CHAPTER 11
THE ASIA
PACIFIC REGION
Team #6
DYNAMIC GROWTH
IN THE ASIA PACIFIC REGION
1996 financial crisis in leading Asian
economies
•Tight monetary policy, appreciating dollar,
deceleration of exports all contributed to
downturn
Despite crash, Asia fastest growing region in
world
•Growth fastest for last three decades
•Prospects for continued growth are excellent
•Source of new products, technology, vast
consumer markets
©testing/Shutterstock
DYNAMIC GROWTH
IN THE ASIA PACIFIC REGION
The Greater China
•Two separate political units hat divided in
1949
•People’s Republic of China
•Taiwan or Republic of China
•Both claimed the other as its territory
•Politically difficult and militarily dangerous
dispute persists
•More direct trade between two in 21st century
•Helps ease the historical tension of East Asia
The People’s Republic of China
•Most important national market aside
from U.S.
•Dramatic
economic
and
social
changes in China
•Events in 2000 had profound effect on
China’s economy
•Admission to the World Trade
Organization
•U.S. granting permanent normal trade
relations to China (PNTR)
•Best thought of as group of regions, not
single country
•China’s diversity, size and political
organization makes this necessary
©testing/Shutterstock
DYNAMIC GROWTH
IN THE ASIA PACIFIC REGION
The People’s Republic of China continued
•China fast emerging as competitor in global
markets
•Must overcome issues to reach full potential
•Human rights and legal system major issues in
China
•Environmental decline associated with fast
growth
•Demographic disaster associated with one-child
policy
•Discrimination against those moving from rural to
urban areas
©testing/Shutterstock
FOREIGN DOMINANCE OF
AUTO INDUSTRY IN CHINA
China has been pressing bureaucrats to buy locally
branded cars. The market share of Chinese brands
has plummeted this century from more than 65
percent in 2000 to just 45 percent. European brands
garner about 20 percent of the market, Japanese 15
percent, American 11 percent, and Korean 8 percent.
Volkswagen (including its Audi luxury sedans,
pictured here parked outside the National Peoples
Congress) dominates the other foreign carmakers,
followed by Hyundai and Toyota. Almost all the
foreign companies are deeply involved in joint
ventures with Chinese partners.
©testing/Shutterstock
DYNAMIC GROWTH
IN THE ASIA PACIFIC REGION
Hong Kong
Ruled by British for 155 years;
reverted to China in 1997
Became special administrative
region (SAR) of PRC
Strong economy
Taiwan, the Republic of
China (ROC)
Mainland-Taiwanese
economic relations improving
Trade benefits both countries
DYNAMIC GROWTH
IN THE ASIA PACIFIC REGION
Japan
Economy growth in 70s and 80s
slowed abruptly in the 1990s
Four possible explanations
1. Faulty economic policies
2. Inept political apparatus
3. Disadvantages due to global
circumstances
4. Cultural inhibitions
Faulty economic policies
The political explanation
Global circumstances have
hurt
The cultural explanation
DYNAMIC GROWTH
IN THE ASIA PACIFIC REGION
India
Gained independence in 1950; had poor
economic growth
- Growth constrained by traditional insular policies
- Import substitutions and an aversion to free
markets
- Anti-business attitudes and widespread corruption
Now India has embarked on profound
transformation
- Many efforts to become active in global economy
- Information technology boom
- Many Indian companies expanding operations
abroad
©testing/Shutterstock
India
•Five-point agenda
->Improving the investment climate
->Developing a comprehensive WTO strategy
->Reforming agriculture, food processing, and
small-scale industry
->Eliminating red tape
->Instituting better corporate governance
•Difficult business environment
->High tariffs
->Inadequate protection of intellectual property
->Anti-business attitudes
->Widespread corruption and bribery
PROTECTIONISM
OF INDIAN INDUSTRY
Despite world-class scientists, the Indian
pharmaceutical industry (with its ownership
restrictions, price controls, and weak
intellectual property restrictions) does not
benefit from innovations and international
investments compared with more open
emerging economies such as China.
©testing/Shutterstock
THE FOUR
“ASIAN TIGERS”
•Hong Kong, South Korea, Singapore, and
Taiwan
- Fastest growing economies in region during
‘80s and ‘90s
- Often described as the “East Asian miracle”
- First countries to move from developing to
industrialized status
•Major influence in trade and economies of
world
- Expanding activity to other parts of Asia in
particular
©testing/Shutterstock
VIETNAM
•Economy and infrastructure damaged after
war
•Country is poised for significant growth
- Bilateral trade agreement with U.S. led to
NTR status
- U.S. tariffs on Vietnamese imports dropped
significantly
- Population of 91 million is educated and
highly motivated
- Government is committed to economic
growth
©testing/Shutterstock
ECONOMY DIVIDE
Here the great economic divide in
Vietnam is displayed: a bright red Ferrari
parked near a soccer pitch adjacent to
Haiphong Harbor in Vietnam where
autos of any sort remain scarce. Notice
the admiring motorbiker. At least he’s
not talking on a cell phone. The
prevalence of helmets suggests that
most follow the rules—though in the
countryside, not so much.
BOTTOM-OF-THE-PYRAMID MARKETS (BOPMS)
C.K. Prahalad introduced concept of BOPMs
•4 billion people live with annual income below $1,200
•Historically ignored consumer group
Perceived lack of resources (both money and technology)
Misconception about inappropriateness of products and services
typically developed for affluent consumers
•Markets now viewed as commercially viable
Industries can evolve with external support under certain conditions
BOTTOM-OF-THE-PYRAMID MARKETS (BOPMS)
ASIA PACIFIC TRADE ASSOCIATIONS
PREPARATION FOR NEXT ECONOMIC LEAP
01 Countries once dependent
on U.S. and European
markets
Growth driven by trade,
02 investment, technology,
and aided by others in
region
03 Trade agreements
ASEAN
ASEAN+3
APEC
ASIA PACIFIC TRADE ASSOCIATIONS
ASSOCIATION OF SOUTHEAST ASIAN NATIONS (ASEAN)
Had problems unifying economies of member nations
All members once had similar products and resources to export
Intra-ASEAN trade hampered; no demand for common products
Most early growth came from trade outside of ASEAN
Members now have fastest growing economies in region
Four causes of vigorous economic growth for members
Governments’ commitment to deregulation, liberalization, and
privatization of their economies.
Decision to shift economies from commodity based to
manufacturing based
Decision to specialize in manufacturing components in which they
have a comparative advantage
Japan’s emergence as a major provider of technology and capital.
ASIA PACIFIC TRADE ASSOCIATIONS
ASEAN+3
Created after Asian financial crisis of 1997-1998
East Asia felt let down when the West did not help
during crisis
Wanted to become more self-sufficient
ASEAN members plus China, Japan, and South Korea
Foreign and finance ministers from each
country
Meet after annual ASEAN meeting
Goal to protect Asian currency from future
attack
Talks of creating common market across all of
Asia
ASIA PACIFIC TRADE ASSOCIATIONS
ASIA-PACIFIC ECONOMIC COOPERATION
(APEC)
Formed in 1989
Includes all major economies around the Pacific Rim plus the U.S. and Canada
Provides formal structure for discussion of goals
Free and open trade and increased economic collaboration
Sustain regional growth and development
Strengthen multilateral trading system
Reduce barriers to investment and trade without detriment to other economies
SUPPLY CHAIN
SUPPLY CHAIN
For products using high-value and time-sensitive component parts
manufactured in Kuala Lumpur, Malaysia, the air express services, such as
provided by this DHL Worldwide Express Boeing 737, are vital.
A FOCUS ON DIVERSITY WITHIN CHINA
MUTUALLY COMPETITIVE, COMPLEMENTARY ECONOMIC
“ WARRING STATES ” IN CHINA
Among them are four unique regional economies
1. Northeast China: industrial heartland
2. Beijing-Tianjin IT corridor
3. Shanghai and the Yangtze River Delta
4. Pearl River Delta
Region-based strategic choices impact subsidiary performance in China
A FOCUS ON DIVERSITY WITHIN CHINA
EXHIBIT 11.7 A MAP OF GREATER CHINA
A FOCUS ON DIVERSITY WITHIN CHINA
NORTHEAST CHINA: LONGTIME INDUSTRIAL HEARTLAND
Includes Liaoning, Jilin, Heilongjiang
Industrial and technical center of country in 70s and 80s
Now not as dominant; great industrial growth in other regions
Caused by Chinese shift from communism toward more free-enterprise orientation
Proximity to industrial neighbors a regional advantage
Goods and ideas flow from Japan, South Korea, and Russia
A FOCUS ON DIVERSITY WITHIN CHINA
BEIJING-TIANJIN
Region of 35 million people
Hosts thousands of IT and high-tech companies
High quality of higher education
Central planning has made it a center of two
things
1. Politics
2. Research and development
A FOCUS ON DIVERSITY WITHIN CHINA
SHANGHAI AND THE YANGTZE RIVER DELTA
•Major industrial renaissance over past two decades
•Decline in textile and heavy manufacturing industries
•Increase in automobile and other high-tech industries
•Shanghai is a regional trade and financial center
•Aided by China’s economic growth and accession to the WTO
•Yangtze River Delta provides broad base of industries and economic resources
A FOCUS ON DIVERSITY WITHIN CHINA
PEARL RIVER DELTA
Includes very large cities, including Hong Kong
Shenzhen leads the economy of region
A boomtown bordering Hong Kong
China’s first Special Economic Zone, 1980
Population grew from 300,000 to 7 million
A manufacturing base for a wide range of industries
<-Click here to go to the video
Pres
s
CHINA’S ONECHILD POLICY
One-child policy began in
1980. Fearing the adverse
social effects of an ageing
population and a looming
shortage
of
working-age
people, In late 2015, the
authorities announced all
married couples could legally
have two children.
Source: The Guardian, nov.
15th, 2022
© Jason Lee / Reuters
A FOCUS ON DIVERSITY WITHIN CHINA
THE OTHER BILLION
Receive about 10 percent of central
government budget
->Amounts to less than $100 per person for roads,
water, power supplies, schools, and hospitals
Economic divide continues to widen
->Unrest in countryside flares up as economic
divide widens
Poor infrastructure causes challenges for
distributers
->Companies must become resourceful
In the 1950s, as a part of a nationalization
campaign, the government confiscated many
temples, churches and mosques for secular use.
Although restrictions on freedom of religion
continue, as economic freedom grows, so do
political freedoms, but at a slower pace.
Source: Pew research. August 30rd, 2023
(Peter Turnley/Getty Images)
RELIGIOUS
REFORMS
©testing/Shutterstock
DIFFERENCES IN BUSINESS NEGOTIATION
STYLES WITHIN THE GREATER CHINA
Northeastern negotiators
Beijing area
->Bureaucratic sloth, imperialist perspective, lack of creativity
Shanghai area
->Shrewd, outgoing, big talkers and spenders, creative thinkers
Fintastique
->Forthright, honest, and plainspoken
The Pearl River Delta
->Entrepreneurship and spontaneity, honest and forthright
Hong Kong
->Mostly bilingual, humility and indirection
Taiwan
->Conservative, autocratic decision-making style
REUTERS
Chinese market is huge and growing fast
with extreme differences in economic
well-being,
cultures,
and
political
structures across land
U.S. exports to China
->Industrial products and services more
desired; does not require as much
cultural nuance
->Consumer products require more indepth strategies and cultural knowledge
Robert Churchill
MARKETING OPPORTUNITIES
IN THE GREATER CHINA
STUDY CASE
COUNTERFEIT MOBILE PHONES IN SOUTHEAST ASIA
Recently, multiple wireless provider
stores in several Southeast Asian
countries have been fined and ordered
to restock their mobile phones. And
why is that? Because in Southeast
Asia, counterfeiting of mobile phones
occurs
frequently,
and
often
customers are unaware that they are
not purchasing “the real thing.”
©ferrantraite/Getty Images
NOMBRE DE LA
PLANTILLA: TEAL
MODERN BUSINESS
PRESENTATION
CHAPTER 12
GLOBAL MARKETING
MANAGEMENT PLANING
AND ORGANIZATION.
Team #6
12-1
How global marketing management differs from international
marketing management
12-2
The need for planning to achieve company goals
12-3
The important factors for each alternative market-entry strategy
12-4
The increasing importance of international strategic alliances
STANDARDIZATION VERSUS ADAPTATION
Global marketing standardization focuses on creating
a standardized plan of action across the board for
marketing your brand or product in various countries.
The ultimate goal is to achieve consistency and create
a global appeal to a brand and its standardized
products.
GLOBALIZATION VERSUS LOCALIZATION
Localization in global marketing focuses on creating
localized content in each region. It’s the process of
adapting all elements of your international marketing
to your target markets—from using different
languages to adapting your messaging, visuals and
campaigns. This helps ensure that your marketing
reflects the interests, needs and context of your target
audience in each region.
GLOBAL INTEGRATION VERSUS LOCAL
RESPONSIVENESS
Global integration is the degree to
which the company is able to use the
same products and methods in other
countries. Local responsiveness is the
degree to which the company must
customize their products and
methods to meet conditions in other
countries.
MARKET SEGMENTATION
Finding most efficient method important
More so than standardization versus adaptation debate
Selecting segmentation variables
Best companies avoid just using country borders
Climate, language, media habits, income all important variables
Internet allows for more specific segmentation
BENEFITS OF GLOBAL MARKETING
Knowledge helps scale production and marketing efforts for
multinational businesses
Global diversity in marketing talent leads to new approaches across
markets
Improved coordination and integration of marketing allows for
transfer of knowledge across countries
Gives marketers access to toughest customers
Financial benefits from diversity of markets
PLANNING FOR
PLANNING FOR GLOBAL MARKETS
Planning
•Systemized way of relating to the future
•Manage impact of external, uncontrollable
factors
•Effects on firm’s strengths, weaknesses, and
objectives
•Formulation of goals and methods to achieve
them
•Commitment of resources to country market
•Allows for rapid growth of international function
PLANNING FOR GLOBAL MARKETS
CORPORATE PLANNING
Is the process of determining the long-term goals of a company and developing
plans to achieve them. It involves identifying company aspirations and goals and
putting plans in place to achieve those.
The process includes:
setting objectives
organizing the work
people and systems to enable those objectives to be achieved
motivating through the planning process and through the plans
measuring performance and so controlling progress of the plans
developing people through better decision-making, clearer objectives, more
involvement, and awareness of progress.
STRATEGIC PLANNING
Is a systematic long-range planning
activity that an organization uses to fix
priorities,
strengthen
operations,
ascertain objectives and focus on the
resources required and are to be
allocated in order to pursue the
strategy and attain the objectives.
That commonly embraces the
definition of strategic objectives,
short, medium and long-term goals
and broad plans to achieve them
Is the process of breaking down a strategic plan into smaller objectives
and goals.
It is used to:
define goals and determine how they will be achieved through actions and
steps.
helps define goals at multiple levels and can help break down long-term
strategic objectives into benchmarks that can be reached in smaller and
more focused projects.
COMPANY OBJECTIVES AND RESOURCES
Important to define objectives for
global success
Clarifies orientation of domestic and
international divisions
Permits consistent policies
Might not match foreign market
opportunities
Change the objectives
Alter the scale of international plans
Abandon foreign market
INTERNATIONAL COMMITMENT
International commitments are generally made public and create national and global
accountabilities for individual States and, in some cases, businesses. This enables national and
international stakeholders to follow up on the commitments made.
Required for successful international operations
Managers must determine willingness to commit
Invest finances and personnel for management
Determination to stay in market long enough for
profit
Planning impacts degree of commitment
Degree of commitment impacts strategies and
decisions
THE PLANNING PROCESS
Help to:
First-time foreign marketer
Determine products to develop and in which markets
Identify level of resource commitment
Already committed companies
Allocate effort and resources among countries and
products
Choose new market segments and products to develop and
old ones to abandon
Systematic process with four phases.
INTERNATIONAL
PLANNING
PROCESS
PLANNING FOR GLOBAL MARKETS
PHASE 1 PRELIMINARY ANALYSIS AND SCREENING
Analyze environment in which
02
company plans to operate
01 Evaluate potential of
foreign markets
03 Company and country needs must be
matched
PLANNING FOR GLOBAL MARKETS
PHASE 2 DEFINING TARGET MARKETS AND ADAPTING
MARKETING MIX ACCORDINGLY
01 Potential target markets
identified and analyzed
further
02
Marketing mix evaluated
in each target market
03 Analysis answers questions about
adaptation
Are there identifiable market segments that allow for common
marketing mix tactics across countries?
Which cultural/environmental adaptations are necessary for
successful acceptance of the marketing mix?
Will adaptation costs allow profitable market entry?
PLANNING FOR GLOBAL MARKETS
PHASE 3: DEVELOPING THE
MARKETING PLAN
1. Occurs once target market options are narrowed
2. Marketing plan developed for specific markets
•Begins with a situational analysis
•Culminates in selection of entry mode and specific
action program
•Establishes what is to be done, by whom, how, and
when
•Includes budgets and expectations for sales and
profits
3.After, company may decide to not enter market
•Plan may reveal that objectives and goals can’t be
met
PLANNING FOR GLOBAL MARKETS
PHASE 4: IMPLEMENTATION AND CONTROL
Planning process continues even after implementation
Evaluation and control system
•Requires performance-objective action
Utilizing a planning process and system
•Encourages consideration of all variables that impact success
•Provides basis for viewing all country markets and their
interrelationships as an integrated and global unit
ALTERNATIVE MARKET-ENTRY STRATEGIES
FOUR BROAD MODES OF FOREIGN MARKET ENTRY
Direct foreign
investment
Exporting
Market entry
Contractual
agreements
Strategic alliances
<-Click here to go to the video
ALTERNATIVE MARKET-ENTRY STRATEGIES
ALTERNATIVE MARKET-ENTRY STRATEGIES
EXPORTING
Direct exporting:
Company sells to customer in another country
Indirect exporting:
Company sells to importer or distributor in
another country
The Internet:
•IIM: International Internet Marketing
Direct sales:
•May involve establishing office in foreign country
•Particularly used for high-tech and big ticket
industrial products
ALTERNATIVE MARKET-ENTRY STRATEGIES
CONTRACTUAL
AGREEMENTS
Contractual agreements play a vital role in marketentry strategies, as they define the terms,
conditions, rights, and responsibilities of the parties
involved in the market entry.
Long-term association between companies
Nonequity; just a means to transfer
knowledge or skills.
Generally,
technology,
processes,
trademarks, skills
Two main categories
Licensing
Franchising
ALTERNATIVE MARKET-ENTRY STRATEGIES
LICENSING
Is a market-entry strategy that allows a company to
grant another party the rights to use its intellectual
property, such as patents, trademarks, copyrights,
or proprietary technology, in exchange for fees or
royalties.
Licensing can take various forms, including
technology licensing, brand licensing, or content
licensing, and it offers several advantages.
Overall, Licensing faces some considerations and
challenges.
ALTERNATIVE MARKET-ENTRY STRATEGIES
FRANCHISING
Franchising is a market-entry strategy used by
businesses to expand their operations into new
markets. It involves granting third-party
individuals or entities the rights to operate their
own businesses using the branding, products,
and business model of the parent company.
Franchising
offers
several
advantages,
although it faces some considerations and
challenges.
STRATEGIC INTERNATIONAL ALLIANCES
WHAT IS AN ISA?
Relationship established by two or more companies.
Cooperate out of mutual need, share risk in
achieving shared goal.
Firms enter SIAs for several reasons.
Opportunities for rapid expansion into new
markets
Access to new technology
More efficient production and innovation
Reduced marketing costs.
Strategic competitive moves
Access to additional sources of products and
capital
STRATEGIC INTERNATIONAL ALLIANCES
EXAMPLE
Star Alliance Strategic Alliance
In the Star Alliance strategic alliance, Lufthansa and
Thai Airlines shared several aspects of their
operations, including ticketing and reservations,
catering, cargo, and airport slots. As the global airline
industry continues to consolidate, more strategic
partnerships are being formed and others
disappearing.
The Impact of Star Alliance | #DEEPDIVE - YouTube
STRATEGIC INTERNATIONAL ALLIANCES
INTERNATIONAL JOINT VENTURES
Joint venture agreements outline the structure and
governance of a jointly owned entity by two or more
parties, often with shared ownership and decisionmaking.
Two or more companies create a separate legal
entity.
Acknowledged intent by partners to share in
management.
Between legally incorporated entities, not
individuals
Equity positions held by both partners.
STRATEGIC INTERNATIONAL ALLIANCES
CONSORTIA
•Developed to pool financial and managerial resources
•Helps to lessen risks
•Similar to joint ventures except for two things
1.Typically involve a large number of participants
2.Frequently operate in a country or market in which none of the participants is
currently active
STRATEGIC INTERNATIONAL ALLIANCES
DIRECT FOREIGN INVESTMENT
Reasons to invest in foreign country:
•Capitalize on low-cost labor
•Avoid high import taxes
•Reduce high costs of transportation to market
•Gain access to raw materials and technology
•Gain market entry
STRATEGIC INTERNATIONAL ALLIANCES
DIRECT FOREIGN INVESTMENT: FACTORS AFFECTING
STRUCTURE AND PERFORMANCE
•Timing; first movers have advantages but are more risky
•The growing complexity and contingencies of contracts
•Transaction cost structures
•Technology and knowledge transfer
•Degree of product differentiation
•Experiences and cultural diversity of acquired firms
•Advertising and reputation barriers
ORGANIZING FOR GLOBAL COMPETITION
STRUCTURE OF GLOBAL ORGANIZATIONS
*Devising standard is difficult; many variables
*Usually structured around one of three alternatives
1.- Global product divisions
2.- Geographical divisions
3.- A matrix organization consisting of either of these arrangements with
centralized sales and marketing run by a centralized functional staff, or a
combination of area operations and global product management
ORGANIZING FOR GLOBAL COMPETITION
LOCUS OF DECISION
•Major elements of organizational strategy
•Where decisions will be made
•Who will make the decision
•Which method will be used to make decision
•Management policy must be explicit about these elements
ORGANIZING FOR GLOBAL COMPETITION
CENTRALIZED ORGANIZATIONS
•Experts available at one location
•Ability to exercise high degree of control on both planning and implementation
phases
•Centralization of all records and information
ORGANIZING FOR GLOBAL COMPETITION
DECENTRALIZED ORGANIZATIONS
•Delegate responsibilities to regional managers
•Direct day-to-day contact with the market
•Lack of broad company view