8
Global Market
Participation
Learning Objectives
• List and describe the five reasons why firms
internationalize.
• Differentiate between born-global firms and other
companies.
• Explain the difference between a standalone attractive
market and a globally strategic one.
• Cite the advantages and disadvantages of targeting
developed countries, developing countries, or
transitional economies.
• List and describe the filters used for screening national
markets.
• Explain the pros and cons of choosing markets on the
basis of market similarity.
Chapter Overview
• Internationalizing marketing operations
• Geographic market choices
• Country selection
Internationalizing Marketing
Operations
Internationalization = a firm’s
expansion from its domestic market
to foreign markets
Internationalizing
• Opportunistic expansion
• Pursuing potential abroad
• Following customers abroad
Internationalizing (cont.)
• Exploiting different market growth rates
• Globalizing for defensive reasons
Born Globals
• Firms that recognize from inception that
their markets are global
• Especially true of high-tech start-ups
• Small percentage of firms
The Costs of Going Global
• Firms are internationalizing more
quickly than in the past
• But it takes TIME and MONEY
– Starbucks expanded internationally in 1996
– first profit 2004; 1650 international stores
= only 7% of revenue!
Stand-Alone Market
Attractiveness
• Factors
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–
–
–
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Market and target segment(s) size
Growth rate
Strength of competition
Market share potential
Government incentives
• Low taxes
• Incentives
Strategic Importance of
Markets
• Current and future battlegrounds
where global competitors engage
each other
• May not necessarily be attractive as a
stand alone market but strategically
important
Targeting Lead Markets
• Vary by industry
• Major R&D Sites
• Have demanding customers who push for
quality and innovation
• Examples:
– Plastics = Japan
– Italy = Textiles, Clothing
– France = Wine
Attractiveness of Developing
Markets
• Latin America, Africa, the Middle East
and parts of Asia
• Trade and investment liberalization
• Market growth may be higher
• Middle class growth
• Remittances enhance buying power
• Competition may be less intense
Challenges of Developing
Markets
• Political risk
• Economic risk – Big ups and downs;
volatility
• Some trade and investment restrictions
remain
• Middle class may still be small –
Predominated by small elite and large
impoverished classes
Country Selection
• Which particular country markets should
a firm enter?
• Each additional country demands
– More financial investment
– More management time and effort
Geographic Indicators
• Size of country, in terms of geographic
area
• Climatic conditions
• Topographical characteristics
Demographic Characteristics
• Total population
• Population growth
rate
• Age distribution of
the population
• Degree of population
density
Economic Characteristics
• Total gross national product
• Per-capita income (also income growth
rate)
• Personal or household disposable
income
• Income distribution
Other Criteria
• Political conditions
• Competition
• Market similarity
– The less the psychic distance the lower the
risk
– But similarities can be overestimated
• Canadian retailers in the USA
Selecting a Global Marketing
Strategy
• Global product category strategy
• Global segment strategy
• Global marketing mix strategies
– Fully integrated
– Partially integrated