Business Marketing
Strategies
for Global Markets
Chapter 8
Capturing Global Advantage

What are RDEs?

Why are they important?
Sources of Global Advantage

Three major types of advantages
• Cost advantages
• Market access advantages
• Capabilities advantages
Cost Advantages

20-40% savings in landed costs
• What are landed costs?

Lower Operating Costs
• Wage differences
• Business process outsourcing

Lower Capital Costs
• Capital and equipments costs
• 30% savings
• Hidden costs
Market Access Advantages

Access to Growing Markets
• China

Following customers
Capabilities Advantage

Gain knowledge and skills
• China and India

How does this help?
• Improve R&D
• Address unmet consumer needs
• Tailor products to local market
To Outsource or not to Outsource?

THAT is the question

To outsource:

To not outsource:
International Market Entry Options




Exporting
Contracting
Strategic Alliances
Joint Venture
Market Entry Options

Exporting
• Goods are produced ___________
• Sales are made through
__________________
• Lowest commitment and risk
• Disadvantages
Market Entry Options

Contracting
• Two types

Licensing
• What can be licensed?
• Advantages
• Disadvantages

Management contracts
• Turnkey operations
Market Entry Options

Strategic Alliances
• “Collaborations among partners
involving the commitment of capital and
management resources with the
objective of enhancing the partner’s
competitive positions.”
• Advantages
• Disadvantages
Market Entry Options

Joint Ventures
• Why?
• Advantages
• Disadvantages

Choosing a Mode of Entry
• Factors
Multidomestic v. Global

Multimdomestic

Global
International Strategy and the
Value Chain

Primary activities
• Upstream
• Downstream

Competitive Advantage
• Downstream
• Upstream


Coordination
Configuration
General Framework
1.
2.
3.
Build a Unique Competitive Position
Emphasize a Consistent Positioning
Strategy
Establish a Clear Home Base for
Business

What’s a home base?
• HP
4.
Leverage Product Line Home Bases
at Different Locations
General Framework
5.
Disperse Activities to Extend Home Base
Advantages



6.
Purchase from cost-effective vendors
Improve market access
Tap competitive advantages in other places
Coordinate and Integrate Dispersed
Activities




Establish clear global strategy
Develop info and accounting systems
Encourage personal relationships
Rely on incentive systems