PDF | This is the introductory chapter to the book giving an overview of today's marketing environment. In doing so, it seeks to highlight the. teaches international marketing, global sourcing strategy (R&D, manufacturing, previous editions of Global Marketing Management. What you should learn from Chapter LO1 How global marketing management differs from international marketing management. LO2 The need for planning.
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GLOBAL MARKETING. MANAGEMENT. SECOND EDITION. Masaaki Kotabe. Temple University. Kristiaan Helsen. Hong Kong University of Science and. 7th ed. Wiley, p. ISBN The 7th Edition of Global Marketing Management prepares students to become effective managers overseeing. Wiley, p. 5th ed. ISBN: , Global Marketing Management prepares students to become effective managers overseeing.
Problems in franchising Needs a high degree of standardization Protection of the total business system from copycat competition Government intervention Selection and training of franchisees. Governmental Perspective on Franchising Franchising does NOT replace exporting export jobs require large outflow of foreign exchange the bulk of profit remains in the country.
Global Marketing Management IV. Foreign Market Entry Modes 1 The Internet 2 Exporting Direct and Indirect 3 Contractual Agreements i Licensing - A firm allows another firm to use its intellectual property for a royalty ii Franchising - A parent company grants another company the right to do business in a prescribed manner. Global Marketing Management Recommendations of Joint Ventures i Find a partner with complementary skills ii Negotiate agreement carefully; Work out details iii Plan to adjust to a changing environment.
Advantages of Full Ownership: Disadvantages of Full Ownership: Flag for inappropriate content. Related titles. Jump to Page. Search inside document. Global Marketing Management Planning and Organization Global Marketing Management Companies must learn to operate as if the world was one large market.
Adaptation Controversy A. Think and plan long term?
Stick to what you know? Gaurav Kumar. Bydia M. Manzanares Serrano. BL Hants. Rufy Montanez Jusi. Hari Krishan. Karan Sharma. Phan Hong Duong. Essam F. Deliu Bogdan. Anurag Bansal.
Kotabe M., Helsen K. Global Marketing Management
Hitesh Joshi. Ruth Addie Mendez. Rajendra Swarup Mathur. Mohamed Shamin. Rosenba Dela. Ali Elattar. At this point high income countries often decide to invest in foreign countries to protect their share.
As foreign producers expand, their growing economies of scale make them a competitive source for third country markets where they compete with high income exporters. The final phase of the cycle occurs when the foreign producer achieves such a scale and experience that it starts exporting to the original high income producer at a production cost lower than its original high income producer at a production cost lower than its original high income supplier.
High income producers, once enjoying a monopoly in their own market, now face competition at home. The cycle continues as the production capability in the product extends from other advanced countries to less developed countries at home, then in international trade, and finally, in other advanced countries home markets.
Case 1. Non more than the textiles industry, specially cotton. In the early and mid twentieth century the UK was a major producer of cotton textile materials, primarily based on its access to cheap raw materials from its Commonwealth countries and its relatively cheap labour. However, its former colonies like India, Pakistan and certain African countries, which were sources of cotton in themselves realised that they had the labour and materials on their doorstep conducive to domestic production.
They began to do so. Such was their success in supplying their own huge markets that their production costs dropped dramatically with growing economies of scale. Soon they were able to support cloth and finished good back to the UK, which by now had experienced growing production costs due to rising labour costs and failing market share.
An Executive Digest
Now the UK has little cotton materials production and it served by many countries over the world, including its former colonies and Commonwealth countries. Whilst the underlying assumption behind the International Product Trade Cycle is that the cycle begins with the export of new product ideas from high income countries to low income importers, then low income countries begin production of the product etc.
In this case, the Trade Cycle ceases to be the underpinning concept. This may be due to a number of factors like lack of access to capital to build the facilities to respond to the import, lack of skills or that the costs of local production cannot get down to the level of costs of the imported product. In this case, product substitution between the exporter and importer may also take place.
A classic example of this phenomenon is the case of Zimbabwe Sunsplash fruit juice drinks. When Zimbabwe embarked on its World Bank sponsored structural adjustment programme in , Zimbabwe steadily moved from a command to a market economy, part of which allowed foreign importers. In a short space of time, market share for Sunsplash fell from 1 million litres annually to a mere litres. On this reduced volume, coupled with higher transport costs, the company simply could not compete and closed its doors in January However reduction in income and transport costs were not the only problems.
Expenses like high interest rates were an inhibiting factor. The company needed to make the transition to aseptic packaging which would alleviate the need for chemical preservations and enhance unrefrigerated shelf life. The new packaging would have greatly enhanced the product and generated export potential.
Orientation of management: Perlmutter1 identified distinctive "orientations" of management of international organisations. His "EPRG" scheme identified four types of attitudes or orientations associated with successive stages in the evolution of international operations.
The latter two are based on similarities and differences in markets, capitalising on similarities to obtain cost benefits, but recognising differences. Market forces and development Over the last few decades internationalism has grown because of a number of market factors which have been driving development forward, over and above those factors which have been attempting to restrain it.
These include market and marketing related variables. Many global opportunities have arisen because of the clustering of market opportunities worldwide.
Organisations have found that similar basic segments exist worldwide and, therefore, can be met with a global orientation. Cotton, as an ingredient in shirtings, suitings, and curtain material can be globally marketed as natural and fashionable. One can see in the streets of New York, London, Kuala Lumpar or Harare, youth with the same style and brand of basketball shirts or American Football shorts.
Coca Cola can be universally advertised as "Adds Life" or appeal to a basic instinct " You can't beat the Feeling" or "Come alive" as with the case of Pepsi. One can question "what feeling? The more culturally unbounded the product is, the more a global clustering can take place and the more a standardised approach can be made in the design of marketing programmes.
This standardised approach can be aided and abetted with technology. Technology has been one of the single most powerful driving forces to internationalism.
Rarely is technology culturally bound. A new pesticide is available almost globally to any agricultural organisation as long as it has the means to download it. Computers in agriculture and other applications are used universally with IBM and Macintosh becoming household names. The need to recoup large costs of research and development in new products may force organisations to look at global markets to recoup their investment.
This is certainly true of many veterinary products. Farm machinery, for example, requires volume to generate profits for the development of new products. Communications and transport are shrinking the global market place. In many cases this may mean an adaption in advertising appeals or messages as well as packaging and instructions.
Nestle will not be in a hurry to repeat its disastrous experience of the "Infant formula" saga, whereby it failed to realise that the ability to find, boiled water for its preparations, coupled with the literacy level to read the instructions properly, were not universal phenomenon. Marketing globally also provides the marketer with five types of "leverage" or "advantages", those of experience, scale, resource utilisation and global strategy.
If it consumes a third of the world's cocoa output annually, then it is in a position to dominate terms.
This also has its dangers. The greatest lift to producers of raw agricultural products has been the almost universal necessity to consume their produce.
If one considers the whole range of materials from their raw to value added state there is hardly a market segment which cannot be tapped globally. Take, for example, oranges. Not only are Brazilian, Israeli, South African and Spanish oranges in demand in their raw state worldwide, but their downstream developments are equally in demand.
Orange juice, concentrates, segments and orange pigments are globally demanded. In addition the ancillary products and services required to make the orange industry work, find themselves equally in global demand. So insecticides, chemicals, machinery, transport services, financial institutions, warehousing, packaging and a whole range of other production and marketing services are in demand, many provided by global organisations like Beyer, British Airways and Barclays Bank.
Of course, many raw materials are at the mercy of world prices, and so many developing countries find themselves at the mercy of supply and demand fluctuations. But this highlights one important global lesson - the need to study markets carefully. Tobacco producing countries of the world are finding this out.
With a growing trend away from tobacco products in the west, new markets or increasing volumes into consuming markets have to be prospected and developed. Many agricultural commodities take time to mature.
An orange grove will mature after five years. By that time another country may plant or have its trees mature. Unless these developments are picked up by global intelligence the plans for a big profit may be not realised as the extra volume supplied depresses prices.
The unexpected release of Chinese tobacco depressed the tobacco price well below expectations, leaving farms with stock and large interest carrying production loans.
A number of suppliers of agricultural produce can take advantage of "off season" in other countries, or the fact that they produce speciality products. In fact the case of Kenya vegetables to Europe is a classic, covering many of the factors which have just been discussed-improved technology, emerging global segments, shrinking communications gaps and the drive to diversify product ranges.
Kenya took advantage of: a increased health consciousness, increased affluence and foreign travel of West European consumers; b improved technologies and distribution arrangements for fresh products in Western Europe; c the emergence of large immigrant populations in several European countries: d programmes of diversification by agricultural export countries and e increased uplift facilities and cold store technologies between Europe and Kenya.
Exports started in , via the Horticultural Cooperation Union, which pioneered the European "off season" trade by sending small consignments of green beans, sweet peppers, chillies and other commodities to a London based broker who sold them to up market hotels, restaurants and department stores.
From these beginnings Kenya has continued to give high quality, high value commodities, servicing niche markets. Under the colonialists, production remained small, under the misguided reasoning that Kenya was too far from major markets. So irrigation for production was limited and the markets served were tourists and the settlers in Kenya itseff. The s saw an increased trade as private investment in irrigation expanded, and air freight space increased, the introduction of wide bodied aircraft, and trading relationships grew with European distributors.
Kenya, emerged as a major supplier of high quality sweet peppers, courgettes and French beans and a major supplier of "Asian" vegetables okra, chillies etc. Kenya was favoured because of its ability to supply all year round - a competitive edge over other suppliers. Whilst the UK dominated, Kenya began supplying to other European markets. Kenya's comparative advantage was based on its low labour costs, the country's location and its diverse agro-ecological conditions.
These facilitated the development of a diversified product range, all year round supply and better qualities due to labour intensity at harvest time. Kenya's airfreight costs were kept low due to government intervention, but lower costs of production were not its strength.
This lay in its ability for continuance of supply, better quality and Kenyan knowledge of the European immigrant population. Kenya's rapidly growing tourist trade also accelerated its canning industry and was able to take surplus production. In the 's Kenya had its ups and downs. Whilst losing out on temperature vegetables courgettes etc to lower cost Mediterranean countries, it increased its share in French beans and other speciality vegetables significantly getting direct entry into the supermarket chains and also Kenya broke into tropical fruits and cut flowers - a major success.
With the development and organisation or many small "outgrowers", channelled into the export market and thus widening the export base, the industry now provides an important source of income and employment.
It also has a highly developed information system, coordinated though the Kenya Horticultural Crops Development Authority. Kenya is thus a classic case in its export vegetable industry of taking advantage of global market forces. However, ft has to look to its laurels as Zimbabwe is rapidly beginning to develop as another source of flowers and vegetables, particularly the former.
Whilst the forces, market and otherwise, have been overwhelming in their push to globalisation, there remain a number of negatives. Many organisations have been put off or have not bothered going into global industry due to a variety of factors.
Some have found the need to adapt the marketing mix, especially in many culture bound products, too daunting. Similarly brands with a strong local history may not easily transfer to other markets. National Breweries of Zimbabwe, for example, may not find their Chibuku brand of beer brewed especially for the locals an easy transboundary traveller. More often than not sheer management myopia may set in and management may fail to seize the export opportunity although products may be likely candidates.
Similarly organisations may refuse to devolve activities to local subsidiaries. Other negative forces may be created by Governments.
Simply by creating barriers to entry, local enterprises may be protected from international competition as well as the local market. This is typical of many developing countries, anxious to get their fledging industries off the ground.
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The international economic system Several factors have contributed to the growth of the international economy post World War II. Until the world economy traded on a gold and foreign exchange base. This affected liquidity drastically. Now an international reserve facility is available.
Recently, the World Bank has taken a very active role in the reconstruction and development of developing country economies, a point which will be expanded on later. GATT had the intention of producing a set of rules and principles to liberalise trade.
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The most favoured nation concept MFN , whereby each country agrees to extend to all countries the most favourable terms that it negotiates with any country, helped reduce barriers.
The "round" of talks began with Kennedy in the 60s and Tokyo of the 70s. The latest round, Uruguay, was recently concluded in April and ratified by most countries in early Despite these trade agreements, non tariff barriers like exclusion deals, standards and administrative delays are more difficult to deal with.
Under this deal, African and Caribbean countries enjoy favoured status with EU member countries. Relative global peace has engendered confidence in world trade.
Encouraged by this and the availability of finance, global corporations have been able to expand into many markets. The break up of the former Soviet Union has opened up vast opportunities to investors, aided by the World Bank and the European Development Bank. This atmosphere of peace has also allowed the steady upward trend of domestic growth and again opened up market opportunities domestically to foreign firms.
Peace in Mozambique, the "normalisation" of South Africa, and peace in Vietnam as examples have opened up the way for domestic growth and also, therefore, foreign investment. The liberation of economies under World Bank sponsored structural adjustment programmes have also given opportunities. Sometimes, market opportunities open up through "Acts of God".
The great drought of in Southern Africa, necessitated a large influx of foreign produce, especially yellow maize from the USA and South America. Not only did this give a market for maize only, but opened up opportunities for transport businesses and services to serve the drought stricken areas. Speedy communications like air transportation and electronic data transmission and technology have "shrunk" the world.
Costs and time have reduced enormously and with the advent of television, people can see what is happening elsewhere and this can cause desire levels to rise dramatically. Only recently has television been introduced into Tanzania, for example, and this has brought the world and its markets, closer to the average Tanzanian. No doubt a great impetus to global trade was brought about by the development of economic blocs, and, conversely, by the collapse of others.
New countries are trying to join these blocs all the time, because of the economic, social and other advantages they bring.
Similarly, the collapse of the old communist blocs have given rise to opportunities for organisations as they strive to get into the new market based economies rising from the ruins. This is certainly the case with the former Soviet bloc.The current world economy has changed drastically from what it was merely a decade ago.
International markets are separated by differences in language, usage, habit, taste, etc. Many global opportunities have arisen because of the clustering of market opportunities worldwide. Marketing Communications, 5th edition is the most complete and accessible introduction to marketing communications on the market. Different Political Groups: Submit Search. For this reason, the responsibilit y for marketing planning must be carried out by those overseas executives who are most familiar with the local environment.
African culture is not littered with international marketers of note. In foreign entry, in Local competitors become more sophisticate.
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