GLOBAL MARKETS

Exploring Global Markets

 GLOBAL FIRM
A global firm is one that operates in more than one country
and captures R&D, production, logistical, marketing, and
financial advantages in its costs and reputation that are not
available to purely domestic competitors.

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Major Decisions in International Marketing

Deciding whether to go

Deciding which markets to enter

Deciding how to enter

Deciding on the marketing program

Deciding on the marketing organization

 Issues Global strategy
1. Should the firm become global by entering new countries?

2. What countries should be entered and in what sequence?

3. To what extent should products and service offerings be

standardized across countries?

4. To what extent should the brand name and marketing

activities(such as brand position, advertising and pricing)
be standardized across countries?

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5. How the brand should be managed globally?

6. To what extent should strategic alliances should be used to enter

new countries?

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 Objectives-Global strategy

Economies of
Scale Dodge Trade
barriers

Access
National Global Create Global
Incentives strategies brand
associations

Cross-
Access to low-cost subsidization
Labour and Inputs

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a) Obtaining scale of economies

Economies of scale can occur from standardization of

marketing, operations and manufacturing. A firm benefits

when fixed costs involving IT and production technologies can

be distributed over countries.

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b) Desirable Global brand associations
Brands with global presence automatically symbolises

strength, staying power , reliability and ability to generate

competitive products.

Ex : Firms like Honda, Yamaha, Canon operate in which

technology and product quality are important and they
have benefitted from global brand association

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c) Access to Low-Cost labour and raw materials.
Cost reduction in terms of access to cheap labour and raw

materials can be one reason . Access to low cost-labour and

materials can be an strategic advantage when it is

accompanied by skill and flexibility to change to more

alternatives.

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d) Access to National Investment Incentives

Access to national investment incentives means cost

advantage, tax benefits etc.

e) Cross subsidization

Global presence allows to cross-subsidize operation in one

region by the resources generated or accumulated in one part

of the globe.

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d) Dodge Trade barriers
Strategic location of component and assembly plants can

help gain access to markets by penetrating trade barriers

and fostering good will. Locating final assembly plants in a

host country is a good way to achieve favorable trade

treatment.

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e) Access to Strategically Important markets

Some markets are important due to the market size and

potential for growth, raw material supply, labour cost or

access to technology.

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 Global Market selection
1) Is the market attractive in terms of size and growth potential?

2) How intense competition?

3) Can the firm can add value to the market? This means whether
product or operational model provide a benefit to consumers?

4) Whether the business model can be implemented ?

5) Can critical mass be achieved? Its fatal to enter markets

lacking sales potential to support marketing and distribution

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 Global Marketing
Advantages Disadvantages

Differences in consumer
Economies of scale
needs, wants, usage
Lower marketing costs
patterns
Power and scope Differences in consumer

Consistency in brand image response to marketing mix

Differences in brand
Ability to leverage
development process
Uniformity of marketing
Differences in environment
practices
Five Modes of Entry

Indirect exporting

Direct exporting

Licensing

Joint ventures

Direct investment
 Strategic Alliance
A strategic alliance is a collaboration of leveraging the

strengths of two or more organisations to achieve

strategic goals. Two types of alliance Informal and

formal joint ventures.

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 Why Strategic alliance?

a) Generate Economies of scale.

b) Gain access to strategic markets

c) Overcome trade barriers.

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