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Master of Business Administration
International MarketingPaper 488914
Class Details
CLASSES: Weekly 3-hour classes, 6 – 9pm
LECTURER:Name Mike HoffmeisterTitle Prof Dr Room:Phone:
OFFICE HRS:
488914 International Marketing
2
Objectives
Prescriptor• The nature and complexity of international marketing are examined.
An appreciation of factors to be considered when developing international marketing strategies and plans; the making of management decisions is developed.
Paper aim• To show the importance of international marketing for New Zealand
business• To examine the factors to take into account when developing
international marketing strategies and plansLearning outcome
• Identify and evaluate marketing opportunities for local business in a global market.
• Develop marketing strategies and plans for exporting to international markets
Organisation
Student learning time• A minimum of 75 hours, comprising 18 hours of class contact, 3 hours of
assessment and 54 hours of self-directed learning
Learning & Teaching Strategies• Lectures, Group seminars, Class discussion, Readings, Case studies, …
Assessment• Assignment• Weekly formative assessment involving questions and practice
assignments to assist development of understanding of and ability to apply concepts
3
Weekly Programme (I)
Objective Topics Readings
WEEK 1: Introduction: Fundamentals of International Marketing
Discuss the challenges of global marketing
Importance of Export for NZ
Drivers towards globalisation
Management orientation
Meaning of culture
Text: Chapter 1-3 FundamentalsCase 1.1: Ikea´s Global Strategy
WEEK 2: Market Entry Options
Discuss impoact of entry barriers on the choice of an entry mode
Foreign Entry Research
Export, Licensing, Joint Ventures, Foreign Direct Investment
Text: Chapter 4-6Case 2.1: Daloon A/S
WEEK 3: Local Marketing
Discuss how to create and implement local marketing activities
Segmentation
Mature Markets
New Growth Markets
Emerging Markets
Text: Chapter 7-10Case 3.2: Levi Strauss Japan KK
Weekly Programme (II)
Objective Topics Readings
WEEK 4: Global Marketing (I) Brand and Product Strategies
Discuss the emergence of standardized global brand and product marketing strategies
Standardization
Brand Management
Product Strategy
Global Services
Text: Chapter 11-12Case: Disney in France; in Hill, International Business
WEEK 5: Global Marketing (II) Price, Distribution and Advertising Strategies
Discuss selected standardized global marketing mix instruments
Price Strategy
Distribution Strategy
Advertising Strategy
Text: Chapter 13-15Case 4.3: United Colors of Benetton
WEEK 6: Salesforce Management and Marketing Organisation
Discuss aspects of personal selling and marketing organisation · Managing a sales force
· International Human Resources Management
· Organizational Structure
Text: Chapter 16-17Case: Sales Force in Automotive Retailing
4
Assignment for International Marketing
Please write a profile on one of the later mentioned companies with special regard to their international operations. Please consider the following:
• What are the company´s mission statements and objectives?• How has the company become international? Was it successful?• What is their international brand and product strategy?• What is the company´s philosophy concerning their employees and
leadership style in general and specifically for their sales force?
Textbook
Paper based on
Global MarketingForeign Entry
Local Marketing &Global Management
Johny K. JohanssonGeorgetown University, USA
3rd Edition, Boston et al, 2003
5
Master of Business AdministrationInternational Marketing
Paper 488914
Part 1Introduction
Weekly Programme
Objective Topics Readings
WEEK 1: Introduction: Fundamentals of International Marketing
Discuss the challenges of global marketing
Importance of Export for NZ
Drivers towards globalisation
Management orientation
Meaning of culture
Text: Chapter 1-3 FundamentalsCase 1.1: Ikea´s Global Strategy
WEEK 2: Market Entry Options
WEEK 3: Local Marketing
WEEK 4: Global Marketing (I) Brand and Product Strategies
WEEK 5: Global Marketing (II) Price, Distribution and Advertising Strategies
WEEK 6: Salesforce Management and Marketing Organisation
6
The future is not ahead of us. It has already happened.
Unfortunately,it is unequally distributed
amongcompanies,
industries, and nations.
(Philip Kotler 2003, Marketing Management)
What is Marketing?
Marketing• … is a social and managerial process by which
individuals and groups obtain what they need and want through creating and exchanging products and value with others.(Philip Kotler 2004, Principles of Marketing, p 5)
• … is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals.(American Marketing Association)
7
Nike: Superb Marketing
Nike• Company with a powerful brand and superb marketing skills
- It is not so much the shoe but where they take you:- Markts a way of life, a sports culture, a “Just Do It!” attitude- The culture and style is to be a rebel
• Gives customers more than just good athletic gear• Customers do not wear Nikes, they experience them
Target customers
Marketing Mix
A set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. It consits everything the firm can do to
influence the demand for its product.(Philip Kotler 2004, Principles of Marketing, p 56)
ProductVariety; Quality
Design; FeaturesBrand namePackagingServices
PromotionAdvertising
Personal sellingSales promotionPublic relations
PriceList priceDiscounts
AllowancesPayment period
Credit terms
PlaceChannelsCoverage
AssortmentsLocationsLogistics
8
What is INTERNATIONAL Marketing?
International Marketing
• … is the process of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organisations.(Czinkota/ Ronkainen 2004, International Marketing, p 4)
Why International MarketingThe Example of New Zealand
9
Export/ Import by Country in NZ
Merchandise Exports• Total (07/2002-06/2003): $28,2 bill• Australia 20%• European Union 16%• USA 15%• Japan 12%
Merchandise Imports• Total (07/2002-06/2003): $32,2 bill• Australia 23% • European Union 19%• USA 13%• Japan 12%
Source: NZ Trade Statistics, June 2003
Export/ Import by Product in NZ
Merchandise Exports• Total (07/2002-06/2003): $28,2 bill• Diary products 20%• Meat 15%• Foresty 11%
Merchandise Imports• Total (07/2002-06/2003): $32,2 bill• Motor vehicles 16% • Mechanical machinery 13%• Mineral fuels 10%
Source: NZ Trade Statistics, June 2003
10
41,5 40,860,3 75,9
97,6125,4
168,3198,1
246,4281,8
0
50
100
150
200
250
300
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Wine Industry in New Zealand
Win
e Ex
port
in N
Z$00
0
Source: NZ Trade Statistics, June 2003
Wool Exports in NZ07/1997 – 06/1998
0
5
10
15
20
25
30
China + H
K UKIndia
German
y
Belgium
Australi
aIta
ly
Japan
United S
tates
Taiwan
Woo
l Exp
ort i
n %
11
0
200
400
600
800
1000
1200
Australi
aJa
panKorea USA
China
Taiwan
Philippines
Indones
ia
Hong Kon
g
Malays
ia
Forestry Exports in NZ04/2001 – 03/2002
Fore
stry
Exp
ort i
n N
Z$00
0
Drivers towards globalisation
Market
Competition
Technology
Government
12
Market Drivers
Common customer needs• When customers in different countries have same/
simular needs in a product or service category- Nike, McDonalds
Global customers• Customers that need the same product or service in
several countries• Therefore, firms follow customers abroad
- Hotel industry - German Bosch follows Volkswagen
Global channels• Existence of global distribution and logistic firms
- Federal Express
Tranferable marketing• Using the the same name packing, advertising, brand
names and other marketing mix elements in various countries
- Nike: Basket-ball star Michael Jordon
Competitive Drivers
Active• If competitors go to foreign markets• Incentive for firms to follow• Trying to match a competitor´s move• Example
- Swedish Ericsson and Finnish Nokia both went into the USA market in the late 1990
- Toyota´s Lexus, Honda´s Acura and Nissan´s Infinity were introduced in the USA at the same time
Passive• Presence of foreign competitors in a firm´s domestic market increases
the need for the firm to venture abroad or to counterattack in foreign country
• Example- Benetton´s success in the USA has led The Gap and The Limited, two US
competitors, to go abroad
13
Cost Drivers
Economies• … of Scale
- Spreading activities across multiple product lines of businesses Unit cost
• … of Scope- reduction by increased production
• Example- Volkswagen: over 20 factories in foreign countries
Sourcing advantages• Supply from a low-wage country
- global sourcing
Technology Drivers
Internet• Global information and
communication• Business transactions• E-commerce• On-line marketing• Examples
- Microsoft- Amazon- Ryan Air
14
Government Drivers
Favorable trade policies• BMW goes to the US
Acceptance of foreign investments• China
Compatible technical standards• ISO 9000
Risks of international activities
Misunderstanding customers preferences and foreign business culturesLack of international management knowhowUnstable governmentsForeign exchange problemsForeign-government entry requirementsand bureaucracyTariffs and other trade barriersCorruptionTechnological piratingHigh cost of product and communicationadaptionShifting borders
Kotler 2003: Marketing Management, p 385 and Kotler 1999, Marketing Management an Asian Perspective, p 410
15
Limits to global marketing
Limits• Negative industry drivers• Lack of resources• Localized mix requirements• Antiglobalization trends
Leads to LOCALIZED
Global Marketing
Localized Global Marketing
Definition• Globalise …
- the product strategy by marketing the same o product lines, o product designs and o brand names
every where but• Localize …
- distribution and marketing communication
A firms global marketing strategy has to be flexibly implementedand take into account of the different degrees to which the activites need local adaptions and personnel
New code word in marketing strategy
16
International management orientation
International management orientation
Need to classify international companies not only byquantitative figures but also by qualitative features (eg values, international orientation)
EPRG• Ethnocentric
• Polycentric
• Regiocentric
• Geocentric
*Heenan/ Perlmutter 1979, S. 17ff
17
Management Orientation: EPRG-Model*
Ethnocentric orientation• Home market attitude
- „This works at home; therefore, it must work in your country“
• Export company- Each market is simular- Focus on home market - Sourcing, production and marketing
from home market perspective- Management decisions done locally- Manager for oversears are sent from
home markets
*Heenan/ Perlmutter 1979, S. 17ff; Kreutzer 1989, S. 12ff.; Hünerberg 1994, S. 114; Becker 1990, S. 270ff.
domestic
foreign
foreign
Management Orientation: EPRG-Model*
Polycentric orientation• Host market orientation
- „We want to be a good local company“
• Multi-national company- Each host market is different- Foreign market adaptions- Management decisions done in guest
market- Akquisition of manager for guest
market in that country
*Heenan/ Perlmutter 1979, S. 17ff; Kreutzer 1989, S. 12ff.; Hünerberg 1994, S. 114; Becker 1990, S. 270ff.
domestic
foreign
foreign
18
Management Orientation: EPRG-Model*
Geocentric orientation• World orientation
• Global company- Worldwide complex company
structure- International management- Standardised, global objectives and
strategies- Recruitment of managers worldwide
*Heenan/ Perlmutter 1979, S. 17ff; Kreutzer 1989, S. 12ff.; Hünerberg 1994, S. 114; Becker 1990, S. 270ff.
domestic
foreign
foreign
Management Orientation: EPRG-Model*
Regiocentric orientation • Based on polycentric orientation
- Considers increasing regionalisationof economies ie Europe
- Base: not countries but country groups
- Each country group is different while each country within a group is simular
*Heenan/ Perlmutter 1979, S. 17ff; Kreutzer 1989, S. 12ff.; Hünerberg 1994, S. 114; Becker 1990, S. 270ff.
domestic
f f
f f
f f
f f
19
Country Specific Advantages (CSAs)
Factors that determine competitive advantages of a country• Factor Conditions
- The nation’s position in factors of production, such as skilled labor or infrastructure, necessary to compete in a given industry
• Demand Conditions- The nature of the home demand for the industry’s product or service
• Related and Supporting Industries- The presence or absence in the nation of supplier industries and related
industries that are internationally competitive
• Firm Strategy, Structure, and Rivalry- The conditions in the nation governing how companies are created,
organized, and managed, and the nature of domestic rivalry
Firm-Specific Advantages (FSAs)
Firm-specific advantages• Patent• Trademark• brand name • Control of raw materials required for the manufacturing of the product
Knowledge-Based FSAs• Knowledge is recognized as one of the key resources of the firm• Resource-Based Strategy
- Defines the firm not in terms of the products or services it markets, or in terms of the needs it seeks to satisfy, but in terms of what it is capable of
• Marketing FSAs- It is important to recognize that the source of a firm-specific advantage can
depend on specific market know-how
20
Culture
Defined as • the underlying value framework that
guides an individual’s behavior
Reflected in an individual’s perceptions
• of observed events, in personal interactions, and in the selection of appropriate responses in social situations
Manifests itself • in learned behavior as individuals grow
up and gradually come to understand what their culture demands of them
The modern conception of culture • focuses directly on observable behavior;• consequently, culture creates a repertoire
of behavioral skills
Cultures Across Countries
High Context Cultures
• The meaning of individual behavior and speech changes
• Nonverbal messages
• When words are spoken: “reading between the lines”
• Found in most of the European countries, some of Latin American countries, and in Japan and many of the newly industrializing Asian countries
Low Context Cultures
• Intentions are expressed verbally
• A person’s meaning should be explicit: not taken for granted
• Propositions have to be justified and opinions defended openly
• Found in the USA, Russia, Australia and New Zealand
21
Five different “Silent Languages”
Space• Relates to matters such as the distance between two people conversing
Material Possessions• Usually describes a person’s station in life
Friendship Patterns• Reflective of a person’s cultural upbringing
Agreements Across Cultures• Interpreted differently across cultures
Time• Studies have documented the cultural problems with time perceptions
Geert Hofstede Cultural DimensionsSo
urce
: ww
w.it
im.o
rg/g
eert
-hof
sted
e
22
Hofstede’s Cultural Dimensions
Individualism versus Collectivism• In a collective society the identity and worth of the individual is rooted in
the social system
High versus Low Power Distance• High power distance societies tend to be less egalitarian
Masculine versus Feminine• Captures the degree to which culture is dominated by assertive males
Uncertainty Avoidance• Rates nations based on the level
Confucianist Dynamics• Distinguishes the long-term orientation of Asian people; from the more
short-term outlook of Western people
Hofestede´s Classification of Triad Countries
LowHighLowHighContext
LowHighHighLowRisk Tolerance
HighLowHighHighMasculinity
HighLowLowHighPower Distance
High HighHighLowIndividualism
W. EuropeContinent
W. EuropeNorthern
Anglo-Saxon(Canada, US, UK)
Japan
23
Four stages of business negotiation
Concessions and commitments are made throughout; a sequential approach to decision making
Concessions are made only towards the end of negotiations; holistic approach to decision making. Progress is difficult to measure for Americans
Concessions and Agreements
Most important step; minds are changed at the negotiation table and aggressive persuasive tactics are used
Persuasion is accomplished primarily behind the scenes. Vertical status relations dictate bargaining outcomes
Persuasion
Information is given briefly and directly. “Fair” fist offers are more typical
Most important step; high first offers with long explanations and in-depth clarifications
Task-Related Exchange of Information
Relatively shorter periods are typical
Considerable time and expense devoted to such efforts it the practice
Nontask Sounding
AmericansJapanese
Case 1.1 IKEA
DISCUSSION QUESTIONS
1. What are IKEA's firm-specific advantages? Country-specific advantages?
2. What are the cultural factors which make expansion abroad in retailing difficult? What has made it possible in IKEA's case?
3. Describe how IKEA'S expansion has re-energized mature markets around the world and changed the competitive situation.
4. What could be the cultural reasons for IKEA's problems with store managers and employees in North America?
5. How does the TV advertising campaign initiated by IKEA overcome the entry barrier of high advertising expenditures?
24
Weekly Programme
Objective Topics Readings
WEEK 1: Introduction: Fundamentals of International Marketing
WEEK 2: Market Entry Options
Discuss impoact of entry barriers on the choice of an entry mode
Foreign Entry Research
Export, Licensing, Joint Ventures, Foreign Direct Investment
Text: Chapter 4-6Case 2.1: Daloon A/SCase 2.3: Illycaffee Company
WEEK 3: Local Marketing
WEEK 4: Global Marketing (I) Brand and Product Strategies
WEEK 5: Global Marketing (II) Price, Distribution and Advertising Strategies
WEEK 6: Salesforce Management and Marketing Organisation
1
Master of Business AdministrationInternational Marketing
Paper 488914
Part 2Market Entry Options
Lecturer ProfileProf Dr Mike Hoffmeister
Academic
Since August 2003• Professor for International Business at the
University of Applied Sciences Braunschweig/ Wolfenbuettel, Campus Wolfsburg, Germany
Since 2000 MBA Lecturing Experience• KIMS Kassel International Management School,
Germany (Sales Management)
PhD at University of Kassel, Germany• subject: Multi-Franchising in Car Retailing
1986 – 1992 Business Studies• Studied Marketing and Distribution at the University
of Muenster, Germany• Internships at Banks and Advertising agencies in
New York, San Francisco, Hong Kong and South Africa
Business
1992 – 2003 Volkswagen AG • Head of Sales People Development and Training
for the Volkswagen Brand in Germany• Area Sales Manager for the Arabian Gulf States• Marketing Consultant for Brand Management and
Dealer Network Strategy• Trainee at dealership in the USA• Member of the Automotive Committee for Sales
People Development of the Automotive Industry in Germany
1983 – 1986 • 2.5 year apprenticeship at Volksbank Wolfsburg• Soldier in German Army
Contact• Tel +49-5361-831533, 831501• Mail: [email protected]• Robert-Koch-Platz 10-14, 38440 Wolfsburg,
Germany
2
Wolfsburg
Wolfsburg
Hamburg
Berlin
Amsterdam
PragueFrankfurt
Munic
Wolfsburg
3
German Unification
Weekly Programme
Objective Topics Readings
WEEK 1: Introduction: Fundamentals of International Marketing
WEEK 2: Market Entry OptionsDiscuss impact of entry barriers on the choice of an entry mode
Foreign Entry Research
Export, Licensing, Joint Ventures, Foreign Direct Investment
Text: Chapter 4-6Case 2.1: Daloon A/SCase 2.3: Illycaffee Co
WEEK 3: Local Marketing
WEEK 4: Global Marketing (I) Brand and Product Strategies
WEEK 5: Global Marketing (II) Price, Distribution and Advertising Strategies
WEEK 6: Salesforce Management and Marketing Organisation
4
Research topics
Entering new markets abroad requires information about
• Political environment
• Physical environment
• Sociocultural environment
• Economic environment
• Regulatory environment
Political risk factors
Level 1: General Instability• Revolution, external aggression
Level 2: Expropriation• Nationalisation, contract revocation
Level 3: Operations• Import restrictions, local content rules, taxes, export requirements
Level 4: Finance• Repatriation restrictions, exchange rates
5
Unclear legal systems
0 20 40 60 80 100
Singapore
USA
UK
Japan
Brasil
Thailand
Kenyo
Indonesia
Russia
China
Source: Economist, March 3, 2001, p. 100
Top
3se
lect
ed
Lack of transparency; unclear legal systems
Contracts in China
Germany• Official check of
credibility• Written Contract• End of negotiation process• Defines mutual rights and
commitments• Written = commitments
China• No tradition for written
contracts; courts have no power; judges are not independent and have to execute orders
• Rely on personal references • Shows mutual interest / relationship• Start of co-operation• Defines mutual purpose• No lasting regulation for future• A good and trustful co-operation
implies that under new circumstancesthe contract can be newly negotiatedand adopted
Personal relationships are more important than written contractsie Hongkong: in 1996, 1/3 of all sub-contracts of companies are based on verbal commitments
6
Piracy/ Counterfeiting in China
Personal-care product companies such as Henkel and Procter and Gamble estimate that about 25% of the goods bearing their names in China are fake
Pfizer started selling Viagra in China in July 2000• By end of the year, 3 local producers introduced a cheaper version of
the pill
• Within the next 90 days another 30 companies followed
Source: Kotler, Marketing Management: An Asian Perspective
McDonald´s in China
First McDonald´s restaurant opened in Beijing downtown in 1992; 20 year lease contract
Became then the largest McDonald´s in the world within two years
In 1994 the Beijing city government abruptly informed McDonald´s that the location would be needed for commercial complex and that McDonald´s had to move
McDonald´s took the Beijing City Government to court but lost
Source: Kotler, Marketing Management: An Asian Perspective
7
Gillette Razor Blade in China
The Huaxing Razor Blade Factory was producing Gillette look-alike razor blades and sold them in the same packaging
Chinese authorities fined that company US$ 3,500 and told management to stop
Five months later, the company still produced those razor blades
Chinese authorities fined that company again (US$ 3,300)
Huaxing Razor Blade Factory argued it did not want to throw away already produced material
Source: Kotler, Marketing Management: An Asian Perspective
Coca Cola in India
1977 the Indian government decreed that the secret formula for the cola and 60% of the equity of its Indian subsidiary must be transferred to local nationals
• Reasons: Indian government wanted to control manufacturing and to stop the outflow of foreign exchange
Coca-Cola deceided to withdraw from India rather than jeopardize their firm-specific advantages, giving the secret formula to domestic imitators1990’s: Liberalisation in India
• Less-restrictive investment conditions
Coca-Cola returned to India in 1993
8
Israel boycott listwww.inminds.co.uk/boycott-faq.html
Israel boycott listwww.inminds.co.uk/boycott-faq.html
9
Israel boycott listwww.inminds.co.uk/boycott-faq.html
Quoted/Source www.inminds.co.uk/boycott-faq.html• “McDonalds is a "major corporate partner" of the Jewish United Fund. In its own
words, the Jewish United Fund "works to maintain American military, economic and diplomatic support for Israel; monitors and, when necessary, responds to media coverage of Israel." Also, McDonalds chairman and CEO Jack M. Greenberg is a honorary director of the American-Israel Chamber of Commerce and Industry”.
• “McDonalds has 80 resturants in israel, providing employment to 3000 israelis.”• “McDonalds has just announced it is closing down its operation in the middle east
due to loss of revenue as a direct result of the boycott (Oct 2002), and is replacing Greenberg as its chairman and CEO (Dec 2002). Since the launch of the boycott campaign, two of Jordan's six McDonald's franchises have closed due to lack of business. In Egypt, McDonald's decided to change its brand name to Manfoods this past March, in an attempt to dodge the boycott. It had no effect and Egyptian police forces were ordered to guard the entrances to McDonald's restaurants, after stone throwing incidents took place. A total of 175 restaurants will be closed at a loss of $350 million.”
Product reliability in the USAThe McDonald's Hot Coffee Case
A woman spilled hot coffee on herself while driving. She had purchased the coffee at the drive-through window of a McDonald's Restaurant. She sued McDonald's for compensation for her injuries (about $11,000) and was awarded nearly $3 million in compensatory and punitive damages by a New Mexico jury.
• Stella Liebeck, 79, purchased the coffee and while driving her car, placed the coffee cup between her legs and tried to remove the lid. The cup spilled and coffee ran into her lap. Wearing a sweatsuit and sitting in a bucket seat, she received second- and third-degree burns across her buttocks, thighs, and labia.
• After the spill, Liebeck spent seven days in the hospital and three weeks recuperating at home with her daughter in attendance. This was followed by skin grafts. During this period, she lost 20 pounds—to 83 pounds—almost 20% of her body weight.
• Liebeck wrote to McDonald’s and asked them to turn down the coffee temperature, which was set at 170 degrees. She also asked for her out-of-pocket medical expenses of about $2,000 plus the lost wages of her daughter. McDonald’s offered $800. She sued, asking for no less than $100,000 in compensatory damages, including pain and suffering, and triple punitive damages. Just before trial, she offered to settle for $300,000, but McDonald’s rejected the offer.
10
Impact of Media in the USAAudi and the 60 Minutes Show
When 60 Minutes did the "expose" on Audi 5000 sedan's "sudden acceleration" problems that supposedly caused accidents. This caused sales of Audi to slip until they redesigned the model and called it a different name.
Foreign market entry barriers
Barriers• Primarly, to protect domestic
business agianst foreign competitors
Cost• inefficiency creates higher prices
for consumers• Gatekeepers hold the key to the
market and have a chance to profit from a monopolistic position
Tariff barriers• Customs• Tax • Quotas for imports
Nontariff barriers• Slow customs procedures• Special product tests for imports• Bureaucratic inertia in processing
import licenses
11
Impact of Barriers
By lobbying home or host governments When the imported product has a certain level of “local content”or when imports involve production for reexportEstablishing manufacturing in a member country in the regional group; the firm can then export to the market country in the region at lower tariff rates from the transplant operation inside the regionGovernment Regulations: company may need a native partner who can carry out negotiations with government authorities and local regulatorsdifficulty to get members of the distribution channels to carry the firm’s product
Foreign Entry Research
Globalisation• research firms expand abroad and beome multi-national as well• Such as
- AC Nielsen in the USA- Taylor Nelson Sofres in the UK- GfK in Germany
• The internet aggregators: cheaper, better, faster- Profound.com- AllNetResearch.com
12
AC Nielsen in the USA
ACNielsen is the world's leading marketing information company. 21,000 employees worldwide Offering services in more than 100 countriesACNielsen provides market research, information, analysis and insights to the consumer products and service industries.
Macrosegmentation
Grouping countries on the basis of common characteristics deemd to be important for marketing purposesExamples
• Trade blocs- EU, NAFTA, ASEAN, …
• Geographical regions- Southeast Asia, Oceania,
Middle East, Western Europe, …
• Customer behavior- Lifestyle segmentation
13
Lifestyle Segmentation of the EU Consumer
A study covering France, Germany, Italy and the UK identified eight groups:
• Upper conservative Traditional mainstream Traditional working class Modern mainstream Trendsetter Avantgarde Socially concerned Underprivileged
Another broader-based European study produced sixteen so-called Euro-styles:
• Citizens Moralists Ultra-conservatives Underprivileged Intellectuels Pioneers Puritans Tolerants Suburbanites Yuppies Prudents Dandies Rockers Romantics Prudents Vigilantes
The RISC Organization in Geneva offers a continuous measurement of trends. Their research has produced six Euro-types:
• Traditionalists Homebodies Pleasurists Strivers Trendsetters Rationalists
www.languages.dk/marketing/lifestyle_segmentation_of_europe.htm
Foreign Market Entry Modes
Amount of commitment, risk, control and profit potential
Exporting Licensing StrategicAlliance
ForeignDirect
Investment
14
Foreign Market Entry ModesExporting
Indirect Exporting• Export management companies work with independent
agents which operate for the firm in overseas markets, going to fairs, and contacting distributors
• Pro- firm avoids the overhead costs and administrative burden
involved in managing their own export affairs- Less risk- Economies of scale effects (location economies) at home/
learning curve- High transport cost
• Con- skills and know-how developed through experiences
abroad are accumulated outside the firm, not in it
Direct Exporting• Pro
- The firm is able to more directly influence the marketing effort in the foreign market
Exporting Licensing StrategicAlliance
ForeignDirect
Investment
Hom
e market
Export market
Export Company
Agent
Agent
indirect direct
Foreign Market Entry ModesLicensing
The licensor licenses a foreign company to use a
• manufacturing process• Trademark• Patent• trade secret or other item of value
for a fee
Variations• Manufacturing contract• Management contract• Franchising
pro• The need for market research is
reduced • The licensee may support the
product strongly in the new marketCon
• Lack of tight control over manufacturing and marketing
• Less economies of scale/ learning curve effects in home country
• Less profit (taken by licensee)• Limits the ability to move
budgets/profits across countries in order to support competitive attacs on others
• Loss of technology know how
Exporting Licensing StrategicAlliance
ForeignDirect
Investment
15
Foreign Market Entry ModesLicensing: Franchising
Franchising• More complete form of licensing• Franchiser offers a franchisee a
complete brand concept and operating system
• Longer-term commitment• Franchiser often assists the
franchisee to run the business
pro• Marketing concept is
defined in detail • Quicker international
expansion possible• The local franchisee raises
the necessary capital and manages the franchise
con• Careful and continuous
quality control is necessary
Exporting Licensing StrategicAlliance
ForeignDirect
Investment
Franchising
Foreign Market Entry ModesStrategic Alliance
Strategic Alliances• Partnership• Formal or informal arrangement
between two or more companies; sometimes competitors, across borders
• Exchange or share value activities- R&D- Manufacturing- Marketing- Distribution
Distribution Alliances• Also called “piggybacking”, “consortium
marketing”• STAR Alliance
- United Airlines, Lufthansa, Air Canada, SAS, Thai Airways, China Air, and Varig Brazilian Airlines
Advantages• Improved capacity load• Wider product line• Inexpensive access to a market• Quick access to a market• Assets are complimentary• Each partner can concentrate on what
they do best
Disadvantages• Time arrangement can limit growth for
the partners• Can hinder learning more about the
market, creating obstacles to further inroads
Exporting LicensingStrategicAlliance
ForeignDirect
Investment
16
Foreign Market Entry ModesStrategic Alliance: Joint Venture
Joint Venture• Foreign investors join with local investors to
create a joint venture• Common business objectives• Share ownership and control• Involve capital investments• Creation of new corporate unit• Partners
- High net-worth families- Relatively small companies in the same
business- Large companies- Government or government-linked companies
Pro• Benefits from local partners knowledge
of host countries • Sharing development costs and risk
Con• Knowhow transfer to partner• Difficult to manage (common goals,
visions) especially when various cultures are involved
• Limited economies of scale• Limited ability to coordinate
international strategy against competitors
Exporting LicensingStrategicAlliance
ForeignDirect
Investment
Joint Venture
Foreign Market Entry ModesForeign Direct Investment
Direct ownership of foreign-based assembly or manufacturing facilities
Pro• Cost economies in form of cheaper labor or raw
materials• Foreign government incentives• Better image in host market because it creates jobs• Deeper relationship with government, customers,
local suppliers and distributors• Full control over the investment (manufacturing and
marketing)• Reduces risk of know how transfer to competitors (ie
Joint Venture)
Cons• Large investment• Blocked or devalued currencies• Expensive to exit (reduce or close operations
Exporting Licensing StrategicAlliance
ForeignDirect
Investment
17
Internationalisation stages
Stage 1: Indirect exporting, licensing
Stage 2: direct export, via independent distributor
Stage 3: establishing foreign sales subsidiary
Stage 4: local assembly
Stage 5: foreign production
Export Expansion Strategy
Waterfall Strategy• The firm gradually moves into overseas
markets- Advantages of this strategy are that expansion
can take place in an orderly manner and it is relatively less demanding in terms of resource requirements
- Disadvantage of this strategy it may be too slow in fast-moving market
Sprinkler Strategy• The firm tries to enter several country markets
simultaneously or within a limited period of time- Advantages of this strategy are that it is a much
quicker way to market penetration across the globe and it generates first-mover advantages
- Disadvantage of this strategy is the amount of managerial, financial, and other resources required
Waterfall Strategyhome
host
host
host
Sprinkler Strategy
home
hosthosthost
18
Case 2.1 Daloon A/S
DISCUSSION QUESTIONS:• What are the firm-specific advantages of
Daloon over its competitors? The country-specific advantages? Any disadvantages?
• Why was the German market so difficult for Daloon to enter? What was required to make entry successful?
• How well did Daloon adapt its marketing organization to the requirements in the German market? How did Daloon try to create a strong relationship with and loyalty among its customers?
• How did Daloon gain McDonald's Germany as a customer? How is Daloon leveraging this foothold into becoming a supplier for McDonald's in other European countries?
Case 2.3 Illycaffee Company
DISCUSSION QUESTIONS:1. What created the problems
with the existing distribution strategy in the German market? Was the distribution alliance with Hag ill-advised?
2. To what extent do you think the pan-European strategy shift well-founded? For example, one question is whether the espresso market is global or multi-domestic.
3. What would be your recommendation to Mr. Illy?
19
Weekly Programme
Objective Topics Readings
WEEK 1: Introduction: Fundamentals of International Marketing
WEEK 2: Market Entry Options
WEEK 3: Local Marketing
Discuss how to create and implement local marketing activities
Segmentation
Mature Markets
New Growth Markets
Emerging Markets
Text: Chapter 7-10Case 3.2: Levi Strauss Japan KK
WEEK 4: Global Marketing (I) Brand and Product Strategies
WEEK 5: Global Marketing (II) Price, Distribution and Advertising Strategies
WEEK 6: Salesforce Management and Marketing Organisation
Assignment for International Marketing
Please write a profile on one of the mentioned companies with special regard to their international operations. Please consider the following:
• What are the company´s mission statements and objectives?• How has the company become international? Was it successful?• What is their international brand and product strategy?• What is the company´s philosophy concerning their employees and
leadership style in general and specifically for their sales force?
• BASF, Aldi, Carrefours, Walmart, K-Mart, Ikea, GAP, Toys R Us, McDonalds, Starbuck´s Coffee Shop, 7-Eleven, Subway, Walt Disney World, Ritz Carlton Hotel, Emirate Airlines, Lufthansa, Marriott, UPS, Siemens, Caterpillar, Xerox, BASF, Coca Cola, Unilever, Universial Studios, Harley Davidson, Dell Computers, McKinsey, Boston Consulting, Becks Bier, Fosters Beer
1
Master of Business AdministrationInternational Marketing
Paper 488914
Part 3Local Marketing
Weekly Programme
Objective Topics Readings
WEEK 1: Introduction: Fundamentals of International Marketing
WEEK 2: Market Entry Options
WEEK 3: Local Marketing
Discuss how to create and implement local marketing activities
Segmentation
Mature Markets
New Growth Markets
Emerging Markets
Text: Chapter 7-10Case 3.2: Levi Strauss Japan KK
WEEK 4: Global Marketing (I) Brand and Product Strategies
WEEK 5: Global Marketing (II) Price, Distribution and Advertising Strategies
WEEK 6: Salesforce Management and Marketing Organisation
2
The beer market
Can Beer be an international, global
product?
Johanson, Page 225
The beer market
Corona• Became most popular imported beer in the US in 1999• Mexicans regard Corona as a relatively low-class beer• Targets two niche markets
- Mexicans living in the US- Young American beer drinkers, many of whom vacationed on Mexican
beaches• Export all over the world
Heineken• Available in 170 countries• Most international beer in the world
Germany• Over 3.500 beer brands
Johanson, Page 225
3
Local Microsegmentation
Segmentation Criteria• Economic
- the most basic local segmentation criterion is still economic development
• Demographic- the age and family structure in different countries
play an important role in determining global segments
• Culture- people care about their identify even though a lot
has been said in the media about the emergence of global segments of people
• Benefits- the most clearcut segmentation criteria are those
which focus on the benefits sought• Lifestyle
- consumers start developing their own lifestyle with buying behavior involving more than simple necessities
Segmentation and Positioning
Local market segment
Positioning
Universalthe same
across countries
UniformThe same
accross countries
AdaptedDiffers from
country to country
VolvoPampers
Levi´sHonda
NikeYoung boys and aspiring athletics
IkeaMobile phones
UniqueDiffers from
country to country
4
Local Marketing in Mature Markets
Local marketing in • mature markets• new growth markets• emerging markets
Mature markets• Show slow growth apart from some high-technology markets. The
customers in these mature markets are pampered by strong domestic and global companies who compete intensely for customer satisfaction
New growth markets• Show greater purchasing power and more demanding consumers than
emerging markets. Possess a rapidly developing marketing infrastructure
Emerging markets• Characterized by low levels of product penetration, weakly established
marketing infrastructure, relatively unsophisticated consumers with weak purchasing power, and weak domestic competitors
Three Local Marketing Environments
5
Value StatusAffordablePricing
adaptedAdvancedBasicProduct design
wideLimitedLowProduct range
Compete for shareParticipation in growth
Market developmentStrategic focus
In store promotionStrong WeakDistribution
Low MediumHighPolitical risk
Saturated StrongEmbryonicConsumer markets
Strong StrongWeakForeign competition
Strong Getting strongerWeakDomestic competition
Low MediumHighBarriers
Mature New growthEmerging
Three Local Marketing Environments
Local Marketing in Mature Markets
Local marketing in • mature markets• new growth markets• emerging markets
Mature markets• Show slow growth apart from
some high-technology markets. The customers in these mature markets are pampered by strong domestic and global companies who compete intensely for customer satisfaction
6
Ultra-Heat-Treated Milk
Ultra-Heat-Treated Milk requires no refrigeration
US• Large refrigerators, therefore buy milk by gallon or half-gallon• Prefere cold and fresh milk (= healthy)• Assume technologically sophisticated food must be artificial• Not well accepted
EU• Little room in their refrigerators and pantries prefere small cartons• More accepted
Mature Markets
Competition • In many mature markets intense competition has produced a
management focus on customer satisfaction• There exists a need to make sure that existing customers will stay loyal
Two factors make customers satisfied in mature markets- Product quality including functional performance factors
• Emotional factors or a matter of pleasing the customer
Segmentation• customers are increasingly particular with well-developed preferences• The fragmentation of mature markets presents an opportunity that there
will often be a part of the market that has yet to find the kind of product desired
7
Marketing Mix in Mature Markets
Product Policies• Many Third World countries tend toward selling a low-cost “me-too” product in a mature market
- A “me-too” product is basically a copy of another product, often with simpler features and at a lower price• The global marketer introducing a new kind of product to a local market has the advantage of little
or no competition
Pricing• In mature markets it is common to think of pricing in terms of selecting a target position and then
using temporary deals and offers to attract customers in the short term
Distribution• In mature markets, the distribution system is usually well developed• One distribution strategy is “piggybacking”
- An existing network controlled by another company, often a potential competitor, in which the product is distributed through contracting with the competitor to move products on a fee or commission basis
Promotion• In many mature markets where market share is the criterion of success s
- Sales promotions are used to break the habitual choice of the loyal customer
Pan-European MarketingEurope becoming a very large single marketApproaching 400 million consumers Single currency (EURO €)15 members
• Belgium, Germany, France, Italy, Luxembourg, Netherlands. Denmark, Ireland, United Kingdom, Greece, Spain, Portugal, Austria, Finland, Sweden
New members in May 2004• Cyprus, the Czech Republic,
Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic, and Slovenia
• Negotiation process- Bulgaria, Romania , Turkey.
8
Pan-European Marketing
Competition• The integration forced large European corporations to start
coordinating previously independent national operations• For smaller European companies and even the many large firms,
the threat from these foreign entrants has been met by the creations of larger and stronger companies
• At the corporate level, there seems to be only one strategic response possible for European firms: Get bigger and go pan-European
Product Positioning• There are very few products today that can maintain different
images in different countries of Europe• In pan-European marketing, product positioning is the same across
countries
Pan-European Marketing-Mix
Product Policies• The marketing mixes of the European marketers have moved toward uniformity as the
pan-European strategies are implemented• Most packaged goods in Europe feature packaging in at least four languages: English,
French, German, and Spanish
Pricing• Pan-European pricing is a particularly complicated issue • As the single euro currency is introduced and companies have to set a common euro
price throughout the region• Price differentials on the same product and brand in different countries are being
minimized to avoid inducing customers to buy in a neighboring country
Distribution• Retail and wholesale distribution is gradually being transformed from locally based
smaller units to large integrated organizations resembling those common in North America
Promotion• There is increasing use of pan-European TV advertising, taking advantage of the
satellites beamed across previously closed borders
9
Regional Trade Agreements• The 1994 NAFTA agreement has created increased
exchange between- Canada- the U.S.- Mexico
Background• Ethnic Diversity
- A fundamental cultural factor is the region’s ethnic diversity
• Religion- In North America, church and state are
separated by law• Decentralization
- In North American, firms are spread all over the world and even into small towns
Marketing in North America
Marketing in North America
Competition• The U.S. is one of the most competitive markets in
the world
Market Segmentation• For segmentation purposes cultural identity can
serve as a useful criterion
Product Positioning• When positioning in the U.S., premium is placed on
direct and straightforward explanations• The Canadian approach treats differences in
cultural norms with more sensitivity and more soft sell
10
Marketing-Mix in North America
Product Policies• Market size, affluence, and diversity have meant that the
North American market offers a dizzying array of choices of product and services
Pricing• The attractiveness of the North American market has
made it a very competitive arena for many domestic and foreign producers
Distribution• The great size of the North American continent and the
wide spread of its people seems to be the main cause for a very efficient distribution system in the U.S.
Promotion• North American communications media are similar to
media elsewhere, but the use of advertising and commercials is greater in North America
Increased Credit Use in the USA
Source: www. Economy.com
• More and more consumers are fueling their affluent lifestyles with credit that is easily available, and accepted, as a normal way of life in the United States.
11
Local Marketing in Growth Markets
Local marketing in • mature markets• new growth markets• emerging markets
New growth markets• Show greater purchasing power
and more demanding consumers than emerging markets. Possess a rapidly developing marketing infrastructure
Growth Markets
Two Kinds of Markets• Markets that are relatively rich in natural raw materials• Markets that have turned toward Western-style capitalism more recently, with the
help of foreign direct investment
The Role of Trade Blocs• Membership in trade blocs plays a very important role for two reasons
- It makes the country more attractive to foreign investors- It creates an trading region with an enlarged market potential
Market Segmentation• New growth markets are in the growth phase of the PLC• Market segmentation in these countries differs from that in the developing
countries primarily in the degree to which a core middle class is developed
Product Positioning• In new growth markets it is easy to observe the attention given to well-known
brand names
12
Marketing-Mix in Growth Markets
Marketing Tactics• Product
- Basic localization to make sure the product functions well is necessary in these markets, and customers can be as demanding as elsewhere
• Pricing- Pricing is important but can largely reflect the same considerations as in the
advanced markets—demand, costs, competitive conditions• Distribution
- Distribution is very important and warrants larger margins and more support services than elsewhere
• Promotion- Promotional support, tie-ins with local representatives, and an open mind in
regard to trusting locals will be more justified in the future
Megatrends in Asia
From Government driven to market-driven economies
From villages to supercities
From agricultural society to information age
From labor-intensive to high-technology instustries
From west to east, as Asia becomes the center of the world
Source: John Naisbitt, Megatrends Asia, 1995)
13
Population in New Asian Growth Markets(year 2000, in millions)
1260
1003
211127
47 22
282
82
0
200
400
600
800
1000
1200
1400
ChinaIndia
Indonesia
Japan
South Korea
Taiwan USA
German
y
GDP in New Asian Growth Markets(year 2000, US$bill)
1100474 153
4800
457 310
9870
1900
0
2000
4000
6000
8000
10000
ChinaIndia
Indonesia
Japan
South Korea
Taiwan USA
German
y
14
Marketing in the New Asian Growth Markets
Market Environment• Several of these countries are ethnically homogeneous while others are populated by
several racial groups
Regional Trade Agreements• The Association of South East Asian Nations (ASEAN) was created in 1967• APEC (Asia-Pacific Economic Cooperation) is a large association that spans both sides
of the Pacific • In 1992, ASEAN countries met to formalize a far-reaching trade agreement forming the
ASEAN Free Trade Area (AFTA)
Market Segmentation• The economic upswing in the Asian high-growth markets has led to the emergence of a
significant middle class in Thailand known as the “have somes”• However justified from an economic perspective, avoiding the rural areas where people
tend to be less well off can create some political problems
Product Positioning• The Asian markets’ desire for global identification has made many multinationals with
more mundane products use global standardization in their positioning strategies
Marketing-Mix in the New Asian Growth Markets
Product• Policies: The emphasis on these markets as followers of global mature markets
makes standardized product policies natural• Design: The Asian consumer is generally more eager to achieve “a harmonious
whole” than Western individuals• New Products: The buyers in Asian markets are basically eager to get access to
the products they see available in mature foreign markets
Pricing• In Asia as elsewhere, the global marketer faces a choice between a high
skimming price strategy and a lower penetration price strategy
Distribution• Many observers agree that the most visible sign of economic growth in the Asian
markets is the dynamism of the urban retail sector
Promotion• By and large the promotional strategies employed by multinationals in Asian
markets have been only minimally adapted from elsewhere
15
Local Marketing in Emerging Markets
Local marketing in • mature market• new growth markets• emerging markets
Emerging markets• Characterized by low levels of
product penetration, weakly established marketing infrastructure, relatively unsophisticated consumers with weak purchasing power, and weak domestic competitors
Local Marketing in Emerging Markets
The macroenvironment in the typical developing market is characterized by uncertainty
Consumer needs tend to be basic and easy to identify
Market Segmentation• In these markets, income level represents the basic segmentation
criterion- Effective income measures are defined in terms of access to convertible
currency
16
Marketing-Mix in Emerging Markets
Product Positioning• product policy a key issue• Customer needs tend to be basic and domestic alternatives weak
Pricing• The balance between affordability and upper-end positioning• The lack of purchasing power means that the marketer often must find
ways of offering a simpler product
Distribution• Unless effective ways of distributing the product can be found or
created, market entries might be thwarted and economic growth of the developing countries will not take off
Promotion• Promotion in developing markets is initially limited because of lack of
broadcast media
Marketing in China
China has a population of 1.2 billion people which is the largest in the world
• With its underlying strength in natural resources and able and disciplined worker the Chinese economy has so far been relatively untouched by the Asian Crisis
• Despite the size and potential of the Chinese market its fast-growing purchasing power is still low
• Market Segmentation- Geographic region- Urban/rural split in the typical emerging market pattern
• Product Positioning- The China market is open for global brands and
standardized campaigns
17
Entry Barriers in China
Import License Controls• The Ministry of Foreign Trade and Economic
Cooperation (MOFTEC)
Protective Tariffs• With the entry into the WTO, the government
has promised to continue tariff reductions to meet the level of the other WTO members
Foreign Exchange Control• Foreign exchange is controlled by the State
Administration of Foreign Exchange Control
Foreign Trading Companies• With ongoing reform, and WTO entry, the
government-controlled trading companies have lost their monopoly
Marketing in China
Product Policies• Chinese consumer buy foreign products
because of no availability of similar products and the superior quality of foreign products
Pricing• Most Chinese customers are price-oriented
out of habit and are not willing to pay more for alleged superior quality
Distribution• Most distribution channels are controlled by
the government• Guanxi: Mutual good feeling and trust
Promotion • Strictly controlled by the government
18
Westernization of Chinese Consumers
Christmas shopping is becoming more important than Spring festival
Department stores use x-mas decoration like Santa Clauses, trees with lights, bells etc
Trend across all generations and social classes
Importance of Guanxi (good relations or connections)
“Guanxi seems to be the lifeblood of the Chinese business community, extending into politics and society. Without
guanxi one simply cannot get anything done … with guanxi anything seems possible”
(Davis/Leung/Wong, Benefits of Guanxi, in: IMM, 1989)
To overcome distrust among partners, Chinese develop family-like links, more extensively than almost any other nationFamily is a system of contacts rather than purely an emotional unit as in the WestIndividuals make decisions on the basis of family ties or social connections rather than objective issuesLong-term not short-term phenomenonRequirements for Guanxi
• Each party is fully committed to each other
• Honor your obligationsSource: Tang/Reisch; Erfolg in China-Geschäft
19
Cultural Differences
Present yourself Highlight yourself Be part of a groupSelf confident Enjoy respectBe dynamic and pushy Be helpful, co-operative
Discussion behaviour Offensive, direct Defensive, indirect, discreetInquisitive, active Hesitant, reactiveEngaged, emotional Relaxed, patientCollegial Respectful, distanced
Conflict management Confront conflicts IgnoreBe more specific GeneraliseDramatisize Relaxed attitideReject, deny Pull back;
no direct feedback Source: Tang/Reisch; Erfolg in China-Geschäft
The Automotive Industry in China
20
China … land of extremes
China … land of extremes
21
The automotive boom will bring problems
People living in metropolitan areas = 480 Mill (=EU + USA)
Only 1% of city residents own a car, though 32% intend to by one in the next 5 years
As a consequence• Pollution
• Traffic jams
• Cities get bigger and cars will be necessary to travel
Light Vehicle Sales in China So
urce
: J.D
. Pow
er &
Ass
ocia
tes;
in: w
ww
.aw
know
lege
.com
; Jun
e 20
03
0
1
2
3
4
5
6
1990 1992 1994 1996 1998 2000 2002 2003(est)
Mio Units
Over 1 mill passenger carsin 2002 and over 3 mill in 2008
2008(est)
2019(plan)
30Goal for 2019:Worldwide largest
car market
22
Key figures of the Chinese car market
Around 100 automotive manufacturers• Most produce less than 100.000 units pa
40 to 50 new models introduced in 2003 by foreign joint ventures
Intense price competition• Price declined by about 8% in 2003, following 7-8% in 2002
90% of car purchases are done by cash• China´s local consumer financing companies have yet to provide
sufficient and sophisticated lending services• Chance: new consumer groups can afford a car
Source: J.D. Power & Associates; in: www.awknowlege.com; June 2003
Taxi companies are key customers
Sales dominated by company (esp Taxi) and government customers; sales to private customers increase strongly
• Meanwhile over 50% private sales
23
Impact of World Trade Organisation
Opens the market and increases competition
Classical Management functions become more important• Marketing• Human Resources Management• Accounting
Local Production vs. Import• Less market entry barriers
Wholly Foreign Owned Enterprises versus Joint Ventures
Automotive impact• Less import tariffs from 80-100% to 25% by 2006• No import quotas by 2005
- Licensing law: a limited number of license plates are released every month, which must be bid on at monthly auctions (ie October 2002 3,200 plates for an average price of US$ 3,500)
• Independent sales without Chinese Partners• Foreign financial institutes are allowed to offer automotive financeSource: M. Taube, Universität Duisburg-Essen
Volkswagen´s investment into China
1984 Joint Venture Shanghai Volkswagen Automotive Ltd
• Sales 2002: 300.000 units• Employees 2000: 11.000 pers
1991 Joint Venture First Automotive Works Volkswagen Ltd
• Sales 2002: 210.000 units• Employees 2000: 7.000 pers
1978 first meetings of Volkswagen in ChinaToyota and General Motors were first choice partner of China; however, both decided not to invest at that stage
24
Challenges of co-operative internationalisation strategies in China
Market
Lack of efficient legal frameworkClosed market
• High tariffs• Import quotas• Chinese majority joint ventures • Increasing local-content
Management
Different business styles and valuesCorruptionBureaucracy Language problemsDifferent learning structuresDifficult to find skilled staff
Source: Mercado Solutions Asia Ltd. 2000; Bennett 1998, p. 190; Posth/ Bergmann 1995
Joint Ventures from a non-Chinese car manufacturer’s view
Pros• Market entry into
protected market• Lower tariffs• Contact to local
authorities
Cons• Long starting process• Difficult to manage and lead• Lack of skilled personnel• Must buy parts locally• Knowledge transfer• Difficult to control sales and service
network• Image of locally produced product• Danger of know-how transfer not only
from foreign joint-venture to chinese partner but also to other foreign investors
- FAW: Volkswagen, Toyota, Mazda- SAIC: Volkswagen, GM, Isuzu
25
Case 3.2 Levi Strauss Japan K.K.Selling Jeans in Japan
DISCUSSION QUESTIONS:1. What are the key success factors (KSFs) in the
Japanese marketplace?
2. To what extent do the Levi Strauss' FSAs and CSAs match the KSF's. How has Levi's been able to leverage its country-of-origin to become a leading brand? Can other American jeans do the same?
3. How would you explain the apparent success of LSJ's advertising campaign stressing American values in Japan?
4. List the pros and cons of the different distribution alterna-tives facing LSJ. Which one do you think has the best chance of succeeding?
5. Would you retain the premium positioning of Levi's in Japan? Why/Why not?
Weekly Programme
Objective Topics Readings
WEEK 1: Introduction: Fundamentals of International Marketing
WEEK 2: Market Entry Options
WEEK 3: Local Marketing
WEEK 4: Global Marketing (I) Brand and Product Strategies
Discuss the emergence of standardized global brand and product marketing strategies
Standardization
Brand Management
Product Strategy
Global Services
ext: Chapter 11-12
ase: Disney in France; in Hill, International Business
WEEK 5: Global Marketing (II) Price, Distribution and Advertising Strategies
WEEK 6: Salesforce Management and Marketing Organisation