Globa Marketing - · PDF fileGloba Marketing Foreign Entry, ... Globalization 8 ... Part 2...

GlobaMarketingForeign Entry, Market Development& Strategy Implementation

first Canadian edition

Michael R. CzinkotaGeorgetown. University

Ilkka A. RonkainertGeorgetown University

Carlyle FarrellRyerson University

Ronald McTavishBrock University

N E L S O N ^ / E D U C A T I O N

Part 1Overview of Global Marketing

Chapter I The Global Marketing Imperative 3The Global Marketplace l.l:TheTriumph of Free Enterprise and Global

Markets 3Global Marketing Defined 5In More Detail I. I: Selected Approaches to Foreign Market Entry 6

Evolution of the Concept 7

Globalization 8Forms of Globalization 10

Globalization Drivers 10

In More Detail 1.2: Economies of Scale vs. Economies of Scope 11Globalization of the Canadian Economy 14The Global Marketplace 1.2: Caron's Farm 15The Anti-Globalization Movement 15Opportunities and Challenges in Global Marketing 16

Goals of This Book 18

Key Terms 18

Questions for Discussion 19

Internet Exercises 19

Recommended Readings 19

Notes 19

Chapter 2 International Trade Policy and Trade Institutions 211 The Global Marketplace 2.1 :Trade as the Engine of Growth 21

Theoretical Foundation for International Trade 22Mercantilism 22

The Theory of Absolute Advantage 23

In More Detail 2.1: An Example of Absolute Advantage 23In More Detail 2.2: An Example of Comparative Advantage 24

The Theory of Comparative Advantage 24

The Heckscher-Ohlin Model 24

The Product Cycle Theory 25

In More Detail 2.3:The Leontief Paradox 25The Under Theory 2 7

Krugman's Model of International Trade 2 7

In More Detail 2.4: An Example of the Country Similarity Theory 27The Diamond of National Advantage 28

Models of International Investment 29Dunning's OLI Framework 30

Transactions Cost Analysis 30

Transnational Institutions Affecting World Trade 31The World Trade Organization 31

In More Detail 2.5:Trade in Textiles and Clothing 33The International Monetary Fund 34

The World Bank 34

The Global Marketplace 2.2: The WTO and the Softwood Lumber

Dispute 35

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Contents XVII

In More Detail 2.6: Balance of Payments 35The United Nations 36

International Trace Policy and Protectionism 36Arguments for Protection 37Forms of Protectionism 37

Government Export Promotion 40International Trade and Investment Performance 42

InternationalTrade Performance 42international Investment Performance 4bImplementation of InternationalTrade and Investment Policy 47Summary 48Key Terms 48Questions for Discussion 48Internet Exercises 48Recommended Readings 49Notes 49

Part I Cases Starbucks in Ireland 51Starbucks' Foray into Foreign Markets 51Expansion Strategies in Ireland 54A Competitive Existence 55Notes 56

Parker Pen Company 57Globalization. 57Globalization at Parker Pen Company 57Epilogue 59Questions for Discussion 60

Part 2The Global Market Environment

Chapter 3 The Role of Culture in Global Marketing 63The Global Marketplace 3.1 Transferring Cultural Values 63Culture Defined 65In More Detail 3.1 :What Is Canadian Culture? 67The Global Marketplace 3.2: In Defence of Chinese Cultural Values? 68

The Elements of Culture 69The Global Marketplace 3.3: Soup: Now It's M'm-M'm-Global! 79Cultural Literacy and Ethnocentricity 82

Sources of Cultural Knowledge 82Cross-Cultural Training 83

Cultural Analysis 84In More Detail 3.2: Alternative Models of Cultural Analysis 87Cultural Rules for Success in Global Marketing 88

Summary 89Key Terms 90Questions for Discussion 90Internet Exercises 90Recommended Readings 90Notes 91

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Chapter 4 The Economic Environment 93The Global Marketplace 4.1: Markets at the Bottom of the Income

Pyramid 93Economic Factors in Assessing Foreign Markets 95

Market Characteristics 97

The Global Marketplace 4.2: Income Disparity in Japan 103The Global Marketplace 4.3: In Search of the New China 106Impact of the Economic Environment on Social Development 113In More Detail 4.1: An Alternative Measure of Welfare I 13Regional Economic Integration 114

Levels of Economic Integration 114

Economic Integration in Europe 116

North American Integration 119

The Global Marketplace 4.4: NAFTA and Wal-Mart: Re-shaping the MexicanRetail Market 121

Other Economic Alliances 121

Implications of Economic Integration for Global Marketing 124Dealing with Financial Crises 125

Causes of the Crises 125

Effects of the Crises 125

Consumer Marketer Responses 126

Summary 12 7

Key Terms 128




Notes 129

Chapter 5 The Global Political and Legal Environments 131The Global Marketplace 5.1: Las Cristinas—Trouble for Crystallex 131Home Country Political and Legal Environments 132

Embargoes and Sanctions 133

In More Detail 5.1 :The Legal Authority for Canadian Sanctions 135Export Controls 135

Import Controls 139

Regulation of International Business Behaviour 140

The Global Marketplace 5.2: Marketing Opportunity in Post-War Iran? 144Host Country Political and Legal Environment 145

Political Action and Risk 145

In More Detail 5.2:Terrorism and Global Marketing 148In More Detail 5.3:The Measurement of Political Risks 151

Legal Differences and Restraints 152

Influencing Politics and Laws 153

The International Environment 154International Politics 154

International Law 154

Summary 155

Key Terms 155




Notes 156

Contents 1 x i x

Part 2 Cases China's Beauty Industry: L'Oreal's Foray 158Introduction 158China's Beauty Industry 158L'Oreal's International Expansion 159L'Oreal's Foray into China 160L'Oreal's Acquisitions 162Challenges 162'Notes 162

Muslim Colas: Cola Wars or Cola Crusades 164Online Boycott Lists that Prominently Feature Coca-Cola 164

Muslim Colas 164Questions 165Notes 165

Shrimp Farming in Ecuador 167Xavier's Dilemma 167The Family Business 167The Asian Shrimp Disaster 168Xavier's Entrepreneurship 168Investment Alternatives 169

Part 3Foreign Market Entry Analysis and Planning

Chapter 6 Strategic Planning 173The Global Marketplace 6.1:Appliance Makers on a Global Quest 173Global Marketing 174Why Do Firms Internationalize? 176

Issues in Internationalization Strategy 178

In More Detail 6. l:The Case of Automobiles 180Market Segmentation 187The Global Marketplace 6.2: Segmenting Global Markets by Cultural

Values 189The Global Marketplace 6.3: How to Segment the Robotic Equipment

Market 190Why Segmentation Is Important to Canadian Companies 191

Other Aspects of Global Strategy:The Business Definition Issue 192The Global Marketplace 6.4: Canadian Practice in Business Definition 192Issues in the Development of Global Marketing Strategy 193

Implementing Global Marketing Strategy 195

The Global Marketplace 6.5: Finding the Fit Overseas 197In More Detail 6.2: How Toyota Does Things 199The Local Company in the Global Environment 199

Summary 201

Key Terms 201




Notes 203

Contents

Chapter 7 Global Marketing Research 205The Global Marketplace 7.1 :The Toasted Deli Sandwich 205Marketing Research Defined 206

Global Marketing Research 207The Importance of Global Marketing Research 208In More Detail 7.1: Environmental Scanning 209The Global Marketplace 7.2:Welcoming China to Global Marketing

Research 210The Process of Global Marketing Research 211

Define the Research Problem 212Determine the Information Needs 212Develop the Research Design 213

In More Detail 7.2: Decision Support Systems 214The Global Marketplace 7.3: Domaine Pinnacle 216In More Detail 7.3: Data Privacy 217In More Detail 7.4:Tips for Conducting Interviews in Foreign Markets 219The Global Marketplace 7.4:Adapting Research Procedures to Local

Conditions 220In More Detail 7.5: Online Surveys 222In More Detail 7.6:Validity versus Reliability 223

Collect the Data 226Analyze and Interpret the Data 226

In More Detail 7.7: Delphi Forecasting 228Present the Research Findings 228

Research Administration 229Approaches to Research Administration 229Summary 231Key Terms 231Questions for Discussion 232Internet Exercises 232Recommended Readings 232Notes 232

Appendix A: Data Analysis Techniques 234Cross-Tabulation 234t-Tests 234Multiple Regression 234Cluster Analysis 235Factor Analysis 235Additional Reading 235

Chapter 8 Foreign Market Entry Strategies 237The Global Marketplace 8.1: Gen-u-Wine Storage 237Motivations to Enter Foreign Markets 238

Proactive Motivations 239Reactive Motivations 240

The Global Marketplace 8.2: Russian Vodka Manufacturers Go Global 241In More Detail 8.1 :Waterfall vs. Sprinkler: Foreign Market Expansion

Strategies 243The Internationalization Process 243Modes of Entry 244

Exporting 244The Global Marketplace 8.3: GV Snowshoes 245In More Detail 8.2: Entry-Mode Selection 245The Global Marketplace 8.4:Jamaica Pepper Exports 247

Licensing and Franchising 248

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The Global Marketplace 8.5: International Franchising That Will Melt in YourMouth 249

The Global Marketplace 8.6:Saputo Inc.—Growth by Acquisition 253Foreign Direct Investment 253

Summary 265

Key Terms 266

Questions for Discussion , 266



Notes 267

Part 3 Cases Exporting Chopsticks to Japan 269Company Background 269Learning About the Chopstick Market 269The Founding of Lakewood Forest Products 269The Production and Sale of Chopsticks 270Questions for Discussion 270

Global Market Opportunity in the Olive Oil Industry:The Case of Baser Food 271Background 271Industry in Turkey 272The World of Olive Oil 274Company 275Potential Markets 278Endnotes 281

Dr. Eris: Cosmetics from Poland 282The Polish Cosmetics Market 282The Company 284Brand Image 285Diversification 285Marketing Communications 286Internationalization 286Questions for Discussion 286Notes 286

Ruth's Chris:The High Stakes of InternationalExpansion 287The House That Ruth Built 287A World of Opportunities 288What Should Ruth's Chris Do Next? 290Notes 291

Tri Star International 292Changing Face of Shoe Industry (1988) 292Product Design 292Brand 293Competitive Advantage 293China's Competitive Advantages 293Questions 294

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Contents

Part 4Global Marketing Strategy

Chapter 9 Product Strategies and Global Brand Management 297The Global Marketplace 9.1: Using Canadian Product Innovation to Meet

Global Energy Needs 297

ProductVariables 298

Standardization versus Adaptation 298

Factors Affecting Adaptation 301

The Market Environment 302

Government Regulations 302

In More Detail 9. l:The Economics of Product Adaptation 303

Non-Tariff Barriers 304

Customer Characteristics, Expectations, and Preferences 305

The Global Marketplace 9.2: Jeans for Muslims 307

Economic Development 308

Competitive Offerings 308

Climate and Geography 309

Product Characteristics 309

Product Constituents 309

Branding 309

Packaging 310

Appearance 311

Method of Operation or Usage 312

Quality 312

Service 313

Country-of-Origin Effects 313

Company Considerations 313

Product Counterfeiting 314

The Global Marketplace 9.3:The Phantom Pirates 315

Global Product Development and Brand Management 317

Global Product Development 317

Management of the Product and Brand Portfolio 323

Summary 328

Key Terms 329




Notes 330

Chapter 10 International Services Marketing 333The Global Marketplace 10.1: Cell Phones in Africa 333

Differences between Services and Goods 334

Linkage between Services and Goods 336

Stand-Alone Services 337

The Role of Services in the Canadian Economy 338

The Role of Services in the Global Economy 344

Global Trade Problems in Services 345

Regulation of Services Trade 345

Global Strategic Challenges in Services 346

Drivers of Global Services Growth 347

The Internet and the Global Marketing of Services 349

Typical International Services 350

Starting to Market Services Internationally 352

Strategic Implications of International Services Marketing 352

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Strategic Planning for Global Services Marketing 354Selecting Target Markets 354

Planning the Product Offering 356

In More Detail 10.1: Developments in NAICS 356The Global Marketplace 10.2: How Technical and Financial Services Help

Heavy-Equipment Marketing 359Sales Promotion and Pricing 362

The Global Marketplace 10.3: Royal Bank of Canada Faces CombativeAdvertising in the U.S. 363

International Channels of Distribution for Services 365.

The Global Marketplace 10.4:Winning Service Contracts Is Long, HardWork 366

Summary 367

Key Terms 368




Notes 369

Chapter I I Global Pricing Strategies 371The Global Marketplace 11.1: Price Fixing in the Cargo Services

Industry 371Price Dynamics 372Pricing in Foreign Markets 374

Corporate Objectives 374

Costs 375

The Global Marketplace I 1.2:Just Do It in a Recession! 376Demand and Market Factors 376

Market Structure and Competition 377

Environmental Constraints 377

Pricing Strategies in Global Markets 378Transfer Pricing 379

Transfer Prices and Corporate Objectives 380

Export Pricing 382The Process of Setting Export Prices 382

Strategies for Setting Export Prices 383

Export-Related Costs 384

Terms of Sale 387

The Global Marketplace 11.3: Penetrating Foreign Markets by ControllingExport Transport 389

Terms of Payment 390

Getting Paid for Exports 394

Managing Foreign Exchange Risk 395

Sources of Export Financing 396

In More Detail 11.1: EDC Export Financing 398Dumping 399

Non-Price Options 400Countertrade 400

Summary 404

Key Terms 404




Notes 406

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Chapter 12 Global Distribution and Logistics 409The Global Marketplace 12.1:"Just Chill'n" 409The Structure of Global Distribution Channels 410Design of Global Distribution Channels 411

Customer Characteristics 412

Culture 412

Competition 414

Company Objectives 415

Character 415

Capital 415

Cost 416

Coverage 417

Control 417

Continuity 418

Communication 418

Selection of Intermediaries 419Types of Intermediaries 419

Sources for Finding Intermediaries 419

The Global Marketplace 12.2: Clinotech Diagnostics 420Screening Intermediaries 421

Channel Management 422

Global Logistics 428A Definition of Global Logistics 428

The New Dimensions of Global Logistics 430

International Transportation Issues 430

In More Detail 12.1 :The Role of Freight Forwarders 431The Global Marketplace 12.3:Vancouver Port Strike 433The International Shipment 436

Documentation 437

Management of Global Logistics 438

In More Detail 12.2: Global Outsourcing 439Summary 440

Key Terms 440




Notes 442

Chapter 13 Global Advertising and Sales Promotion 443The Global Marketplace 13.1: Canwest Global Communications: Growth oi

an International Media Conglomerate 443Formulation of Global Marketing Communications Strategy 444

Planning Global Promotional Campaigns 446

The Global Marketplace 13.2:The World Wants Its MTV! 454In More Detail 13.1: Culture and Advertising Style 459

Communications Tools 464

The Global Marketplace 13.3: At the Fair 471Other Promotional Techniques 4 71

Summary 477

Key Terms 477




Notes 478

Contents

Chapter 14 Management of the Global Sales Force 481The Global Marketplace 14.1:Why Personal Selling Matters to Canadian

Companies 481The Sales Force as a Company Resource 483

The Resource-Based View and Company Resources 484

Personal Selling and the Degree of Internationalization of the Firm 484Personal Selling Effectiveness 487

The Sales Process and Relationship Selling 488

The Global Marketplace 14.2: Relationship Building in Developing Markets:The Case of Nigeria 489

Personal Selling in Practice 490

In More Detail 14.1 targeting the Chilean Market 492Management of the Global Sales Force 495In More Detail 14.2: Gearing Up for Sales in India 495In More Detail 14.3: Why Strong International Sales Management

Is Important 497The Global Marketplace l4.3:The Information Needs of Global

Salespeople 500Sales-Force Automation 503

The Global Marketplace 14.4: Automating the Sales Force 504In More Detail 14.4: European Experience of SFA 505Selling Through Distributor Partners 507The Role of Expatriates in Global Sales-Force Management 510

Summary 512

Key Terms 513




Notes 514 ,

Part 4 Cases Polar-adidas 516Introduction 516About Partnership Agreements 516The Growth of Polar Electro Oy 518Polar Marketing 519Other Partnerships 520Growth Prospects of Polar 520Questions for Discussion 520

Nova Scotia 521The U.S. Market for Canadian Travel Services 521A Benefit-Matching Model 521The Case of Nova Scotia 522Examples of Successful Positioning 523Positioning Nova Scotia 524Questions for Discussion 524Notes 524

Starwood Hotels & Resorts Worldwide Inc.Cross-Marketing Strategies 525Starwood Hotels and Resorts:A Business Profile 525Cross-Marketing Strategies 529Notes 529

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Medi-Cult: Pricing a Radical Innovation 531Company Background 531Assisted Reproductive Technologies 532Customers 535Competition 536Market Launch 536Henrik Krogen's Dilemma 537

Samsung: From Cheap to WOW! 538Samsung's Ascendancy 538Staying Laser-Focused 540What's Next... 541

Branding:The Asian Dilemma 542What's in a Name? 542Proud to Be Asian 544The Changing Mindset 544Miles to Go... 545Notes 546

Part 5The Implementation of Global Marketing Strategy

Chapter 15 Marketing Organization, Implementation, and Control 549The Global Marketplace 15.1: Procter & Gamble: Organization 2005 549Organizational Structure 551

Organizational Designs 551In More Detail 15.1: From International to Global Organization 554

Global Organizational Structures 554In More Detail 15.2: Product Structures in Practice 556

Evolution of Organizational Structures 561The Global Marketplace 15.2: Beyond the Matrix 561Implementation 562

Locus of Decision Making 562Factors Affecting Structure and Decision Making 563The Networked Global Organization 564Promoting Internal Cooperation 566

In More Detail 15.3: Working Together at Boeing 567The Role of Country Organizations 568

The Global Marketplace 15.3: Characteristics of Success 569Control 572

Types of Controls 572The Global Marketplace 15.4: International Best Practice Exchange 573

Exercising Control 5 76Summary 577Key Terms 578Questions for Discussion 5 78Internet Exercises 578Recommended Readings 5 78Notes 579

Contents

Chapter 16 International Negotiations 581The Global Marketplace 16.1 :The Art of Negotiation 581The Importance of Negotiations in Global Marketing 583

Stages of the Negotiating Process 584

The Influence of Culture on Global Negotiations 586The Global Marketplace 16.2: How the Japanese See Things 586The Global Marketplace 16.3: A Majestic Misstep in Thailand 587The Global Marketplace 16.4: Should You Give a Gift? 589

Preparing for Global Negotiations 590

The Global Marketplace 16.5: Practical Advice for Negotiating with ChinesePartners: "Where You Stand Depends on Where You Sit" 591

Success Factors in Global Negotiations 595The Global Marketplace 16.6: Don't Contract Yourself into a Corner 596In More Detail 16.1 :The Case of Distributors' Contracts 597

Summary 598

Key Terms 598




Notes 599

Part 5 Cases Importing Industry Specific Software: How American AreCanadians? 601Background 601The Selection Process 602The Purchase Decision 602The Implementation Plan 603The Crisis 603

Teleflex Canada:A Culture of Innovation 604Teleflex Inc. 604Teleflex Canada 605Innovation.Technology, and Product Development 605Teleflex Canada Culture 607Teleflex Inc. and Teleflex Canada 608Pull-Through Strategy 608The Future 609

'Conclusion 611

Part 6Looking Ahead

Chapter 17 The Future of Global Marketing 615The Global Marketplace 17.1: Marketing Overseas: Excellent for Career

Advancement 615The Global Marketing Environment 616

Planned versus Market Economies 6 / 6

The North-South Relationship 618

The Asia-Pacific Region and China 619

The BRIC Countries 619

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The Global Marketplace 17.2: Laying the Groundwork for East AsianCollaboration 620

In More Detail 17.1: Selling Mobile Telephones and Laptops to PoorerCountries 621

Factors Influencing Global Marketing 621The Global Financial Environment 621The Influence of Technology 622Trade and Protectionism 623Population and Immigration 624

The Global Marketplace 17.3: Migration:A Double Blessing 625Government Policy 626

Government Attitudes 627In More Detail 17.2: Picking Winners and Losers 628The Future of Global Marketing Management 628

Research and Planning 629In More Detail 17.3: The Global Marketer's Catch-22 629

Product Policies 630Trends in Global Communications 632Distribution Trends 632

The Global Marketplace 17.4: Towards Paperless Trading? 633Pricing Policies 633

In More Detail 17.4: Short- vs. Long-Term Pricing Problems 634Careers in Global Marketing 634

FurtherTraining 634Employment with Large Firms 635Employment with SMEs 636Self-Employment 637Opportunities for Women 637

Canada and the "New" International Competition 639What Can Be Done? 639The Role of the Government 640Summary 641Key Terms 641Questions for Discussion 641Internet Exercises 641Recommended Readings 642Notes 642

Glossary 645Index 659

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Globa Marketing - · PDF fileGloba Marketing Foreign Entry, ... Globalization 8 ... Part 2...

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