Part 4
Focusing on the Customer: Marketing Growth Strategies
CHAPTER 17
Global Marketing
Longenecker • Moore • Petty • Palich
© 2008 Cengage Learning.
All rights reserved.
PowerPoint Presentation by Charlie Cook
The University of West Alabama
Looking AHEAD
After you have read this chapter, you should be able to:
1. Describe the potential of small firms as global
enterprises.
2. Identify the basic forces prompting small firms to
engage in global expansion.
3. Identify and compare strategy options for global
businesses.
4. Explain the challenges that global enterprises face.
5. Recognize the sources of assistance available to
support international business efforts.
© 2008 Cengage Learning. All rights reserved.
17–2
Small Businesses as Global Enterprises
• Globalization
The expansion of international business:
 Converging
market preferences
 Falling trade barriers
 Integration of national economies.
• Born-global Firms
Small companies launched with
cross-border business activities
in mind
• Size does not necessarily limit a firm’s
international activity,
© 2008 Cengage Learning. All rights reserved.
17–3
Questions to Consider Before Going Global
• What are management’s objectives?
Reasons, commitment, expected payoff
• How prepared is management to go global?
In-house expertise, responsibility for and time
allocated to international operations, organizational
structure.
• Is there sufficient production capacity?
Present capacity, effect of international operations on
local production
• Is there enough financial capacity?
Capital available for marketing, expansion, payback
© 2008 Cengage Learning. All rights reserved.
17–4
17-1
Questions to Consider Before Going Global
Source: Adapted from U.S. Department of Commerce, A Basic Guide to Exporting, cited in John B. Cullen and K. Praveen Parboteeah,
Multinational Management: A Strategic Approach, 3rd edition (Cincinnati, OH: South-Western College Publishing, 2005), p. 208.
© 2008 Cengage Learning. All rights reserved.
17–5
Before Going Global
• Decide if firm is up to the task of globalization.
• Study different cultural, trading systems, political
and business practices in foreign markets.
North American Free Trade Agreement (NAFTA)
European Union (EU)
• Prepare to modify products to meet
design specifications that may vary
from county to country.
© 2008 Cengage Learning. All rights reserved.
17–6
17-2
Basic Forces Driving Global Enterprises
© 2008 Cengage Learning. All rights reserved.
17–7
17-3
Big Emerging Markets
Source: Adapted from The World Bank Group, “World Development Indicators, 2007,”
http://www.worldbank.org/data/countrydata-query.html, accessed February 9, 2007.
© 2008 Cengage Learning. All rights reserved.
17–8
Expanding the Market:
Making the Most of Experience
• Experience Curve Efficiencies
Per-unit savings gained from the repeated production
of the same good.
• Learning Effects
Insights gained from experience, that lead to improved
work performance.
• Economies of Scale
Efficiencies that result from the expansion of
production.
© 2008 Cengage Learning. All rights reserved.
17–9
Expanding the Market
Gaining Access
to Resources
Cutting
Costs
Factors in
Competing
Internationally
Capitalizing on
Special Features
of Location
© 2008 Cengage Learning. All rights reserved.
17–10
17-4
Strategy Options for Global Enterprises
© 2008 Cengage Learning. All rights reserved.
17–11
Strategy Options for Global Firms
• Exporting
Selling products in the home country to customers in
another country.
 Trade mission
– A trip organized to help small business owners make direct
contact with potential buyers abroad and learn about cultural and
regulatory obstacles in foreign markets.
• Importing
Selling goods produced in another country to buyers
in the home country.
 Global sourcing strategy—connecting with overseas
suppliers that can provide products or services a
company needs to operate successfully.
© 2008 Cengage Learning. All rights reserved.
17–12
Strategy Options for Global Firms (cont’d)
• Foreign Licensing
Allowing a company in another country to purchase
the right to manufacture and sell a company’s
products in international markets
Licensee
 The company buying the licensing rights
Licensor
 The company selling the licensing rights
Royalties
 Fees paid by the licensee to the licensor
for each unit produced under a licensing contract
© 2008 Cengage Learning. All rights reserved.
17–13
Strategy Options for Global Firms (cont’d)
• International Franchising
Selling a standard package of products, systems, and
management services to a company in another
country.
• International Strategic Alliances
A combination of efforts and/or assets of companies in
different countries for the sake of pooling resources
and sharing the risks of an enterprise
© 2008 Cengage Learning. All rights reserved.
17–14
Strategy Options for Global Firms (cont’d)
• Locating Facilities Abroad
Cross-border acquisition
 The
purchase by a business in one country of a
company located in another country
Greenfield venture
 A wholly owned subsidiary formed
“from scratch” in another country
© 2008 Cengage Learning. All rights reserved.
17–15
Challenges to Global Business
• Political Risk
 The potential for political forces in a country to
negatively affect the performance of businesses
operating within
• Economic Risk
 The probability that a government will mismanage its
economy and thereby change the business
environment in ways that hinder the performance of
firms operating there.
 Exchange rate—the value of one country’s currency
relative to that of another country.
© 2008 Cengage Learning. All rights reserved.
17–16
17-5
“Country Risk Rankings” Map
Source: Paul Pedzinksi, “Country Risk Poll,” Euromoney, Vol. 37, No. 443 (March 2007), pp. 171–176.
© 2008 Cengage Learning. All rights reserved.
17–17
Challenges to Global Business (cont’d)
• Managerial Limitations
 Product planning
 Marketing
 Finance
 Management
 Accounting
 Legal issues
© 2008 Cengage Learning. All rights reserved.
17–18
Assistance for Global Enterprises
• Analyzing Markets and Planning Strategies
Small Business Administration resources
 Office
of International Trade
 U.S. Export Assistance Centers (USEACs)
 Publications
– Opportunities in Exporting
– SBA Guide to Exporting
Department of Commerce
 International
Trade Administration
Speak to a recent returnee
Visit the foreign country
© 2008 Cengage Learning. All rights reserved.
17–19
Assistance for Global Enterprises (cont’d)
• Connections With International Customers
Trade Leads
Trade Missions
Trade Intermediaries
 An
agency that distributes a
company’s products on a
contract basis to customers
in another country
© 2008 Cengage Learning. All rights reserved.
17–20
17-6
A Sample of International Trade Leads on the Web
Bidmix.com
International Business Forum
TradeLeads.com
World Bank FundLine
World Trade Markets
WCTA Trade Opportunities
Bulletin Board
ASIA: Asian Sources On-Line
EUROPE: ECeurope.com
Australia: Australia on Display
India: Tradeindia
Taiwan: Taiwan Products Online
Source: Michigan State University CIBER website, http://www.ciber.msu.edu/busres/static/trade%2Dleadsold.htm, accessed February 16, 2007.
© 2008 Cengage Learning. All rights reserved.
17–21
17-7
Trade Intermediaries Most Suited for Small Businesses
Confirming Houses
Export Management Companies
Export Trading Companies
Export Agents, Merchants, or Remarketers
Piggyback Marketers
Source: U.S. Department of Commerce, A Basic Guide to Exporting (Washington, DC: Department of Commerce
and Unz & Co., Inc.), http://www.unzco.com/basicguide/c4.html, accessed February 19, 2007.
© 2008 Cengage Learning. All rights reserved.
17–22
Assistance for Global Enterprises (cont’d)
• Financing
Private banks
 Letters
of credit
– An agreement issued by a bank to honor a draft or other demand
for payment when specified conditions are met.
 Bill
of lading
– A document indicating that a product has been shipped and the
title to that product has been transferred.
© 2008 Cengage Learning. All rights reserved.
17–23
Key TERMS
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globalization
born-global firms
tariffs
North American Free Trade
Agreement (NAFTA)
European Union (EU)
experience curve efficiencies
learning effects
economies of scale
international outsourcing
offshoring
exporting
trade mission
importing
foreign licensing
© 2008 Cengage Learning. All rights reserved.
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licensee
licensor
royalties
counterfeit activity
international franchising
international strategic alliance
cross-border acquisition
greenfield venture
political risk
economic risk
exchange rate
trade intermediary
letter of credit
bill of lading
17–24