Business Marketing Business Marketing Strategies Strategies

for Global Marketsfor Global Markets

Chapter 8Chapter 8

Capturing Global AdvantageCapturing Global Advantage

What are RDEs?What are RDEs?

Why are they important?Why are they important?

Sources of Global AdvantageSources of Global Advantage

Three major types of advantagesThree major types of advantages• Cost advantagesCost advantages• Market access advantagesMarket access advantages• Capabilities advantagesCapabilities advantages

Cost AdvantagesCost Advantages

20-40% savings in landed costs20-40% savings in landed costs• What are landed costs?What are landed costs?

Lower Operating CostsLower Operating Costs• Wage differencesWage differences• Business process outsourcingBusiness process outsourcing

Lower Capital CostsLower Capital Costs• Capital and equipments costsCapital and equipments costs• 30% savings30% savings• Hidden costsHidden costs

Market Access AdvantagesMarket Access Advantages

Access to Growing MarketsAccess to Growing Markets• ChinaChina

Following customersFollowing customers

Capabilities AdvantageCapabilities Advantage

Gain knowledge and skillsGain knowledge and skills• China and IndiaChina and India

How does this help?How does this help?• Improve R&DImprove R&D• Address unmet consumer needsAddress unmet consumer needs• Tailor products to local marketTailor products to local market

To Outsource or not to Outsource?To Outsource or not to Outsource?

THAT is the questionTHAT is the question

To outsource:To outsource:

To not outsource:To not outsource:

International Market Entry OptionsInternational Market Entry Options

ExportingExporting ContractingContracting Strategic AlliancesStrategic Alliances Joint VentureJoint Venture

Market Entry OptionsMarket Entry Options

ExportingExporting• Goods are produced ___________Goods are produced ___________• Sales are made through Sales are made through

____________________________________• Lowest commitment and riskLowest commitment and risk• DisadvantagesDisadvantages

Market Entry OptionsMarket Entry Options

ContractingContracting• Two typesTwo types

LicensingLicensing• What can be licensed?What can be licensed?• AdvantagesAdvantages• DisadvantagesDisadvantages

Management contractsManagement contracts• Turnkey operationsTurnkey operations

Market Entry OptionsMarket Entry Options

Strategic AlliancesStrategic Alliances• ““Collaborations among partners Collaborations among partners

involving the commitment of capital and involving the commitment of capital and management resources with the management resources with the objective of enhancing the partner’s objective of enhancing the partner’s competitive positions.”competitive positions.”

• AdvantagesAdvantages• DisadvantagesDisadvantages

Market Entry OptionsMarket Entry Options

Joint VenturesJoint Ventures• Why?Why?• AdvantagesAdvantages• DisadvantagesDisadvantages

Choosing a Mode of EntryChoosing a Mode of Entry• FactorsFactors

Multidomestic v. GlobalMultidomestic v. Global

MultimdomesticMultimdomestic

GlobalGlobal

International Strategy and the International Strategy and the Value ChainValue Chain

Primary activitiesPrimary activities• UpstreamUpstream• DownstreamDownstream

Competitive AdvantageCompetitive Advantage• DownstreamDownstream• UpstreamUpstream

CoordinationCoordination ConfigurationConfiguration

General FrameworkGeneral Framework

1.1. Build a Unique Competitive PositionBuild a Unique Competitive Position2.2. Emphasize a Consistent Positioning Emphasize a Consistent Positioning

Strategy Strategy3.3. Establish a Clear Home Base for Establish a Clear Home Base for

BusinessBusiness What’s a home base?What’s a home base?

• HPHP

4.4. Leverage Product Line Home Bases Leverage Product Line Home Bases at Different Locationsat Different Locations

General FrameworkGeneral Framework

5.5. Disperse Activities to Extend Home Base Disperse Activities to Extend Home Base AdvantagesAdvantages

Purchase from cost-effective vendorsPurchase from cost-effective vendors Improve market accessImprove market access Tap competitive advantages in other placesTap competitive advantages in other places

6.6. Coordinate and Integrate Dispersed Coordinate and Integrate Dispersed ActivitiesActivities

Establish clear global strategyEstablish clear global strategy Develop info and accounting systemsDevelop info and accounting systems Encourage personal relationshipsEncourage personal relationships Rely on incentive systemsRely on incentive systems