global marketing strategies chapter 7 bbe2313 fundamental of entreprenuership

Global Marketing StrategiesCHAPTER 7

BBE2313 • FUNDAMENTAL OF ENTREPRENUERSHIP

BENTR2101 Fundamental of Entrepreneurship 2

Objectives

• At the end of lecture students should be able to:– Explain why "going global" has become an

integral part of many small companies’ strategies.

– Describe the eight principal strategies small businesses can use to go global.

– Explain how to build a successful export program. – Discuss the major barriers to international trade

and their impact on the global economy. – Describe the trade agreements that will have the

great est influence on foreign trade.


Topics Covered

• Why going global?• Strategies for going global• International trade• Barrier in international trade


Why “Go Global?”

• Offset sales declines in the domestic market

• Increase sales and profits• Extend products’ life cycles• Lower manufacturing costs• Improve competitive position• Raise quality levels• Become more customer-oriented


Questions to Consider Before Going Global

1. Is there a profitable market in which our company has the potential to be successful over the long run? (see Table 12.1)

2. Do we have and are we willing to commit adequate resources of time, people, and capital to a global campaign?

3. Are domestic pressures forcing our company to consider global opportunities?


Questions to Consider Before Going Global

4. Do we understand the cultural differences, history, economics, values, opportunities, and risks of conducting business in the country we are considering?

5. Is there a viable exit strategy for our company if conditions change or the new venture does not succeed?

6. Can we afford not to go global?


Eight Strategies for Pursuing Global Markets


Strategies For "Going Global"

• Launching a World Wide Web site


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• Launching a World Wide Web site Relying on trade intermediariesRelying on trade intermediaries



Trade Intermediaries

• Export Management Companies (EMCs)• Export Trading Companies (ETCs)• Manufacturer’s Export Agents (MEAs)• Export merchants• Resident buying offices• Foreign distributors


• Joint ventures

Launching a World Wide Web siteLaunching a World Wide Web site Relying on trade intermediariesRelying on trade intermediaries



Joint Ventures

• Domestic joint venture – two or more U.S. companies form an alliance for the purpose of exporting their goods and services abroad.

• Foreign joint venture – a domestic firm forms an alliance with a company in the target nation. – Most important ingredient: Choosing the

right partner.– Another key to success: Establishing

common objectives.


• Foreign licensing• International franchising• Countertrading and bartering• Exporting

Launching a World Wide Web siteLaunching a World Wide Web site Relying on trade intermediariesRelying on trade intermediaries Joint venturesJoint ventures



Exporting

• Small companies account for 97% of all companies involved in exporting, but…

• They generate just one-third of the U.S. export sales.

• Only 1% of all small and medium-sized businesses export; twice as many are capable of exporting but are not doing so.


Number of Countries to Which Small Businesses Export

2 to 4 countries23.7%

5 to 9 countries7.7%

10 or more countries5.6%

1 country63.0%

Source: Exporter Data Base, U.S. Dept of Commerce, Office of Trade and Economic Analysis, Trade Development/International Trade Agency.


Steps to Successful Exporting

1. Recognize that even the tiniest companies and least experienced entrepreneurs have the potential to export.

2. Analyze your product or service.3. Analyze your commitment to developing export

markets.4. Research potential markets and pick your

target.


5. Develop a distribution strategy.6. Find your customer.

– U.S. Department of Commerce– International Trade Administration

7. Find financing for export sales.– SBA, EX-IM Bank, OPIC, and others

8. Ship your goods.9. Collect your money.

Steps to Successful Exporting


How a Letter of Credit Works.

$

Foreign buyer agrees to buy products;seller agrees to ship goods if buyerarranges a letter of credit.

Buyer requests that his bank grant aletter of credit, which assures exporterpayment if she presents documents proving goods were actually shipped.Bank makes out letter of credit to sellerand sends it to seller’s bank (called the confirming bank).

Seller ships goods to buyer according to letter of credit’s terms and submits shipping documents to bank issuing letter of credit.

$Letterof Credit

Seller’s Bank Buyer's Bank

Buyer’s bank makes payment to seller’s (confirming) bank. Confirming bank then pays seller amount specified in letter of credit.

$

BuyerSeller


• Establishing international locations

Launching a World Wide Web siteLaunching a World Wide Web site Relying on trade intermediariesRelying on trade intermediaries Joint venturesJoint ventures Foreign licensingForeign licensing International franchisingInternational franchising Countertrading and barteringCountertrading and bartering ExportingExporting



Barriers To International Trade

• Attitude - "My company is too small to export."

• Lack of information about how to get started.

• Lack of export financing.

Domestic Domestic

BarriersBarriers::


• Tariffs - Taxes a government imposes on goods and services imported into that country.

• Quotas - Limits on the amount of a product imported into a country.

• Embargoes - Total bans on imports of certain products.

International International

BarriersBarriers::



• Dumping - Selling large quantities of a product in a foreign country below cost to gain market share.

• Political barriers - rules, regulations and risks.

• Business barriers – business practices and laws.

• Cultural barriers - Differing languages, philosophies, traditions, and accepted business practices.

International International

BarriersBarriers::



International Trade Agreements

• General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO)

• North American Free Trade Agreement (NAFTA)


Guidelines For Success In International Markets

• Make yourself at home in all three of the world's key markets - North America, Europe, and Asia.

• Appeal to the similarities within the various regions in which you operate but recognize the differences in their particular cultures.

• Be willing to commit the necessary resources to make your global efforts successful.

• Develop new products for the world market.



• Use the many resources available to research potential markets and to determine the ideal target for your products.

• Familiarize yourself with foreign customs and languages.

• Learn to understand your customers from the perspective of their culture, not your own.


• "Glocalize" - Make global decisions about products, markets, and management, but allow local employees to make tactical decisions about packaging, advertising, and service.

• Make positive and preferably visible contributions to the local community.



• Train employees to think globally, send them on international trips, and equip them with state-of-the-art communication technology.

• Hire local managers to staff foreign offices and branches.



• Do whatever seems best wherever it seems best, even if people at home lose jobs or responsibilities.

• Consider using partners and joint ventures to break into foreign markets you cannot penetrate on your own.


global marketing strategies chapter 7 bbe2313 fundamental of entreprenuership

Documents

global opportunities

internet world stats

global campaign

global economy

internet usage statistics

world total757

trade intermediariesstrategies

trade agreements