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The Unique Nature ofIndustrial Marketing

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Industrial Marketing

Also called: Business-to-Business(B2B) and Organizational Marketing.

Definition: the creation andmanagement of mutually beneficialrelationships between organizationalsuppliers and organizationalcustomers.

Customer can be private firm, publicagency, or nonprofit organization.

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The Marketing Concept

Creating value for customerswith goods and services that

address organizational needs

and objectives.

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Marketing Concept

Three major components:

All company activities should beginwith, and be based on, therecognition of a fundamental customer

need.

A customer orientation should beintegrated throughout the functionalareas of the firm: production,

engineering, finance, R&D. Customer satisfaction is viewed asthe means to long-term profitabilitygoals.

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B2B Defined

The management process responsible

for the facilitation of exchange

between producers of goods and

services and their organisational

customers.

B2B marketing and purchasing is a

complex and risky business

involving a number of different

parties.

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Flows within a B2B market

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Differences between B2B and

consumer marketing (1 of 3)

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Differences between B2B and

consumer marketing (2 of 3)

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Differences between B2B and

consumer marketing (3 of 3)

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B2B customers

Commercial enterprises - profit making

organisations that produce and/or resell

goods and services for a profit. Can be

subdivided into users, originalequipment manufacturers (OEMs),

resellers.

Government bodies.

Institutions - largely non-profit making

organisations, e.g. universities,

churches, etc.

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Characteristics of B2B markets

Nature of demand - derived,

joint, inelastic.

Structure of demand -

industrial and geographic

concentration. Buying process complexity.

Buyer-seller relationships.

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12

Follower Interact

Isolate Shaper

CustomerFocus

Low Technology Focus High

High

Low

Strategic Focus Grid

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Market Orientation

Acquire intelligence from theexternal environment.

Disseminate that intelligencethroughout the organization.

Respond to the intelligence:

take action.(Kohli and Jaworski 1990, Journal of

Marketing)

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Marketing Mission Statement

State in terms of meetingcustomer needs, not in terms of

products or technologies.

Marketing Myopia (Levitt 1960HBR)

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Marketing Activities

Identify customer needs Research customer behavior

Divide market into manageablesegments

Develop new products/services Establish/negotiate prices

Deliver, install, service products

Ensure adequate and timely supply ofproducts at correct place

Allocate resources across productlines

Communicate with customers

Evaluate/control marketing programs15

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Marketing Mix

Limited number of variables under

Marketings control to create position that is attractive tothe target market segment.

Four Ps Product

Price

Promotion

Place (Distribution)

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External Environment

Characterized by:

Degree of Stability

Complexity

Diversity

Hostility

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External Environment

Six Environments

Technological

Economic Social/Cultural (Customer)

Political/Legal

Natural/Climatic Competitive

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So whats different

about B2B? Marketing Concept

Marketing Mix

Market Segmentation Product Life Cycle

All apply in both B2C and B2B.

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So whats different about B2B?

The technical characteristics of

the product are important.

These products directly affect theoperations and economic health of

the customer.

The customer is an organizationrather than an individual

consumer, or family.

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Five Major Differences

Between B2B and B2C

Products/Services beingmarketed

Nature of demand

How the customer buys

Communication process Economic/Financial factors

21

/

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Products/Services

More complex

Functional vs. Symbolic Attributes

Large unit dollar value/Largequantities

Custom/Tailored Various Stages from raw material tofinished goods.

Foundation, Entering, FacilitatingGoods

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23

Raw Material Extraction

Material Processing

Manufacturing

Parts/Subassembly

Assembly

Distribution

Wholesale/Retail Trade

Final Consumers

Facilitators

Firms in Production Chain

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Nature of Demand

Derived needed to produceother goods and services.

Precision steel tubes for

various products to be used in

automobiles.

Joint/Shared pump set needsengine /motor

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Influences on a B2B purchasing chain

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Sourcing strategies - advantages

and disadvantages (1 of 2)

Source

: Adapted from Treleven (1987).

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Sourcing strategies - advantages

and disadvantages (2 of 2)

Source: Adapted from Hahn (1986) and Ramsey and Wilson (1990). Reprinted by permission of MCB University Press Ltd.

M d l f i i l

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Models of organisationalbuying decision making

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BUSINESS

BUYERS

COMMERCIALENTERPRISE

GOVERNMENT

INSTITUTIONAL

COOPERATIVESOCIETIES

DEALERS /DISTRIBUTORS

OEMs;

End user

Publicsector

projects

Public

private

Manufacturigunits

Non

manufacturing units

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What do they buy?

Materials and parts RM,Manufactured materials, components

gets into the product directly.

Capital goods: plant and building,infrastructural needs, machinery

needed to produce other products and

services.

Supplies and services: consumables,delivery services, installation and

commissioning, servicing and repairs,

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Decision problems in B2B purchasing

decision making process (1 of 2)

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Decision problems in B2B purchasing

decision making process (2 of 2)

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Roles in the buying process

Purchasing - handle relationships withsuppliers.

Production/operations - meeting targets for theend product in both quantity and quality terms.

Engineering - the specification and design.

R&D.

Finance - devolve budgets to appropriatemanagers.

Marketing - outputs of the production process.

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Unit production model of

buyer-seller contact in B2B markets

Source: Adapted from Johanson (1982), copyright 1982 John Wiley & Sons Limited. Reporoduced with permission.

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Mass production model of

buyer-seller contact in B2B markets

Source: Adapted from Johanson (1982), copyright 1982 John Wiley & Sons Limited. Reproduced with permission.

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Buying centres - comparison between

consumer and B2B markets (1 of 2)

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Buying centres - comparison between

consumer and B2B markets (2 of 2)

INDUSTRIALBUYER BEHVIORM ODE

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38

INDUSTRIAL BUYER BEHVIOR M ODE

INFO. SOURCE

Act

- Sales person

- Exhibitions & trade shows

- Trade journals- W OM

- DIRECTM AIL

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7 Rs of MARKETING MIX.

RESEARCH WHAT DO THEY WANT? RATE SPEED MIND TO MARKET CYCLE.

RESOURCES 4 Ms.- THROUGH THE SCM.

RETAILING SHELF SPACE VS MIND SPACE.

RELIABILITY SOLUTION PERFORMANCE SCM AFTER SALES SERVICES

REWARD LOYALTY ENHANCING BRANDLOYALTY.

RELATIONSHIP- WITHIN SCM CRM - MENTALRECALL RATE.

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How Customer Buys

Group Process

Formal

Lengthy

Loyal

Decisions based on risk andopportunity

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Communication

Personal selling more importantthan mass paid advertising

Support sales with other

promotional acadvertising in trade journals,catalogs, trade shows, directmail, WWW.

Message focused on technical,factual, and descriptive content.

Multiple audience members.

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Economic/Financial Factors

Competition oligopolistic

Power/Dependency relationships

Reciprocity: Doing businesswith companies that do businesswith them.

Economic variables: interestrates, inflation, business

cycle

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Marketing Environment Audit

Macro environment A. Demographic :What major demographicdevelopments and trends pose opportunities orthreats to this company?

What actions has the company taken in response tothese developments and trends?

B. Economic What major developments in income,

prices, savings, and credit will affect thecompany? What actions has the company been takingin response to these developments and trends?

C. Environmental: What is the outlook for thecost and availability of natural resources andenergy needed by the company?

What concerns have been expressed about thecompany's role in pollution and conservation, Andwhat steps has the company taken?

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D. Technological What major changes areoccurring in product and process technology? Whatis the company's position in thesetechnologies? What major generic substitutesmight replace this product?

E. Political What changes in laws and

regulations might affect marketing strategy andtactics? What is happening in the areas ofpollution control, equal employment opportunity, product safety, advertising, price control, andso forth, that affects marketing strategy?

F. Cultural What is the public's attitude

toward business and toward the company'sproducts? What changes in customer lifestyles andvalues might affect the company?

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Task Environment A. Markets What is happening to market size,growth, geographical distribution, and profits?

What are the major market segments? B. Customers What are the customers' needs andbuying processes? How do customers and

prospects rate the company and icompetitors on reputation, product quality,

service, sales force, and price? How dodifferent customer segments make their buyingdecisions?

C. Competitors Who are the major competitors? What are their objectives,strategies, strengths, weaknesses, sizes, and

market shares? What trends will affectfuture competition and substitutes for thecompany's products?

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D. Distribution and Dealers What are the maintrade channels for bringing products to customers?

What are the efficiency levels and growthpotentials of the different trade channels?

E. Suppliers What is the outlook for theavailability of key resources used in production?What trends are occurring among suppliers?

F. Facilitators and Marketing Firms What is

the cost and availability outlook fortransportation services, warehousing facilities,and financial resources? How effective are thecompany's advertising agencies and marketingresearch firms?

G. Publics Which publics represent particular

opportunities or problems for the company? Whatsteps has the

company taken to deal effectively witheach public?

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Marketing audit : Measurement of performance

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Marketing audit : Measurement of performance

A. Business Mission

Is the business mission clearly statedin market-oriented terms? Is itfeasible?

B. Marketing Objectives and Goals

Are the corporate and marketingobjectives stated in the form of cleargoals to guide marketing planning and

performance measurement?

Are the marketing objectives

appropriate, given the company'scompetitive position, resources, andopportunities?

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C. Strategy Is management able to articulate a clear marketing

strategy for achieving its marketing objectives? Isthe strategy convincing? Is the strategyappropriate to the stage of the product life cycle,competitors' strategies, and the state of theeconomy?

Is the company using the best basis for marketsegmentation? Does it have sound criteria for

rating the segments and choosing the best ones? Hasit developed accurate profiles of each targetsegment?

Has the company developed a sound positioning andmarketing mix for each target segment? Aremarketing resources allocated optimally to the

major elements of the marketing mix -- i.e.,product quality, service, sales force, advertising,promotion, and distribution?

Are enough resources or too many resources budgetedto accomplish the marketing objectives?

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Marketing-Organization Audit A. Formal Structure Does the marketing officer have adequate authority

over, and responsibility for, Structure companyactivities that affect the customer's satisfaction? Are the marketing activities optimally structured

along functional, product, end- user, and territoriallines?

B. Functional Efficiency Are there good communication and working relations

between marketing and Efficiency sales? Is the product management system working effectively?

Are product managers able to plan profits or onlysales volume?

Are there any groups in marketing that need moretraining, motivation, supervision, or evaluation?

C. Interface Efficiency Are there any problems between marketing and

manufacturing, R&D, purchasing, Efficiency finance,accounting, and legal that need attention.

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Marketing-Systems Audit A. Marketing Information System Is the marketing intelligence system producing accurate, sufficient, and

timely information about marketplace developments with respect tocustomers, prospects, distributors and dealers, competitors, suppliers,and various publics?

Are company decision makers asking for enough marketing research, andare they using the results?

Is the company employing the best methods for market and salesforecasting?

B. Marketing Planning System Is the marketing planning system well conceived and effective? Is sales forecasting and market potential measurement soundly carried

out? Are sales quotas set on a proper basis? C. Marketing Control System Are the control procedures adequate to ensure that the annual-plan

objectives are being achieved?

Does management periodically analyze the profitability of products,markets, territories, and channels of distribution?

Are marketing costs periodically examined? D. New-Product Development System Is the company well organized to gather, generate, and screen new-

product ideas?

Does the company do adequate concept research and business analysisbefore investing in new ideas?

Does the company carry out adequate product and market testing beforelaunching new products?

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Marketing-Productivity Audit

A. Profitability Analysis

What is the profitability of the company'sdifferent products, markets, territoriesand channels of distribution?

Should the company enter, expand,

contract, or withdraw from any businesssegments and what would be the short- andlong-run profit consequences?

B. Cost Effectiveness Analysis

Do any marketing activities seem to haveexcessive costs? Can cost-reducing stepsbe taken?

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Marketing-Function Audits

A. Products

What are the product-line objectives? Arethese objectives sound? Is the currentproduct line meeting the objectives?

Should the product line be stretched orcontracted upward, downward, or both ways?

Which products should be phased out? Whichproducts should be added?

What is the buyers' knowledge and attitudestoward the company's and competitors'product quality, features, styling, brand

names, etc.? What areas of product strategyneed improvement?

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Price

What are the pricing objectives, policies,

strategies, and procedures? To what extent areprices set on cost, demand, and competitivecriteria?

Do the customers see the company's prices asbeing in line with the value of its offer?

What does management know about the price

elasticity of demand experience curve effects,and competitors' prices and pricing policies?

To what extent are price policies compatiblewith the needs of distributors and dealers,suppliers, and government regulation?

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Distribution

What are the distribution objectives andstrategies?

Is there adequate market coverage and

service? How effective are the following channelmembers distributors, dealers, manufacturersrepresentatives, brokers, agents, etc.?

Should the company consider changing itsdistribution channels?

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Advertising, Sales Promotion, and Publicity

What are the organization's advertisingobjectives? Are they sound?

Is the right amount being spent on advertising?How is the budget determined?

Are the ad themes and copy effective? What docustomers and the public think and Publicityabout the advertising?

Are the advertising media well chosen? Is the internal advertising staff adequate?

Is the sales-promotion budget adequate? Isthere effective and sufficient use of sales-promotion tools such as samples, coupons,

displays, sales contests? Is the publicity budget adequate? Is the publicrelations staff competent and creative?

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Sales-force

What are the organization's salesforce objectives?

Is the salesforce large enough to accomplish thecompany's objectives?

Is the salesforce organized along the properprinciples of specialization (territory, market,product)? Are there enough (or too many) salesmanagers to guide the field sales representatives?

Does the sales-compensation level and structureprovide adequate incentive and reward?

Does the salesforce show high morale, ability, andeffort?

Are the procedures adequate for setting quotas andevaluating performances?

How does the company's salesforce compare tocompetitors salesforce?

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Different Problems: The How through ActionPlans

Huge Problem:

Performance objectives arent broken down tothe action plans required to execute.

What happens: Were out of alignment. We dont have the available resources

We dont have the funding

Timelines of different departments collide

Our stakeholders arent on board or coordinated

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The Biggest Obstacle: Alignment

What to Check out for Alignment

Do employees throughout the organization know themission?

Are the processes clearly enough articulated?

Is everyone walking and talking in alignment?

Do we have clearly defined values and does everybody

really demonstrate them? What is the gap between what we (the Leadership Team)want and what we want them (the organization) to do?(World-class companies keep raising the bar andcreating a gap.)

What are you doing now and what could you do if you

got it right - if every individual were nailing it?

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More to check out for Alignment Why cant you execute? Because youre not aligned.

Is the strategy/business planning internallycredible?

Is it credible lower down to people charged with

execution? What are the dislocations? (People, timing,resources, technology, funding)

Is there is alignment in communication and in themessages going up and down?

Is there is execution alignment - a gap betweenwhat were trying to achieve ad what were actuallyachieving (both relative to plan and in terms ofpotential)?

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So whats different in this Approach toMeasuring

Clarity of Measures

Alignment with the mission, the plan,the stakeholders, available resources

Drilling down from objectives to criteriaand action plans are the plans inalignment with the objectives, the

resources, the time lines, customer andstakeholder needs

Continuous Learning

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Continuous Learning

Why is Continuous Learning Important?

Peter Senges definition The Learning Organization Question for all of you: Do you have a learning

organization? Are you willing to invest in people? Is it worth it? If you dont, how can you encourage your people to

learn? Concept of CANI : Continuous and Never-ending

Improvement Need to continually upgrade the quality of: Our people Systems Processes Procedures Resources. And if we dont, somebody else will do it and take

away our business.

People: Personal and Professional

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Development

8

Inputs Outputs

Inputs, Outputs &

Performance Management

Tasks

Behaviors,

Competencies,

Technical Skills

Deliverables,

Performance

Objectives

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Strategic PlanningModel

What is Strategic

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What is StrategicPlanning?

Process to establish priorities on what you willProcess to establish priorities on what you willaccomplish in the futureaccomplish in the future

Forces you to make choices on what you will doForces you to make choices on what you will do

and what you will not doand what you will not do Pulls the entire organization together around aPulls the entire organization together around a

single game plan for executionsingle game plan for execution Broad outline on where resources will get allocatedBroad outline on where resources will get allocated

Why do Strategic

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Why do StrategicPlanning?

If you fail to plan, then you plan to fail beIf you fail to plan, then you plan to fail beproactive about the futureproactive about the future

Strategic planning improves performanceStrategic planning improves performance

Counter excessive inward and short-term thinkingCounter excessive inward and short-term thinking Solve major issues at a macro levelSolve major issues at a macro level Communicate to everyone what is most importantCommunicate to everyone what is most important

Fundamental Questions

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Fundamental Questionsto Ask

Where are we now? (Assessment)Where are we now? (Assessment) Where do we need to be? (Gap / Future EndWhere do we need to be? (Gap / Future End

State)State)

How will we close the gap (Strategic Plan)How will we close the gap (Strategic Plan) How will we monitor our progressHow will we monitor our progress

A Good Strategic Plan

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A Good Strategic Planshould . . .

Address critical performance issuesAddress critical performance issues Create the right balance between what theCreate the right balance between what the

organization is capable of doing vs. what theorganization is capable of doing vs. what the

organization would like to doorganization would like to do Cover a sufficient time period to close theCover a sufficient time period to close the

performance gapperformance gap Visionary convey a desired future end stateVisionary convey a desired future end state Flexible allow and accommodate changeFlexible allow and accommodate change

Guide decision making at lower levels Guide decision making at lower levels operational, tactical, individualoperational, tactical, individual

Strategic Planning Model

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g gA B C D E

EnvironmentalScan

Assessment

BackgroundInformation

SituationalAnalysis

SWOT Strengths,Weaknesses,Opportunities,Threats

Situation Past,Present andFuture

SignificantIssues

Align / Fit withCapabilities

Mission &Vision

Values /GuidingPrinciples

Major Goals

SpecificObjectives

PerformanceMeasurement

Targets /Standards ofPerformance

Initiatives andProjects

Baseline Components

PerformanceManagement

Review Progress BalancedScorecard

Take CorrectiveActions

Down toSpecifics

Evaluate

Where we are Where we want to be How we will do it How are we doing

Gaps Action Plans Feedbackupstream revise plans

Pre-Requisites to

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Pre-Requisites toPlanning

Senior leadership commitmentSenior leadership commitment

Who will do what?Who will do what?

What will each group do?What will each group do?

How will we do it?How will we do it? When is the best time?When is the best time?

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Assessment

Assessment Model: Assessme

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Assessment Model:S W O T

Assessment

External Assessment:Marketplace, competitors,social trends, technology,regulatory environment,economic cycles .

External Assessment:

Marketplace, competitors,social trends, technology,regulatory environment,economic cycles .

Internal Assessment:Organizational assets,resources, people, culture,systems, partnerships,suppliers, . . .

Internal Assessment:Organizational assets,resources, people, culture,systems, partnerships,suppliers, . . .

Easy to Understand Apply at any organizational level

Needs to be Analytical andSpecific

Be honest about yourweaknesses

Good Points Possible Pitfalls

SWOT SWOT

Assessme

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StrengthsAssessme

nt

Strengths Those things that you do well, theStrengths Those things that you do well, thehigh value or performance pointshigh value or performance points

Strengths can be tangible: Loyal customers,Strengths can be tangible: Loyal customers,

efficient distribution channels, very high qualityefficient distribution channels, very high quality

products, excellent financial conditionproducts, excellent financial condition Strengths can be intangible: Good leadership,Strengths can be intangible: Good leadership,

strategic insights, customer intelligence, solidstrategic insights, customer intelligence, solid

reputation, high skilled workforcereputation, high skilled workforce

Often considered Core Competencies BestOften considered Core Competencies Bestleverage points for growth without draining yourleverage points for growth without draining your

resourcesresources

Assessme

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WeaknessesAssessme

nt

Weaknesses Those things that prevent you fromWeaknesses Those things that prevent you fromdoing what you really need to dodoing what you really need to do

Since weaknesses are internal, they are withinSince weaknesses are internal, they are within

your controlyour control

Weaknesses include: Bad leadership, unskilledWeaknesses include: Bad leadership, unskilled

workforce, insufficient resources, poor productworkforce, insufficient resources, poor product

quality, slow distribution and delivery channels,quality, slow distribution and delivery channels,

outdated technologies, lack of planning, . . .outdated technologies, lack of planning, . . .

Assessme

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OpportunitiesAssessme

nt

Opportunities Potential areas for growth andOpportunities Potential areas for growth andhigher performancehigher performance

External in nature marketplace, unhappyExternal in nature marketplace, unhappy

customers with competitors, better economiccustomers with competitors, better economic

conditions, more open trading policies, . .conditions, more open trading policies, . . Internal opportunities should be classified asInternal opportunities should be classified as

StrengthsStrengths Timing may be important for capitalizing onTiming may be important for capitalizing on

opportunitiesopportunities

Assessme

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ThreatsAssessme

nt

Threats Challenges confronting the organization,Threats Challenges confronting the organization,external in natureexternal in nature

Threats can take a wide range bad pressThreats can take a wide range bad press

coverage, shifts in consumer behavior, substitutecoverage, shifts in consumer behavior, substitute

products, new regulations, . . .products, new regulations, . . . May be useful to classify or assign probabilities toMay be useful to classify or assign probabilities to

threatsthreats The more accurate you are in identifying threats,The more accurate you are in identifying threats,

the better position you are for dealing with thethe better position you are for dealing with thesudden ripples of changesudden ripples of change

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Baseline

h b li

Baseline

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Why create a baseline?Baseline

Puts everything about the organization into aPuts everything about the organization into asingle context for comparability and planningsingle context for comparability and planning

Descriptive about the company as well as theDescriptive about the company as well as the

overall environmentoverall environment Include information about relationships Include information about relationships

customers, suppliers, partners, . . .customers, suppliers, partners, . . . Preferred format is the Organizational ProfilePreferred format is the Organizational Profile

Organizational Profile

Baseline

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Organizational Profile1. Operating Environment

Baseline

Products and Services Suppliers, DeliveryProducts and Services Suppliers, DeliveryChannels, Contracts, Arrangements, . . .Channels, Contracts, Arrangements, . . .

Organizational Culture Barriers, Leadership,Organizational Culture Barriers, Leadership,

Communication, Cohesiveness . . . .Communication, Cohesiveness . . . . Workforce Productivity Skill levels, diversity,Workforce Productivity Skill levels, diversity,

contractors, aging workforce, . . .contractors, aging workforce, . . . Infrastructure Systems, technology, facilities, . .Infrastructure Systems, technology, facilities, . .

Regulatory Product / Service Regulation, ISORegulatory Product / Service Regulation, ISOQuality Standards, Safety, Environmental, . . .Quality Standards, Safety, Environmental, . . .

Organizational Profile

Baseline

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Organizational Profile2. Business Relationships

Baseline

Organizational Structure Business Units,Organizational Structure Business Units,Functions, Board, Management Layers, . . .Functions, Board, Management Layers, . . .

Customer Relationships Requirements,Customer Relationships Requirements,

Satisfaction, Loyalty, Expectations, . . .Satisfaction, Loyalty, Expectations, . . . Value Chain Relationship between everyone inValue Chain Relationship between everyone in

the value chain . . . .the value chain . . . . Partner Relationships Alliances, long-termPartner Relationships Alliances, long-term

suppliers, customer partnerships, . . .suppliers, customer partnerships, . . .

Organizational Profile3 f

Baseline

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3. Key Performance

Categories

Baseline

CustomerCustomer

Products and ServicesProducts and Services FinancialFinancial

Human CapitalHuman Capital OperationalOperational

External (Regulatory Compliance, SocialExternal (Regulatory Compliance, Social

Responsibility, . . . )Responsibility, . . . )

G A l iBaseline

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Gap AnalysisBaseline

Baseline / OrgProfile

Challenges /SWOT

Gap = Basis forLong-Term

Strategic Plan

Gap = Basis forLong-Term

Strategic Plan

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Components

Major Components of theSt t i Pl / D t

Compone

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Strategic Plan / Down toAction

p

nts

Mission

Vision

Goals

Objectives

Measures

Why we existWhy we exist

What we want to beWhat we want to be

Indicators andIndicators and

Monitors of successMonitors of success

Desired level ofDesired level of

performance and timelinesperformance and timelines

Planned Actions toPlanned Actions to

Achieve ObjectivesAchieve Objectives

O1 O2

AI1 AI2 AI3

M1 M2 M3

T1 T1 T1

Specific outcomes expressed inSpecific outcomes expressed in

measurable terms (NOT activities)measurable terms (NOT activities)

Strategic Plan

Action Plans

Evaluate Progress

Targets

Initiatives

What we must achieve to be successfulWhat we must achieve to be successful

Mi i St t tCompone

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Mission Statementp

nts

Captures the essence of why the organizationCaptures the essence of why the organizationexists Who we are, what we doexists Who we are, what we do

Explains the basic needs that you fulfillExplains the basic needs that you fulfill Expresses the core values of the organizationExpresses the core values of the organization Should be brief and to the pointShould be brief and to the point Easy to understandEasy to understand If possible, try to convey the unique nature of yourIf possible, try to convey the unique nature of your

organization and the role it plays that differentiatesorganization and the role it plays that differentiates

it from othersit from others

Examples Good and Bad

Compone

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Examples Good and BadMission Statements

p

nts

To Make People Happy

To Explore the Universe and Searchfor Life and to Inspire the NextGeneration of Explorers

NASA

Walt Disney

Does a good job ofexpressing the core values of

the organization. Alsoconveys unique qualitiesabout the organization.

Too vague and and unclear.Need more descriptiveinformation about whatmakes the organizationspecial.

Vi iCompone

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Visionp

nts

How the organization wants to be perceivedHow the organization wants to be perceived

in thein the

future what success looks likefuture what success looks like

An expression of the desired end stateAn expression of the desired end state Challenges everyone to reach for somethingChallenges everyone to reach for something

significant inspires a compelling futuresignificant inspires a compelling future

Provides a long-term focus for the entireProvides a long-term focus for the entireorganizationorganization

E l f Vi i D i t

Compone

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Examples of Vision Descriptors Adept

Aggressive Agile

Aligned

Assertive

Available

Best-in-class

Challenging

Clear

Competent

Complex Compliant

Conservative

Coordinated

Critical

Direct

Equal

Disciplined

Effective

Efficient

Enduring

Expanding

Expert

Fast

Fast-paced

Financially-sound

Focused

Growth

Healthy

Improving

Incentivized

Solid

Solvent

Stable

State of the

Art

Strong

Streamlined

Sufficient

Strategic

Sustainable

Timely

Value-added

Vigilant

Visionary

World-class

Informative

Innovative

Leading

Logical

Major

Nimble

Pioneering

Protected

Organized

Over-Arching

Quick

Ready

Responsive

Savvy

Simple

nts

Guiding Principles and

Compone

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g pValues

nts

Every organization should be guided by a set ofEvery organization should be guided by a set ofvalues and beliefsvalues and beliefs Provides an underlying framework for makingProvides an underlying framework for making

decisions part of the organizations culturedecisions part of the organizations culture Values are often rooted in ethical themes, such asValues are often rooted in ethical themes, such as

honesty, trust, integrity, respect, fairness, . . . .honesty, trust, integrity, respect, fairness, . . . . Values should be applicable across the entireValues should be applicable across the entire

organizationorganization Values may be appropriate for certain bestValues may be appropriate for certain best

management practices best in terms of quality,management practices best in terms of quality,exceptional customer service, etc.exceptional customer service, etc.

Examples ofG idi P i i l d

Compone

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Guiding Principles andValues

nts

We obey the law and do not compromise moral or ethical principles ever!

We expect to be measured by what we do, as well as what we say.

We obey the law and do not compromise moral or ethical principles ever!We expect to be measured by what we do, as well as what we say.

We treat everyone with respect and appreciate individual differences.

We carefully consider the impact of business decisions on our people and we

recognize exceptional contributions.

We treat everyone with respect and appreciate individual differences.

We carefully consider the impact of business decisions on our people and we

recognize exceptional contributions.

We are strategically entrepreneurial in the pursuit of excellence, encouraging original thought

and its application, and willing to take risks based on sound business judgment.

We are strategically entrepreneurial in the pursuit of excellence, encouraging original thought

and its application, and willing to take risks based on sound business judgment.

We are committed to forging public and private partnerships that combine diverse strengths,

skills and resources.

We are committed to forging public and private partnerships that combine diverse strengths,

skills and resources.

GoalsCompone

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Goals nts

Describes a future end-state desired outcomeDescribes a future end-state desired outcomethat is supportive of the mission and vision.that is supportive of the mission and vision. Shapes the way ahead in actionable terms.Shapes the way ahead in actionable terms. Best applied where there are clear choices aboutBest applied where there are clear choices about

the future.the future.

Puts strategic focus into the organization specificPuts strategic focus into the organization specific

ownership of the goal should be assigned toownership of the goal should be assigned to

someone within the organization.someone within the organization. May not work well where things are changing fastMay not work well where things are changing fast

goals tend to be long-term for environments thatgoals tend to be long-term for environments thathave limited choices about the future.have limited choices about the future.

Developing GoalsCompone

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Developing Goals nts

Cascade from the top of the Strategic Plan Cascade from the top of the Strategic Plan Mission, Vision, Guiding Principles.Mission, Vision, Guiding Principles. Look at your strategic analysis SWOT,Look at your strategic analysis SWOT,

Environmental Scan, Past Performance, Gaps . .Environmental Scan, Past Performance, Gaps . . Limit to a critical few such as five to eight goals.Limit to a critical few such as five to eight goals.

Broad participation in the development of goals:Broad participation in the development of goals:

Consensus from above buy-in at the executionConsensus from above buy-in at the execution

level.level. Should drive higher levels of performance andShould drive higher levels of performance and

close a critical performance gap.close a critical performance gap.

Examples of GoalsCompone

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Examples of Goals nts

Reorganize the entire organization for better responsiveness to customersReorganize the entire organization for better responsiveness to customers

We will partner with other businesses, industry leaders, and government agencies in order to

better meet the needs of stakeholders across the entire value stream.

We will partner with other businesses, industry leaders, and government agencies in order to

better meet the needs of stakeholders across the entire value stream.

Manage our resources with fiscal responsibility and efficiency through a single comprehensiveprocess that is aligned to our strategic plan.

Manage our resources with fiscal responsibility and efficiency through a single comprehensive

process that is aligned to our strategic plan.

Improve the quality and accuracy of service support information provided to our internal

customers.

Improve the quality and accuracy of service support information provided to our internal

customers.

Establish a means by which our decision making process is market and customer focus.Establish a means by which our decision making process is market and customer focus.

Maintain and enhance the physical conditions of our public facilities.Maintain and enhance the physical conditions of our public facilities.

ObjectivesCompone

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Objectives Relevant - directly supports the goalRelevant - directly supports the goal

Compels the organization into actionCompels the organization into action

Specific enough so we can quantify andSpecific enough so we can quantify andmeasure the resultsmeasure the results

Simple and easy to understandSimple and easy to understand

Realistic and attainableRealistic and attainable Conveys responsibility and ownershipConveys responsibility and ownership

Acceptable to those who must executeAcceptable to those who must execute

May need several objectives to meet a goalMay need several objectives to meet a goal

nts

Goals vs Objectives

Compone

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Goals vs. Objectives

GOALS OBJECTIVES

Very short statement, few

words

Longer statement, more

descriptiveBroad in scope Narrow in scope

Directly relates to theMission Statement

Indirectly relates to the MissionStatement

Covers long time period(such as 10 years)

Covers short time period (such 1year budget cycle)

nts

Examples of Objectives

Compone

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Examples of Objectives

Develop a customer intelligence database system to capture and analyze patterns in purchasingbehavior across our product line.

Develop a customer intelligence database system to capture and analyze patterns in purchasingbehavior across our product line.

Launch at least three value stream pilot projects to kick-off our transformation to a leaner

organization.

Launch at least three value stream pilot projects to kick-off our transformation to a leaner

organization.

Centralize the procurement process for improvements in enterprise-wide purchasing power.Centralize the procurement process for improvements in enterprise-wide purchasing power.

Consolidate payable processing through a P-Card System over the next two years.Consolidate payable processing through a P-Card System over the next two years.

Monitor and address employee morale issues through an annual employee satisfaction survey

across all business functions.

Monitor and address employee morale issues through an annual employee satisfaction survey

across all business functions.

nts

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Down toSpecifics

What are Action Plans? Down toSpecifics

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Objectives

Initiatives

Action Plans

The Action Plan identifies the specific steps that will be taken to achieve the initiatives and strategic objectives where the rubber meets the road

Each Initiative has a supporting Action Plan(s) attached to it

Action Plans are geared toward operations, procedures, and processes

They describe who does what, when it will be completed, and how the organization knows when steps are completed

Like Initiatives, Action Plans require the monitoring of progress on Objectives, for which measures are needed

Specifics

Characteristics of Down toSpecifics

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Action Plans Assign responsibility for the successful completion of the Action Plan. Who

is responsible? What are the roles and responsibilities? Detail all required steps to achieve the Initiative that the Action Plan is

supporting. Where will the actions be taken?

Establish a time frame for the completion each steps. When will we need totake these actions?

Establish the resources required to complete the steps. How much will ittake to execute these actions?

Define the specific actions (steps) that must be taken to implement the

initiative. Determine the deliverables (in measurable terms) that shouldresult from completion of individual steps. Identify in-process measures toensure the processes used to carry out the action are working as intended.Define the expected results and milestones of the action plan.

Provide a brief status report on each stepbrief status report on each step, whether completed or not. Whatcommunication process will we follow? How well are we doing in executing ouraction plan?

Based on the above criteria, you should be able to clearly define youraction plan. If you have several action plans, you may have to prioritize.

Specifics

Action Plan Execution

Down toSpecifics

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Action Plan ExecutionSpecifics

Requires that you have answered the Who, What, How,Where, and When questions related to the project or initiativethat drives strategic execution

Coordinate with lower level sections, administrative andoperating personnel since they will execute the Action Plan inthe form of specific work plans

Assignaction responsibility and set timelines Developworking plans and schedules that have specific action steps

Resource the project or initiative and document in the form ofdetail budgets (may require reallocation prior to execution)

Monitorprogress against milestones and measurements Correct and revise action plans per comparison of actualresults against original action plan

Quantify from Action LevelUp

Down toSpecifics

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Upin terms of Measurements

Spec cs

Measure your milestones short-term outcomes atMeasure your milestones short-term outcomes atthe Action Item level.the Action Item level.

Measure the outcomes of your objectives.Measure the outcomes of your objectives.

Try to keep your measures one per objective.Try to keep your measures one per objective. May want to include lead and lag measures toMay want to include lead and lag measures to

depict cause-effect relationships if you aredepict cause-effect relationships if you are

uncertain about driving (leading) the desireduncertain about driving (leading) the desired

outcome.outcome.

Establish measures using a template to captureEstablish measures using a template to capture

critical data elementscritical data elements

Measurement Template

Down toSpecifics

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Measurement Templatep

(Insertorganizationname)

(Insert divisionname)

(Insert departmentname)

Risk Frame areaobjective supports

(Insert objectiveowner)

(Insertmeasurementowner)

(Insert reportingcontact info)

Objective Description description of objective purpose, in sufficient detail for personnel notfamiliar with the objective to understand its intent. Objective descriptions are typically two orthree paragraphs long. This will appear in the pop-up window when you mouse over theobjective in the Balanced Scorecard System.

References sourcedocumentation for objective andobjective description

Comments additional information about the objective not covered in above blocks, such as recommendations for further

revision, additional organizations objective impacts, recommendations for coordination / alignment with other objectives, etc.

Measure Name - The nameexactly as you want it toappear in the BalancedScorecard, including themeasure number (i.e. PercentEmployees Satisfied, etc.)

Measure Description description of the measure,include its intent, data source, and organizationresponsible for providing measure data. This willappear in the pop-up window when you mouse overthe measure in the Balanced Scorecard.

Measure Formula formula used tocalculate measurevalue (if any)

Data Source - Thesource of the data manual, dataspreadsheet, ordatabase name andcontact familiar withthe data

Measure Weight - the relative weight of the measure based on the impact it has onthe overall objective. The total weights for all measures for an objective must add to100

Measure Reporter Person responsiblefor providing measure data. Include thename, organization and email.

Target Maximum Maximum expected value for the measure. Effective Date Date the target firstbecomes effective

Frequency How oftentarget data will be reported

Units Unitsof measure

Target Point where the measure goes from green to amber

Criteria for Good Down toSpecifics

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Integrity Complete; useful; inclusive ofseveral types of measure; designed tomeasure the most important activities ofthe organization

Reliable: Consistent

Accurate - Correct

Timely Available when needed: designed touse and report data in a usable timeframe

Confidential and Secure: Free from

inappropriate release or attack

Measuresp

Examples of MeasurementsLead Indicators

Down toSpecifics

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Lead Indicators

Average time to initiate customercontact => shorter time should lead tobetter customer service

Average response time to incident =>

below average response times shouldlead to increased effectiveness indealing with incident

Facilities that meet facility qualityA1 rating => should lead to improvedoperational readiness for meetingcustomer needs

p

Examples of Measurements

Down toSpecifics

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Lag Indicators

Overall customer satisfaction rating =>how well you are doing looking back

Business Units met budgeted servicehour targets => after the factreporting of service delivery volume

Number of category C safety accidentsat construction sites => historicalreport of what has already taken place

p

TargetsDown toSpecifics

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Targets For each measurement, you should have atleast one target

Targets should stretch the organization tohigher levels of performance

Incremental improvements over current

performance can be used to establish yourtargets

Targets put focus on your strategy

When you reach your targets, you have

successfully executed your strategy

Examples of Targets

Down toSpecifics

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Average Time to Process New

Employee Setups in DB

65 days Year

2007

60 days Year

2008

55 days Year

2009

Utilization Rate for RentalHousing Units

90% for

Year 2007

92% for Year2008

95% for Year2009

Toxic Sites meeting in-servicecompliance

55% for Year2007

70% for Year2008

95% for Year2009

Personnel Fully Trained inSafety and Emergency

65% by 2rd Quarter

75% by 3thQuarter

90% by 4thQuarter

Open Positions Filled after 30day promotion period

75 positionsSept 2007

100 positionsJan 2008

135 positionsJuly 2008

% Reduction in Orders FilledShort in 1st Cycle

50% by Year2008

65% by Year2009

85% by Year2010

Sanity CheckDown toSpecifics

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Sanity Check . . .

Make sure everything is linked andconnected for a tight end-to-end modelfor driving strategic execution.

INITIATIVE

Employee

Productivity

Improvement

Program

Employee

SatisfactionSurvey Rating

90% favorable

overall

Measure

Target

Target Actual

90%

45%

PercentSatisfaction

gap

MEASURE / TARGET

OBJECTIVE

Improve Employee

Satisfaction

ACTION PLAN

Identify issues per a

company wide survey

International Marketing

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International Marketing

Trade policy Culture

Consumer buying

power Productstrategies

Obstacles to Trade:

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Protectionism

Differing interests ofconsumers and manufacturers

Benefits of trade tend to be

more diffused than benefits tospecific groups ofprotectionism

Approaches to

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Protectionism Tariffs Quotas

Voluntary exportrestrictions

Subsidies todomesticproducers/exporters

Non-tariff barriers

legal obstacles differential

treatment

Cultural Lessons

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Cultural Lessons

Diet Coke is named Light Coke inJapan--dieting was not well regarded

Red circle trademark was unpopularin Asia due to its resemblance of

Japanese flag Packaging of products is moreimportant in some countries than inU.S.

Advertisement featuring man and dogfailed in Africa--dogs were not seemas mans best friend

More Cultural

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Lessons...

Cologne ad featuring a man attackedby women failed in Africa

Food demonstration did well inChinese stores but not in Koreanones--older women were insulted bybeing taught by youngerrepresentatives

Pauses in negotiations Level of formality

Definitions

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Definitions

Culture: That complexwhole which includesknowledge, belief, art,morals, custom, and anyother capabilities and

habits acquired by man as amember of society.

Alternative definition: Meanings that areshared by most people in a group

[at least to some extent]. (Adapted from Peter and

Olson, 1994)

Hofstedes Cultural

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Dimensions Individualism (vs.collectivism)

Power distance

Masculine vs. feminine

Strong vs. weakuncertainty avoidance

Short vs. long termorientation

(Confucianist dynamics) The Foolish Old Man WhoMoved the Mountain

Based on interviews withIBM executives throughout

the World--1980s

Negotiation Content

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Negotiation Content

Non-task sounding Task-related exchange ofinformation

Persuasion

Concessions and agreements

Geography--Surprisinglyf l

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Impactful

U.S. and most Western Europeanareas are highly generallyaccessible

Compare to areas in thedeveloping World: China

Russia

Latin America (even Mexico), Africa

Communication vs. shipping

Climate and Topography:Th C f L ti A i

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The Case of Latin America

4,500 by 3,000 miles (at widest) 48% forests

West coast dominated by mountainranges

5% of land arable

Natural barriers inhibiting growth

Large proportion of residents in

cities; people in rural areas often donot associate themselves withcountries

Climate and Topography:Th C f L ti A i

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The Case of Latin America

4,500 by 3,000 miles (at widest) 48% forests

West coast dominated by mountainranges

5% of land arable

Natural barriers inhibiting growth

Large proportion of residents in

cities; people in rural areas often donot associate themselves withcountries

China: Geography

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China: Geography

Very rapidprogress onShanghaiinfrastructure

Rural villages aredifficult toaccess

Strong regional

differences evenwithin the country

Some Issues in Culture

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Some Issues in Culture

Time monochronic vs.

polychronic

meanings

Personal space preferred distance

territoriality

interactionwith/ignoring peoplein close proximity

Symbols colors

historicalassociations

Friendship andacquaintance

Agreements

Etiquette

Eastern vs. WesternC lt

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Culture

Differences in Values

Perceptions of Objects

Reality

Stability vs.change

Control

Perceived roles

pain mana

Perceived Control OverR lit

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Reality

World is not generally seen aspredictable

Trends are not expected to

continue Individual has little controlover the world

BUT Outcome is believed to be tied toeffort, not individual skill

More Tendencies

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More Tendencies

Westeners tend to ratethemselves

More unique than average and what

they are Above average in ability

Easteners tend to ratethemselves

Less unique than they really are

Below average

Proverbs

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Proverbs

Western: The early bird getsthe worm

Eastern:

The first bird in the flock getsshot

A nail that stands out will be

hammered down.

Values

Source: Richard E. Nisbett, The Geography of Thought: How Asians and

Westeners Think Differently and Why,New York, 2003, The Free Press

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Values

Issue Western Value Eastern ValueDistinctiveness ofpeople

Want to be distinctive Not valued; emphasis ontie to group

Perceived control Significant; values determinechoices

Modestsocietal valuesare already established

Emphasis Success and achievement;relationships may get in the way

Best outcome for relevantgroup (e.g., family, workgroup)

Self-esteem Strive to feel good; assuranceswanted

Tied to belonging withgroup

Relationships Equality or superior position Clearly defined;hierarchical

Rules Same rules apply to all Depend on context andrelationship

Some implications

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So e p ca o s

Thanking peoplefor things theyare clearly supposed to do?

Why the need for a choice

between 40 different brands ofcereal?

Socialization

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Western textbook: See Dickrun. See Dick play. See Dickrun and play.

Chinese: Big brother takescare of little brother. Bigbrother loves little brother.

Little brother loves bigbrother.

Perception of People

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p p

Western: People have characteristicsindependent of the situation Fundamental attribution error: Peopleattribute their own behavior to thecircumstances but that of others toinnate characteristics.

Eastern: Person is connected;behavior is the result of specificroles played at the time

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INTERNATIONAL BUSINESS WHY ?

Highly competitive business environment competition

from multi-nationals.

Business firms should increase their top lines and reduce

costs to retain their bottom lines.

One of the options, which some feel is a must, is to

internationalize the business operations.

Business firms should therefore develop proper strategies

to globalize operations.

INTERNATIONAL MARKETING WHY?

INTERNATIONAL MARKETING WHY?

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INTERNATIONAL MARKETING WHY?

Completion from MNCs in Domestic Market.

To increase Top line in order to keep steadybottom line with rising costs.

Maximize profits.

Global sourcing by multinationals has made exportof components and products more lucrative.

Reduction of duty and barriers by members of theWTO has made has made global markets moreattractive.

Convergence of tastes of customers globally hasresulted in development of global

products/services. The growth of buying power worldwide, includingdeveloping countries.

International Marketing: Marketingproducts/services across national borders by a

national or multinational company.

3 Stages of International Marketing:

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Depends on involvement of the firm -

Export Marketing

marketing across political boundaries

Multinational Marketing

marketing activities include other

operations in more than one country.

International Business

where organizations focus on globalcompetitive advantage and spread their value

creation activities globally.

Environment

Trade Barrier By many countries earlier to protect

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Trade Barrier By many countries earlier to protectdomestic Industry.

Tariff Barriers Barriers by imposition ofDuties (import duty) and taxes.

India once has duty of 300% on some imported itemsbut today reduced to 30 - 20%.

Non-Tariff Barriers Other than tariff such as:

Licensing Import Quota

Voluntary Export Restraints

Administrating protections.

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Some of the Administrative Barriers Safeguards against import surgesthreatening domestic industry.

Health Standards as NTB. Foreign Exchange Regulations notreleasing FE for import.

Trading Blocks Line

A S E A N European Union, etc. S A A R C

Market Selection:

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Decide Marketing Objective Define Parameters of Market Selection Preliminary Screening

Detailed study

and short

listing

Evaluation by

Metrix &

Selection

Normal Marketing Objectives:

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Profit More profitable inInternational Market.

Sales Volume To increase salesvolume and grow.

CompetitionTo beat domesticcompetition, compete globally evencounter competition.

Government Policy Incentives for

export or government policy not toallow volume exclusion of someindustries.

Evaluation Attributes: General: Political Economy

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Currency

Infrastructure Government Regulations/Bureaucracy

Tax

Can it be a market hub?

Specific: Demand Competition/Price Sensivity

Manufacturing cost

Government Policy/Incentives for business

Cultural influence on Marketing Mix.

Strategic International Market Entry ChoicesLeveraging Internal

CompetencyManaging Uncertainty

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- Asset Specificity

- Strategic Resource

- Context Specificity

Choice of International

Mode of Entry

Internalization

Direct Exports

Greenfield Investments

Acquisitions

Indirect Exports

Contractual Agreements

-Licensing- Franchising

- Syndication

- Turnkey Projects

Equity Joint Ventures

- Minority

- Equal

- Majority

Collaboration

Managing Uncertainty

- Environmental

- Behavioral

Entry Mode Selection

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Entry Mode Selection

Tradeoffs Risk Return

Control Investment

Market Entry Strategies

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y g

I di t E ti

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Indirect Exporting

Exporting via intermediariesin domestic market

Via domestic clients Export houses/ trading companies

Piggybacking

Co-operative export venture Clients buying offices in homemarket

Direct Exporting

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1. Exporting via intermediariesin foreign market

2. Direct selling to firms

within the foreign market(e.g. large companies-industrial goods)

3. Mail order

4. Via local sales office

5. Direct to government body

Contrasting AdvertisingPerspectives (Aithison 2002)

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Perspectives (Aithison 2002)

Western Atomisticbroken

down to smallestcomponent parts

Unique selling

propositions

How to

Positioning

May be dull and

boring Copy focused

Asian Holistic

Everythingrelates to

everything else

How things fittogether andrelate

Visual and oral

Jim Aitchison, How Asia Advertises,New York: Wiley, 2002.

Advertising ContentComparisons

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Comparisons

American: Individual benefit and pleasure(e.g., Make your way through the

crowd) Korean

Collective values (e.g., We havea way of bringing people together)

Debate and Conflict

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The first person to raise his voice haslost the argument. (Chinese proverb)

Use of indirection and projection

Face-to-face vs. anonymous comments

Western adversarial rule of law basedon consistent universal ideals vs.solution for the case at hand in context

Relationships, Education,

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and Work Western

Standing out; being better

Self perceived favorably

Self-esteem building

Work longer on successful job

Eastern Harmony

Must weed out personal characteristics thatmight annoy others

Taught self-criticism

Not recognized in profession until after manyyears of practice

Work longer on unsuccessful job

Physical Product vs.Communication Adaptations

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Communication

adaptations not

needed

(extension)

Communication

adaptations

needed

Product

adaptations not

needed

(extension)

Some industrial

equipment; some

electrical

equipment

Bicycle; fast food;

chewing gum

Product

adaptations

needed

Gasoline; laundry

detergent

Greeting cards

Domestic

equivalent does

not exist(product

invention)

Compass-equipped prayer rug; hand

powered washing machine

CONSUMER INCOMES ANDBUYING POWER

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BUYING POWER

Measuring country wealth

gross domestic product

purchase parity vs. nominal

Government role in the economy

Tax burden

Services provided by the Governmente.g., health care, education

Country of OriginEffects

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Effects

Perception of product quality (e.g., Japan, Germany)

elegance and style (e.g., France, Italy)

Historical associations

Positioning strategies

Emphasis on origin (e.g., French wine)

De-emphasis/obfuscation of of country oforigin (e.g., French beer, Americanproducts with French language labels)

Nominal vs. Purchase ParityAdjusted GNPsExamples (2003)

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Adjusted GNPs Examples (2003)

Countr

U i d SSource: World Bank (http://www.worldbank.org/data/databytopic/GNIPC.pdf)

The Hamburger Standard (fromthe Economist)

http://www.worldbank.org/data/databytopic/GNIPC.pdfhttp://www.worldbank.org/data/databytopic/GNIPC.pdf

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the Economist)

Country Local Price in US$ Buying power relative to U.S.

U.S. $2.71 1.00

Britain 3.14 .75

Egypt 1.35 2.00

Mexico 2.18 1.24China 1.20 2.26

Switzerland 4.59 0.59

Market Entry Strategies

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Exporting Low investment Low control of

promotion

Licensing

Low investment Low control of

promotion,positioning, andquality

Able to benefit fromexistingdistribution andmarket knowledge

Joint venture Considerable investment More control

Able to benefit frompartners experience

Must work with partner

Direct investment Large investment

Risky

Greater control

May lack knowledge of

market

Market Positioning StrategiesAcross Countries

http://www.haagendazs.com/hdshds.do

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c oss Cou es

Hagen-DazsU.S. vs. Japan Corona BeerMexico vs. U.S.

Mercedes-BenzEurope vs. U.S.

McDonalds U.S.

Europe

Developing countriese.g., China

U.S. Laws of Interest tofirms with U.S.I l t

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Involvement Anti-trust Foreign CorruptInfluences

Anti-boycott laws Trading With the Enemy

The International Lifel

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Cycle Market for older technologytends to exist in lessdeveloped countries Manufacturing of older

generation technology--e.g.,Pentium I computers

Resale of capital equipmente.g., DC 8 aircraft, old threepart canning machines

Some countries tend to bemore receptive toinnovation than others

Leap frogging Going directly from

old technology to thevery newest, skippingintermediate step(e.g., wireless ratherthan wired technology)

Shorteningof productlifecycles