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.

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Small Businesses as Global

Enterprises
Globalization
The expansion of international business:
Converging
Falling

market preferences

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 firms

international activity,
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Questions to Consider Before Going

Global
What are managements 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

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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.

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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.

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17-2

Basic Forces Driving Global Enterprises

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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.

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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.

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Expanding the Market

Gaining
GainingAccess
Access
to
toResources
Resources

Cutting
Cutting
Costs
Costs

Factors
Factors in
in
Competing
Competing
Internationally
Internationally
Capitalizing
Capitalizingon
on
Special
SpecialFeatures
Features
of
ofLocation
Location

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17-4

Strategy Options for Global Enterprises

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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 strategyconnecting with overseas
suppliers that can provide products or services a
company needs to operate successfully.
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Strategy Options for Global Firms

(contd)
Foreign Licensing
Allowing a company in another country to purchase

the right to manufacture and sell a companys

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
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Strategy Options for Global Firms

(contd)
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

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Strategy Options for Global Firms

(contd)
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

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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 ratethe value of one countrys currency
relative to that of another country.

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17-5

Country Risk Rankings Map

Source: Paul Pedzinksi, Country Risk Poll, Euromoney, Vol. 37, No. 443 (March 2007), pp. 171176.

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Challenges to Global Business (contd)

Managerial Limitations
Product planning
Marketing
Finance
Management
Accounting
Legal issues

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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
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Assistance for Global Enterprises

(contd)
Connections With International Customers
Trade Leads
Trade Missions
Trade Intermediaries
An

agency that distributes a

companys products on a
contract basis to customers
in another country

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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.

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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.

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Assistance for Global Enterprises

(contd)
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.

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Key TERMS

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

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

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