFTA: North American free trade agreement
• MERCOSUL: Links countries in Latin America
• APEC: Asia pacific economic cooperation forum
• ASEAN: association of South East Asian nations
• SAFTA: South Asian free trade area
Key Developing Markets: Brazil, Russia, China, India, South Africa
Desired Country Characteristics for Market Entry
• Rank high on market attractiveness
• Rank low in market risk
• Possess a competitive advantage
3. What are the major ways of entering a foreign market?
mitment, Risk, Control, Profit Potential
Indirect exporting: work through independent intermediaries
Direct Exporting Methods
• Domestic-based export department
• Overseas sales branch or subsidiary
• Traveling export sales representatives
• Foreign-based distributors or agents
Using a global web strategy
Licensing: Licensor issues a license to a foreign company to use a manufacturing process, trademark,
patent, trade secret or other item of value for a fee. Two ways: contract manufacturing & franchising
4. To what extent must the company adapt its products and marketing
program to each foreign country?
Review the following elements: product features, labeling, colours, materials, sales promotion,
advertising media, brand name, packaging, advertising execution, prices, ad themes
Advantages of global marketing: Economies of scale, Lower marketing costs, Power and scope,
Consistency in brand image, Ability to leverage good ideas quickly, Uniformity of marketing practices
Disadvantages: Differences in consumer needs, wants, usage patterns, Differences in consumer
response to marketing mix, Differences in brand development process, Differences in environment
Cultural Dimensions: Individualism vs. Collectivism, High vs. Low Power Distance, Masculine vs.
Feminine, Weak vs. Strong Uncertainty Avoidance
Commandments of Global Branding
• Understand similarities and differences in the global branding landscape
• Do not take shortcuts in brand building
• Establish a marketing infrastructure
• Embrace integrated marketing communications
• Establish brand partnerships
• Balance standardization and customization
• Balance global and local control
• Establish operable guidelines
• Implement a global brand-equity measurement system
• Leverage brand elements
International Product and Communication Strategies
Levels of Product Adaptation
• Production of regional product versions
• Production of country versions
• Production of city versions
• Production of retailer versions
Product invention can be backward (reintroduce an old product) or forward
Dual adaptation means adapting both product and communication.
Price Choices: Set a uniform price everywhere, Set a market-based price in each country, Set a cost-
based price in each country
A gray market consists of branded products diverted from normal or authorized distributions
channels in the country of product origin or cross international borders; dealers in lower priced
countries sell products in higher priced countries.
Distribution Channels
Seller
International headquarters
Channels between nations
Channel within nations
Final buyers
5. How should the company manage and organize its international
activities?
Global Organization Strategies
World as Single Market, Multinational, Glocal
Export division, international division, global organization
