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Learning Objectives
Evaluate regional economic integration Discuss regional integration in Europe Evaluate regional integration in the Americas Examine regional integration in Asia Review regional integration in the Middle East and Africa
50 40 30 20 10 0
?
NAFTA
? ?
ANCOM
? ? ?
CARICOM
? ? ? ?
EU
NAFTA - 21%
Asia - 19%
(of which Japan - 7%)
Non-Triad countries - 13% of world exports. Thickness of arrows corresponds to volume of exports.
1980
1998
Latin American Free Trade Association (LAFTA) The Andean Community Pact Latin American Integration Association (ALADI) Southern Common Market (MERCOSUR)
Integration in Asia
Association of Southeast Asian Nations (ASEAN) Asia Pacific Economic Cooperation (APEC)
Learning Objectives
Explain the stages of identification and analysis that precede strategy selection Identify organizational strategies of international companies Learn how production affects strategy Learn how marketing affects strategy Discuss the structures of international organizations
Export Strategy
Entry mode depends on ownership advantages, location advantages, and internal advantages Companies will sometimes choose export strategy if their ownership levels are low Traditional theory states that the larger the company, the greater the chance of being an exporter
Import Strategy
Three types of importers: 1) looking for a product to buy and sell 2) looking for a cheaper source overseas 3) using foreign source as part of the global supply chain Two types of imports 1) Industrial and consumer goods 2) Intermediate goods that are part of a firms supply chain
Multinational Strategies
International Strategies
Global Strategies
Growth Growth
Retrenchment Retrenchment
Strategic Target
Industrywide
Differentiation Differentiation
Focus Focus
Department-Level Strategies
Primary
Manufacturing Marketing and Sales Customer Service Efficient Logistics
Support
Research & Development Human Resources Procurement Accounting & Finance
Production Considerations
Capacity Planning Facilities Location Planning
Process Planning
Centralization Centralization
Decentralization Decentralization
Industrialized Markets
Emerging Markets
Pricing Factors
Exchange rates Transportation costs Duties Channels Insurance Banking
Field Trips
Competitor Analysis
International Division
Asia Division
Americas Division
Europe Division
Japan
China
S. Korea
Trains Division
Automobiles Division
International Staffing
Ethnocentric Polycentric Geocentric
Third Country
A resident of a country other than the home country and the host country employed to manage the operation.
Planning
Recruiting
Selecting
Culture Shock
Employee Compensation
Managerial Employees Non-Managerial Workers
Personal Space
People in the United States prefer a wide distance from those with whom they are involved in face-to-face communication. People in Arab cultures prefer a very short distance between themselves and those with whom they are communicating.
Market research
6 5 4 3 2 1 0
-20
USA 1
Japan 3
France 7
Spain 14
Mexico 11
India 4 UK 9
Indonesia 15 60
China 2
80
Ethnic Chinese
V ietnames e Other
Total ethnic Chinese population in these countries = 39 million + PRC vs < 3.5 million in HK
50
40
20
10
Positioning strategy Positioning strategy Cathay Pacific based in Cathay Pacific based in Hong Kong Hong Kong
Cathay Pacific Positioned as Asian airline with: Meals Entertainment Cabin interiors
Slogan
Overcomes problems with macro segments since consumer behaviour is not uniform within countries Approach
1. Micro segmentation from within country data (segments are equivalent, not the same - SES approach) 2. strategies less standard than with universal segments 3. Consolidate across countries
Country A (segment 1a) Country B (segment 1b) Country C (segment 1c)
Micro Segmentation
Targeting
limited scale economies due to minor adjustments to marketing mix
consumers likely to respond similarly to marketing mix segmentation for product class
lifestyles personality culture a viable SES segment will enable economies of scale
SES Approach
Qualifying dimensions
Geographic location Support services Legal/economic conditions Political climate
Country
A
1 2 3
B
1 3 4
C
1 5 6
Large combined cross national segment responds to equivalent marketing mix enable scale economies
KEY: FB&T = Food, Beverages, & Tobacco; C&F = Clothing & Footwear; HH = Household Expenses; MH = Medical Health; T&C = Transpo tation & Communications; R&E = Recreation & Education
segments based on BSB Global Scan Similar global attitudes across 18 countries
22 % 14% 18% 12 % 14% 19% 22% 18% 17 % Adaptors psychographicallysimilar psychographically similar differencesin how differences in how segments translate into segments translate into preferences preferences USStrivers short of time US Strivers short of time and money and money cars- -fun, stylish and cars fun, stylish and value for money value for money Japanesestrivers not short Japanese strivers not short of money of money cars- -extension of cars extension of home, accessories home, accessories important important Customisedmarketing mix Customised marketing mix Contrastwith SES approach Contrast with SES approach
16% 12%
Traditionalists
Pressured Achievers
17%
29%
22%
Strivers
26 %
Japan
US
UK
Source: p.180
requiresequivalent requires equivalent Keegen and Green 1997, strategy across markets strategy across markets
Segmentation Tools
Development of homogenous clusters from micro or macro level data Distance = (X
c u tryA on
Cluster Analysis
-X
c u tryB on
)2+(Y
c u tryA on
-Y
c u tryB on
)2
Where: X, Y are segmentation variables eg. X = buying power (PPP) Y = culture variables (Power Distance) Distance score differences between data from different measures allows classification into 2 or more clusters enables analyst to place consumers into one group or another
Cluster Analysis
Segmentation variable y
Cluster 1
(eg. culture)
Cluster 2
Task
to group consumers from countries into two or more homogeneous groups (clusters)
Three clusters
Usefulness of this is questionable since a cluster of one country is less efficient
Regression analysis
Y=a+ Contrasts with cluster analysis which is bx Y a classificatory method Regression: use of one or more independent variables to predict dependent variable Y = a + b1X1 + b2x2 + b3X3..
Microwave ownership
-76.7 - 0.5 (frozen food) +2.7 (women in wf) t = 2.9 - 0.3 (GDP/Cap)
Conclusions
Use of macro and micro data
to form market clusters SES
economies of scale
Global Manufacturing: Key Supply chain: Terms - Coordination of materials, information and
funds from the initial raw material supplier all the way to the final consumer Logistics: - Part of the supply chain that plans, implements and controls efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption