Chapter 10
Global and Multi-Market
Strategies
John S. Hill

Global and Multi-Market Strategy Formulation topic layout
Global and Multi-Market Strategy
Formulation
Formulating Global &
Multi-Country Marketing
Strategies
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Defining the Core Business
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Strategy Internationalization
-Identifying Cross-National
Segments
-Speed of Internationalization
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Globalizing the International
Strategy
-Building Global Brand
Portfolios
-Building Global Brands
-Standardizing and Adapting
Marketing Strategies
Dealing with
Competitors
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Competitive
Strategies
-Global Rivalries
-Initiating
Competitive
Strategies
-Responding to
Global Rivals
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Cooperative
Strategies
-Global
Alliances
Global and
Multi-Market
Financial
Strategies
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Transfer Pricing
Issues
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Managing
Foreign Exchange
Risks
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Global Cash
Management
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Global & Multi-
Market Financial
Synergies
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Administering
Global Finances

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 Identifying and Developing Core Businesses
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Contribute significantly to corporate sales and profits
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Take full advantage of the technological and managerial resources available within corporations
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Have significant potential for development in world markets

Internationalizing the Core
Strategy
 Identifying Cross-
National Customer
Similarities: Global
Segmentation Criteria
 Speed of
Internationalization:
Single, Multi-country or
Global Expansion
Strategies

Internationalizing the Core
Strategy
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Identifying cross-national customer groupings with similar needs and who respond in similar fashions
Demographic Criteria:
Age segments: babies, children, teens, senior citizens
Occupational similarities: business, doctors, engineers, architects, teachers
Income-based segments: upper income, middle classes
Gender-based segments: women (and men)

Internationalizing the Core
Strategy
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Global Segmentation Criteria
Lifestyle-Psychographics Criteria
International sophisticates: above middle-income consumers with genuine interests in international products
Semi-sophisticates: middle and high-income consumers: know little about world affairs/foreign cultures but buy foreign products for status reasons
Provincial consumers: poor or wealthy, with few interests in international products or world events; often nationalistic
Global Segmentation Criteria: Product Features (product styling, performance, reliability) and Benefits (convenience, health, efficiency)

Internationalizing the Core
Strategy
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Global Segmentation Criteria
Market Similarities: Cultural, Political and Economic Catalysts to Global and Multi-country Segmentation
Trade Blocs, EU, NAFTA, and Mercosur: countries trade together and assimilate each other’s cultures (‘European’, ‘Latin American’)
Language similarities: often remnants from colonial eras (English,
French, Spanish, Arabic, German)
Religious similarities, Buddhism,
Confucianism and Taoism shaping Asia; Islam in the
Middle East

Internationalizing the Core
Strategy
 Speed of Internationalization: Single, Multi-country or Global Expansion Strategies
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Availability of corporate resources
Competitor strategies or likely reactions (first mover advantages; multi-market launches)
Corporate objectives (market dominance, follower strategies)
Importance of individual markets: key emerging markets
(India, China, Brazil)

Globalizing the International Strategy
 Advantages and
Disadvantages
 Building Global
Product Portfolios
 Creating Global Brands

Globalizing the International Strategy
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Simplify marketing task and reduce promotional costs
Enhances success rates of global product launches and gives products multi-country momentum
Good product ideas can gain first mover advantages
Take advantage of worldwide similarities among customers
Country reputations for product expertise can be leveraged worldwide

Globalizing the International Strategy
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Standardized products and images are not sensitive to cultural differences
Misfortunes accruing to global brands can reverberate across entire product ranges and tarnish corporate reputations on a region-wide (Coca Cola in
Europe) or worldwide scale (Nestle, Perrier)

Globalizing the International Strategy
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 Building Global Product Portfolios
 Four Strategies to Globalize Brand Portfolios
Consolidation from regional and national lines: Proctor &
Gamble in Europe and Asia
Buying and Selling Brands through Mergers and Acquisitions:
Unilever sold its Harmony hair care brand to EMVI
Building Global Brands through New Product Development:
Ford 2000 unified North American and European divisions
Building Global Product Portfolios Through Geographic
Extensions: McDonalds, KFC and Pizza Hut

Globalizing the International Strategy
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Products and brands: Key difference—brands are
‘covenants with the customer’; built up over time
Types of global brands
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Building global brand images
Creating brand personalities
Building trust and customer relationships
How global branding contributes to strategy
Brand associations and country of origin

Globalizing the International Strategy
 Creating Global Brands
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Corporate (or Organizational) brands, company reputations as centerpieces of global strategies.
Canon and Johnson & Johnson
Range Brands, collections of product lines brought together under business. General Electric (GE)
Product brands, contribute to and benefit from corporate and range branding strategies

Globalizing the International Strategy
 Creating Global Brands
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Sincerity: honest, wholesome
Excitement: sports cars, fashions
Competence: reliability, intelligence
Sophistication: upscale appeals
Ruggedness tough, masculine appeals

Globalizing the International Strategy
 Creating Global Brands
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Clubs and usage programs: airlines, wine clubs
Public relations program: video games and magazines
Product shows and event stores: Cadbury World,
Disney
Publicity stunts: Swatch
Event sponsorships: athletic events, football, rugby, tennis, golf, motor racing

Globalizing the International
Strategy
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 How Global Branding Contributes to Strategy
Branded components confer additional quality onto existing brands. ‘Intel Inside’
Flagship Brands “Silver Bullets”, star brands in the company’s global portfolio. Walkman for Sony
Global Brand Leverage, product extensions to add additional brands: Mercedes
Mega-brands, brand names are leveraged over entirely new business and product lines. Disney, Richard Branson’s
Virgin
Brand Associations and Country of Origin, Some countries acquire reputations for specific products, Scotch Whisky

Globalizing the International Strategy
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Creating Global Brands
Standardizing and Adapting Marketing Strategies (‘be global, act local’)
Product strategies some components easier to standardize than others (brand name, warranties, positioning)
Distribution worldwide has become streamlined with express mail services, the internet, and global retailers
Personal selling and sales management strategies have been harder to standardize globally
Pricing strategies are difficult to standardize globally because of factor price differences, transportation costs, and foreign exchange rate discrepancies
Advertising strategy standardization has been facilitated by the growth of global advertising agencies and global media

Dealing with Competitors: Global and Multi-Market
Competitive and Cooperative Strategies
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Competitive Strategies,
Global rivalries, leveraging of competitive advantages across markets, offensive competitive tactics against rivals
Cooperating with
Competitors: Global
Alliances

Dealing with Competitors: Global and Multi-Market Competitive and Cooperative Strategies
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Competitive Rivalries in Global Industries
Aircraft: Boeing (US) vs. Airbus (Europe)
Hamburger Franchises: McDonalds (US) vs. Burger King
(UK), etc.
Initiating Competition: Leveraging Competitive
Advantages Across Markets
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Developing a product that becomes an industry standard
(Xerox)
Superior customer service (Caterpillar parts; Federal Express), etc.
Lower cost, superior styling, technologies, innovation, reliability, corporate reputation

Dealing with Competitors: Global and Multi-Market Competitive and Cooperative Strategies
 Offensive Competitive Strategies
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Frontal Assaults: all-out offensives. Coca-Cola and Pepsi
Flanking Strategies, attacking market segments ignored by competitors, Swiss and Japanese watch producers
Encirclement Strategies, use superior resources to produce greater product varieties. Japanese motorcycle producers
Bypass Strategies, focus on future customer needs. “green” cars by Honda and Toyota
Guerilla Strategies, disrupting rivals marketing strategies or stunting sales in major product or service lines

Dealing with Competitors: Global and Multi-Market Competitive and Cooperative Strategies
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 Emerging Market Strategies, Marketplace rivals rush into new, big markets (Latin America, Asia,
Eastern Europe) to gain first mover advantages
 Regional Competitive Strategies, to attack (or defend against) key regional rivals. Spanish banks targeted banks in Latin America

Dealing with Competitors: Global and Multi-Market Competitive and Cooperative Strategies
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Key Market Competitive Strategies, to undermine rivals in strategically important markets. Airbus and Boeing in
Japan
Attacking Rivals in the Home Market: to undermine international corporations with advantages in their domestic markets: Kodak against Fuji in Japan; Fuji attacks Kodak in US

Dealing with Competitors: Global and Multi-Market Competitive and Cooperative Strategies
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Responding to Global Competitors
US Counterstrategies
Government-sponsored trade protection, US imposes tariffs on steel in 2002
Collaborative with global rivals, to cooperate with rivals and learn the secrets of their competitive advantages. GM in Japan
Domestic Collaboration, to form industry-wide cooperation groups. Semi conductor industry
Competitive Restructuring, to undertake top-to-bottom evaluations of company and competitor marketing strategies. Motorola (US) and Philips (Netherlands)

Dealing with Competitors: Global and Multi-Market Competitive and Cooperative Strategies
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Responding to Global Competitors
European Responses
International Offensive Strategies, such as engineering conglomerate Asea-Brown- Boveri; and L’Oreal
International Defensive Strategies, to consolidate market positions within Europe. Solvay (Belgium – chemicals) and Heineken (Netherlands)
National Defensive Strategies , to maintain home market dominance while contemplating international expansions
Restructuring or Exit Strategies, by firms unable to sustain their market positions in European theater of operations.
Philips

Dealing with Competitors: Global and Multi-Market Competitive and Cooperative Strategies
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Responding to Global Competitors
Emerging Market Responses
Defender Strategies: where industry globalization influences are low and competitive assets are home-market-customized. Bajaj countered Honda’s entry into Indian market
Dodger Strategies: by firms with home-market oriented assets but under high competitive pressures; localize or JV
Contender Strategies: larger, well resourced emergent firms to upgrade existing technologies and/or transfer competitive assets into foreign markets (Mexico’s Cemex)
Extender Strategies: use local market expertise and products to move into similar markets abroad. Jollibee

Dealing with Competitors: Global and Multi-Market Competitive and Cooperative Strategies
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 Cooperating with Competitors: Global Alliances
 Characteristics
Tend to be contractual agreements rather than equity-based relationships such as joint ventures
Often involve parts of corporate supply chains rather than entire supply chains
Are not necessarily permanent
Often involve divisions of companies rather than entire firms

Dealing with Competitors: Global and Multi-Market Competitive and Cooperative Strategies
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 Advantages—GAs used for:
Technology and product development
Getting into related businesses
Distribution-sharing agreements
Technology and market access agreements
Shared production
Creating size and critical mass

Dealing with Competitors: Global and Multi-Market Competitive and Cooperative Strategies
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 Collaborating with Competitors: Global
Alliances
Keys to managing Global Alliances
Take time to get to know and trust partner
Choose a partner with complementary products
Be patient: do not expect instant results
“Live like brothers and do business like strangers”
(Arabic proverb)
Maintain management team continuity where possible.
Objectives should be set out in a ‘pre-nuptial agreement’
Be sure that alliances contribute to long term goals
Know when a relationship has accomplished its goals

Global and Multi-Market
Financial Strategies
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Global and Multi-Market
Financial Strategies
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Transfer Pricing Issues
Corporate perspectives on transfer pricing: price to earn profits where they want; under-charge/over-charge on shipments among subsidiaries
Country perspectives on transfer pricing: subsidiaries should charge “arm’s length” prices and pay appropriate taxes
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Managing Foreign Currency Risks
Transaction risk: risks on individual transactions when exchange rate values fluctuate; forward rates an option
Translation risks: ‘paper losses/gains’ when asset valuations fluctuate with exchange rate values
Economic risks: Transaction and translation risks projected over the long-term; preferences for weak currency nations

Global and Multi-Market
Financial Strategies
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Global Cash Management: Settling Corporate
Subsidiary Accounts
Settling individual accounts as exchange rates fluctuate poses problems as payment delays cause losses for one party
Centralized cash management: Netting strategies simplify settlement by reducing number of settlement payments
Global and Multi-Market Financial Synergies
Disposal of Surplus Funds: in best-yield markets
Raising capital: best interest rates
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Administering Global Finances
Internal administration: ‘treasuries’ settle internal accounts
External administration: by banks for less experienced firms

Key points
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Formulating global strategies involves defining core business strategies, internationalizing those strategies, and then globalizing them for competitive strategies
Core businesses contribute to corporate profits, and have significant global potential
Internationalizing core strategies involves recognizing global similarities in customers and markets
Globalizing international strategies entails creating global brands and global brand portfolios
Total product standardization, distribution, pricing and promotional strategies rare—some adaptation usually required

Key points
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Global brands can be classified into corporate brands, range brands, and individual brands
Offensive competitive strategies can be product-based or geographically-based
US companies respond to global rivals by asking for trade protection, working with competitors, forming domestic collaborations, or restructuring themselves. European companies go for offensive or defensive international strategies, national defensive strategies, or exiting the industry.
Emerging market firms can go for defender, dodger, contender, or extender strategies.
Companies can collaborate with rivals by global alliances.

Thank You!