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Case Study #1 :
1
-Biotechnology startup company from France
-International development axes#1 : markets# 2 : production# 3 : technology / R&D
ABCAR DIC PRocess: a French biotechnology
startup with many different markets.
2
http://www.abcar-dic.com/index.php?id_site=2&id_page=
Applications of Technology :- Rice : improve quality (and retail price) of upon harvest
[Markets : Thai, Vietnam rice processors, world’s 2nd & 3rd]
- Oil extraction (palm…) : with application on biofuels,
etc. [Markets : Indonesia, Malaysia]
- Fruit and vegetable drying :
- For food industry : high quality ice creams, etc
3
- For food industry : high quality ice creams, etc
- For food retail : create range of fruits and veggie snacks
- Baby powdered milk : bacteria destruction & vitamin
preservation.
Rice Oil extraction Food Baby
powdered milk
Market A few Asian countries ; a
handful of actors ; large
potential mkt
A few Industrial
users only :
easy to
negotiate
(Mitsubishi
Corp…) ; large
potential mkt
Many possible
actors , many
markets ����
either 80/20
rule or chose
easiest SUPPLY
‘LANE’
A handful of
actors
worldwide
(Nestle, Mead
Johnson…), with
strong
technology
culture
Critical Achieve long R&D in
collaboration with powerful
Achieve control of
supply of raw
Capacity to achieve
quality
Summary of markets:
4
Critical
success
factor
collaboration with powerful
actors having poor
technology culture, and a
different business culture
(Asia, mass market, low
emphasis on quality…)
� Ditto
supply of raw
materials /
capacity to deliver
required quantities
to supermarkets…
quality
requirements of
clients during test
phase
Type of
partnershi
p for
O’seas
activities
ALLIANCE with Powerful
technology broker familiar
with rice industry and Asian
culture (=> Mitsubishi
Corporation)
� Ditto JV with (1)
farmers, (2)
wholesaler of
fresh
fruits/veggies,
(3) distribution
contract with
CONTRACT
(technology
transfer) with 1
of these world
leaders (
royalties)
Innovation Strategy of ABCAR
Goal : for each major application (rice, oil
extraction, fruits/veggie, powdered milk) , (1)
market research, (2) identify & negotiate with
potential partners.
5
potential partners.
Constraint : the company is a startup, therefore
has limited resources for its int’l strategy.
Therefore…
PROBLEM : too many possible applications/markets!!!
Final market :Supermarkets
(Europe, USA, Asia)
fruit snacks
Processing FactorySupply
Sept
Nov.
6
fruit snacks
Requirements :-Steady supply over the year-Flexibility (quantities)
Sept
Nov.
?
Innovative contract with farmers : Pre-purchase harvest
Where to locate ? 1- cheap labor? 2- presence of local J.V. partner3- Low transport cost (raw material )4- Low transport cost (finished product)
[…] H.Q. (France)
Rep. Office in ASIA :(1) Booming region (market + sourcing)
(2) Location in MALAYSIA : centre of Asia, presence in key
markets (oil), presence of multinationals (Nestle)
Fruits &
Veggies:
Powdered
Milk
Palm Oil :Rice :
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Identify Decision Maker :
Timing : complementarity with other party’s « strategic clock » (competition on
market, individual’s carreer moves…)
Fit technology / « client »’s market .
Negotiation Process:
FIT: fine-tune match between technology offered & other party’s needs
Marketing strategy TRIAL & ERROR : eg Fruits & Veggies : product in its retail
form OR for INDUSTRIAL usage (Hagen Daazs…)
[powdered milk]
8
March 2005
March 2006
March 2007
March 2008
March 2009
-very interested intechnology ;-Executive has noauthority to recommend
-Sends engineer toFrench startup tpevaluate facilties andtechnology
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1st meeting BMS Q.C. executive, Philippines factory
authority to recommendto H.Q. (USA, Indiana).� Result : only infoXchange on Technology
Commission large study on BMS milk powders .
Technology transfer contract?
Executive becomes Head of Q.C. at H.Q.
technology-Start technicalexchanges betw. R&Dunits (France- Indiana)
����Technology transfer : -French startup grants right to build machines using its technology ; no investment required.-French startup receives royalty [ x % per ton of milk processed in each factoryworldwide]
[powdered milk]
(1) Client evaluates technology :
test
Modify technology
time
Modify technology
test test
10
time
Contract( technology transfer)
H.Q. (France)
H.Q. (Mead
Johnson, USA ) Number of plant where technology is to be installedRevenue model ( $ xx /ton) * number of yearsIntellectual Property agreementPossible role in technology upgrade
What does theory say about :
Forms of International Behavior ?
OUTWARD FORMSExport IntermediaryExport AgentExport Direct
INWARD FORMSImport IntermediaryBuying AgentImport Direct
« LINKED » FORMSStrategic Alliance
11“International Marketing – An SME perspective”. De Buca, Fletcher and Brown, Prentice Hall, 2004, p249, Fig 7.5
Export DirectSales Office O’seasLicensor O’seasFranchisor O’seasFDI to supply
Import DirectBuying Office O’seasLicensee in Home countryFranchisee in Home CountryFDI to source
Strategic AllianceCooperative Manuf.Countertrade
What does theory say about :
The stages of Market Research process ?
Problem Identification
RESEARCH PROCESS
Define Research strategy
INTERNATIONAL ISSUES
Construct & Measure & Sample equivalence
Geography + distanceCultureLack of market knowledge
12“International Marketing – An SME perspective”. De Buca, Fletcher and Brown, Prentice Hall, 2004, p162, Fig 6.1
Data collection
Analysis and Interpretation
Disseminate results
Secondary data : (accuracy, comparability, reliability, source) Primary data :
researcher and respondent bias
Results : comparability & local biases
Avoid Culturally offensive conclusions
Results : comparability & local biases
Problems with secondary data : the most important
sources of information by country, by order of importance.
JAPAN S’pore TAIWAN KOREA
Customers
Govt
In-house surveys
Personal contacts
Local Surveys
Government
Political contacts
In-house surveys
Customers
Business contacts
Customers
In-house surveys
Competitors
Govt
Personal contacts
Customers
In-house surveys
Personal contacts
Business contacts
Political contacts
13“International Marketing – An SME perspective”. De Buca, Fletcher and Brown, Prentice Hall, 2004, p173
HK China Etc …
Customers
Personal contacts
In-house surveys
Trade Associations
Magazines
Business contacts
Customers
Political contacts
Newspapers
Personal contacts
Magazines
Challenges against accurate data :
1- lack of local resources and skills (developing countries )
2- Official sources can be trusted? China : complex, multi-level, vertical reporting system encourages optimistic
reporting of economic data
14
3-Information kept secret by competitors. China : why is cost of freeze drying so cheap ?
4- Hidden barriers to entry. Japan : why is it difficult to introduce technology?
� The case of Bluetooth Watch for children at Tokyo Disneyland
“International Marketing – An SME perspective”. De Buca, Fletcher and Brown, Prentice Hall, 2004, p175
Case Study #2
15
-I.C.T. startup company from France
- development axes#1 : markets# 2 : production# 3 : technology / R&D
Stage 1 : a simple watch for young children
The company, its technology and
products
16
Stage 2 : a bluetooth/wifi watch for value added
services (education, entertainment)
Stage 3 : a social network for young children
Breakthrough stage 4 : Internet access security
( corporate & consumer markets)
Stage 1 : A time-teaching watch for children
below 6 yrs of age
Traditional analog or digital displays are not adapted to young children’s psychology of time(positioning oneself in time eg at one precise moment of the day ; understanding of ‘time budget’, eg the ‘amount’ of time available before going to bed).
17
An original time display technology :
- key moments’ in the day (meal, shower, nap, play, bus ride, study...), a combination of 2 pictograms : • activity (a pillow for the nap...) • phase of the day (a round and shining sun at noon...).
(1) Laboratoire de psychologie expérimentale, (2) U.P.R.E.S. E.A. 2114, Université François Rabelais, Tours, France.
The child : (1) memorises sequence of activities, (2) capable of anticipating which activity comes next, (3) estimate the time remaining before next activity starts.
children <6 yrs : the market
An attractive market.From TV to toy industry, from food to consumer electronics companies, the marketfor young children (less than 6 years old) has tremendous attraction : the marketsize (75Mn children between 3 and 6 years of age in the developed world only ), itsvery high annual renewal rate (30% per year ... hence preventing saturation) andthe increasing share of their budget that middle classes are spending on theirchildren’s welfare, leisure, education.
Market size (developed countries) 75 Mn
18
Market yearly renewal rate 30%
Amount spent annually on child < 6 years old () $7000
[1] US DOA 2004 (Department of Agriculture) :
Very little innovation...
Estimating the market …
19
Stage 2 : Bluetooth/wifi watch
Cause : Make pictograms customizable from a PC Cause : Make pictograms customizable from a PC
Unplanned result : INNOVATION Unplanned result : INNOVATION
http://en.prim-time.fr/http://en.prim-time.fr/
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http://en.prim-time.fr/http://en.prim-time.fr/
Sets ALARM (buzz, SMS) when out of range
Sensors at hazardous spots
DOMOTICS sensor
21
Similar concepts(1) Map-based location
GPS + 3GCellphone for kids
(3) ‘PROXIMITY’ monitoring
Bluetooth / RFID
22
(2) Input/Output monitoring
NFC (RFID)Wearable TAG
Bluetooth / Wifi
RFID
WARNING
Sensor
Sensors at hazardous spots
23
WARNING GATE
WARNING GATE
GSM
Partenaire Finland
24
Stage 3 : a social network for young children
25
http://www.iht.com/bin/printfriendly.php?id=7914803
Stage 3 : a social network for young children
http://en.prim-time.fr/
� Educatif
� Ludique
� Espace publicitaire
26
http://en.prim-time.fr/
Stage 4 : access authentication to internet, information systems
27
Summary of markets:
Pictogram watch Bluetooth Watch Social site Internet access
control
Market /
channels
Worldwide /
Supermarkets,
ecommerce,
timepiece retailers
/ royalties
Worldwide /
bundling with
telcos; White-label ;
Worldwide /
pay-per-click
revenue model
Worldwide :
large
corporations ;
social networks
(Facebook, …)
28
Market size 1 Mn/y * €15 net
margin + royalties
3 Mn/y * €10 net
margin
(eyeball-based
revenue)
€100K - €1Mn
per corporate
client
Technology
+location +
Production
Fully owned /
minor
development
ahead .
Production : OEM
(no IP risk)
Fully owned / major
devel. ahead
(diabetes, …) ;
partners in any
developed country.
Production : OEM (
IP /cost arbitration)
Fully owned ;
webdesigners
(anywhere :
labor-cost basis)
; worldwide
partners with
original content
Fully owned /
central database
to be located in
tax friendly area.
USING A COMPANY OWNED SALES FORCE
• Advantages
– far greater control over sales and marketing effort
– facilitates formation of closer manufacturer-customer
• Disadvantages
– relatively larger resource
commitment
– higher exit costs
29
manufacturer-customer relationships
– can be used to identify and exploit new international marketing opportunities
– increased exposure to
unexpected changes in
political/social environment
of host country