INTERNATIONAL MARKETING

Dr Ilan Bijaoui

2011

ibii@netvision.net.il

WHY FIRMS GO INTERNATIONAL

Proactive Motivations

• Profit

• Unique product

• Technology

• Exclusive Information

• Managerial urge

• Tax

• Economies of scale

Reactive Motivations

• Competitive pressure

• Overproduction

• Declining sales

• Excess Capacity

• Saturated market

• Proximity to customers

Source: Czinkota, M.R., Ronkainen I.A International Marketing, The Dryden Press 7

ed. 2004 p 226-232

EINK

Electronic ink is a proprietary material that is processed into a film

for integration into electronic displays. Although revolutionary in

concept, electronic ink is a straightforward fusion of chemistry,

physics and electronics to create this new material.

NOTE: Image not drawn to scale - for illustration purposes only.

E Ink

Amazon announces the launch of their next generation eBook,

The Kindle 2TM, an electronic paper eBook featuring E Ink

VizplexTM Imaging Film

iRex Technologies BV a spin-off from Royal Philips Electronics with backing secured from major independent equity investors, has announced the launch of their iLiad, a first generation electronic reader product using E Ink Imaging FilmTM.

Motorola announces the MOTOFONE a new handset poised to

redefine the market by making high design and smart technology

truly affordable.

Seiko Epson Corporation, and Seiko Watch Corporation announce their next generation of watch using an electronic paper display, specially geared for women. The watch design incorporates an easy-to-read, ultra-thin, low-power display integrated into an eye-catching curved band which can be updated according to mood.

http://www.youtube.com/watch?v=C48YI9gYolY

Each column costs about $125,000,

Gilboa said, and with four metre-

high waves, a cluster of five can

generate about one megawatt of

electricity, or can desalinate up to a

850,000 cubic metres (225 million

gallons) of fresh water annually.

GLOBALIZATION DRIVERS

Competitive Drivers

Following another company’s

path in local (Benetton and

Gap in US) and international

markets (Nokia)

Market Drivers

Common customer needs

Global customers

Global channels

Transferable marketing (same

brand package)

Technology Driver

Microwave, Internet, cell

phone

Cost Drivers

Economies of scale, scope,

sourcing

Source: Yip G. 1992 Total Global

Strategy Englewoods Cliffs, NJ

Prentice Hall

Government Drivers

Economic Trade policy

OBJECTIVES

•Sales Expansion

•Resource Acquisition

•Risk Minimization

INTERNATIONAL

MARKETING STRATEGY

MEANS

•Mode: Entry Strategy

•Functions

•Alternatives: Countries,

Control -Organization

PHYSICAL AND SOCIETAL

FACTORS

•Politico Legal

•Culture & Demography

•Economy and Infrastructure

& Regional Integration

•Geography

COMPETITIVE

ENVIRONMENT

•Major Advantage

•Competitors Capabilities

OPERATIONS AND INFLUENCES

Source: Daniels J. Radebaugh L.H. Sullivan D.P(2007.International Business Pearson Prentice

Hall p 5

Wheat - Monthly Price -

Commodity Prices

Month Value

Jul-10 195.82

Aug-10 246.25

Sep-10 271.69

Oct-10 270.29

Nov-10 274.37

Dec-10 306.99

Jan-11 326.54

Wheat, No.1 Hard Red Winter, ordinary protein, FOB Gulf of

Mexico, US$ per metric ton Price in US$ per bushel: 8.7275 As of:

Tuesday, February 22, 2011 Source: USDA Market News

http://mediacenter.dw-

world.de/english/video/#!/82151/Rising_wheat_prices

WTI Crude Oil $98.17 ▲2.75

11:54 AM EST - 2011.02.23

http://www.oil-

price.net/index.php?lang=en

18

CHINA 2010

Updated: 2010-10-03 15:05 Wen said both countries were great civilizations in the history and

the people of the two countries have always been amicable to each other.

There have been consistent mutual support, mutual help and solid

political mutual trust between the two nations for a long time.

http://www.chinese-embassy.org.uk/eng/zgyw/t759204.htm Oct 12, 2010 | 09:49AM Greece, China To Sign Maritime Agreement, New Ship Contracts

Last year, Chinese shipping giant Cosco took over management control

of one of the container terminals in the port of Athens and has said it

is interested in expanding its investment.

Greece's shipping companies, which control some 15% of the world

cargo and tanker fleets, have increasingly turned to China over the

past decade to build new ships for their fleets.

www.nasdaq.com

China will set up a special fund on China-Greece shipping

cooperation, with the initial part of 5 billion U.S. dollars, in a bid

to promote cooperation in maritime transportation between the two

countries, said Wen.

He added China will help upgrade Greece's southeast and largest

port Piraeus to a distributing center for Chinese exports to

Europe.

http://www.chinadaily.com.cn/china/201010/03/content_11375283.h

tm

Updated: 2010-10-03 15:05

China has bought and is now holding Greece's treasury bonds,

and will continue to "take positive attitude to participate in the

purchase of Greece's new treasury bonds," said Wen, adding that it

served as one of China's measures to help the sovereign debt-ridden

country.

Obama Economic Policy

Fight for Fair Trade:

Fight for a trade policy that opens up foreign markets to support

good American jobs.

Use trade agreements to spread good labor and environmental

standards

Pressure the World Trade Organization to stop countries from

continuing unfair government subsidies

Amend the North American Free Trade Agreement:

Work with the leaders of Canada and Mexico to fix NAFTA so

that it works for American workers.

Improve Transition Assistance:

Update the existing system of Trade Adjustment Assistance by

extending it to service industries, creating flexible education

accounts to help workers retrain, and providing retraining

assistance for workers in sectors of the economy vulnerable to

dislocation before they lose their jobs.

End Tax Breaks for Companies that Send Jobs Overseas:

Fight to ensure that public contracts are awarded to companies that

are committed to American workers.

Reward Companies that Support American Workers:

. The legislation would provide a tax credit to companies that

maintain or increase the number of full-time workers in America

relative to those outside the US; maintain their corporate

headquarters in America if it has ever been in America; pay decent

wages; prepare workers for retirement; provide health insurance

Invest in the Manufacturing Sector and Create 5

Million New Green Jobs

Invest in our Next Generation Innovators and Job Creators :

Create an Advanced Manufacturing Fund to identify and invest in

the most compelling advanced manufacturing strategies. The Fund

will have a peer-review selection and award process based on the

Michigan 21st Century Jobs Fund, a state-level initiative that has

awarded over $125 million to Michigan businesses .

Double Funding for the Manufacturing Extension Partnership:

The Manufacturing Extension Partnership (MEP) works with

manufacturers across the country to improve efficiency, implement

new technology and strengthen company growth. This highly-

successful program has engaged in more than 350,000 projects across

the country

Invest In A Clean Energy Economy And Create 5 Million

New Green Jobs :

Invest $150 billion over 10 years to advance the next generation of

biofuels and fuel infrastructure, accelerate the commercialization of

plug-in hybrids, promote development of commercial scale renewable

energy, invest in low emissions coal plants, and begin transition to a

new digital electricity grid .

Create New Job Training Programs for Clean Technologies :

Increase funding for federal workforce training programs and direct

these programs to incorporate green technologies training .

Boost the Renewable Energy Sector and Create New Jobs:

Create a federal Renewable Portfolio Standard (RPS) that will require

25 percent of American electricity be derived from renewable sources

by 2025, which has the potential to create hundreds of thousands of

new jobs on its own.

Create a National Network of Public-Private

Business Incubators: Business incubators

facilitate the critical work of entrepreneurs in

creating start-up companies. Obama and Biden

will invest $250 million per year to increase the

number and size of incubators in disadvantaged

communities throughout the country.

Create the American Opportunity Tax Credit:

This fully refundable credit will ensure that the

first $4,000 of a college education is completely

free for most Americans, and will cover two-

thirds the cost of tuition at the average public

college or university and make community

college tuition completely free for most students.

Congress approved legislation in late September to provide

$25 billion in loans to domestic automakers and suppliers to

upgrade factories to build more fuel-efficient vehicles

Executives with GM, Ford and and the president of the

pressed Pelosi (House speaker) and Reid (Senate Majority

Leader ) to provide an immediate $25 billion loan to keep

the companies operating and a separate $25 billion to help

cover obligations for retirees and their dependents.

Chicago.com/assets/10/news/Firms_Join_Forces_on_Car_Batteries_

-_WSJ.pdf

9/15/09 PITTSBURGH — President Barack Obama delivered his most

strongly worded speech in defense of organized labor since taking office

– tying health care reform into his broader promise to rebuild the middle

class and blue-collar America

http://www.politico.com/news/stories/0909/27176.html#ixzz0UMqDl2a1

Support batteries and electric drive components

for transportation electrification. In early August,

the Administration announced $2 billion in grants to 30

factories producing advanced batteries and electric

drive components. The ARRA Transport Electrification

program is also providing $400 million in cost-shared

grants to 8 projects deploying over 4,000 electric

vehicles and the infrastructure to support them. An

additional nine grants are helping universities prepare

the workforce and consumers for the new industry.

DEFINING CULTURE

• ―Culture is the way of life of a group of people‖ (Foster, 1962)

• ―Culture is that complete whole which includes knowledge, beliefs, art, law, morals, customs and any capabilities and habits acquired as a member of a society‖ (Tylor, 1977)

• ―the collective programming of the mind which distinguishes the members of one human group from another …. The interactive aggregate of common characteristics that influences a groups response to it’s environment‖ (Hofstede, 1980)

A more formal definition:

Culture is a set of learned core values, beliefs, standards, knowledge, morals, laws, and behaviors shared by individuals and societies that determines how an individual acts, feels, and views oneself and others.

(from Mitchell, C. (2000) The Short

course in International Trade Series: International Business Culture, Shanghai: Shanghai Foreign Language Education press)

CONSUMER CULTURE

“social arrangement in which the relations

between the [lived cultural experience of everyday

life] and social resources, between

meaningful [valued] ways of life and the symbolic

and material resources on which they

depend, is mediated through markets.”

“Global Consumer Culture,” in Encyclopedia of International

Marketing, Jagdish Sheth and

Naresh Maholtra, eds., Eric J. Arnould

ELEMENTS OF CULTURE

• Language verbal-

non verbal

• Religion

• Values & Attitudes

• Manners &

Customs

• Material elements

• Aesthetics

• Education Social

Institution

A model of culture

Language

Food

מזון

Architecture

Music

מוזיקה

Dress

לבוש

Literature Climate

אקלים

Noise

Pace of life

Public

emotion

Work ethic

אטיקה

בעבודה

Physical

contact

מגע פיזי

Fons

Trompenaars

Peter Woolliams

Estonia, October 2005

Common Dinner Menu in Japan

boiled rice

clear soup;

boiled vegetables, fish or meat

broiled or deep-fried vegetables,

fish or meat )

vinegared vegetables, fish or

shellfish)

dressed vegetables, fish or shellfish

or boiled greens in soy sauce)

sliced raw fish

pickles

Bean curd,

Yunnan

Ham, Black

Mushrooms

Shrimps,

Pork, Wheat

Flour for

pastry

Civilization Of Chinese Food

Adrienna Pninaly High

lycopene content

Summer Sun

high concentrations of

sugar make honey

sweet. 25 $ per kilo

First Love excellent

flavor, color & shelf-

life

Camelia

Recital

David Holowinski, Vice President, Agro-Power Development, le

plus grand producteur americain de tomates sous serres, inspecte

un melon Desert Sweet™ galia

Mini seedless Tiger type

Mercedes Benz and Swatch

Nip into town, find a parking

space with ease and enjoy a

stress-free drive home when

you're done. comfort, agility,

safety and ecology.

Anders Sundt Jensen, Head of

Brand Management : " 37 markets

worldwide. The smart is particularly

sought-after in the USA which, even

in the first year of the market

launch, has become the third

strongest market after Italy and

Germany.

High-Context cultures

• long lasting relationships

• communication is economical, fast and efficient

• wider range of communicative expressions

• people in authority are personally responsible for the actions of subordinates

Cultural Context

Hall, E. T., 1976. Beyond Culture, Anchor Press / Doubleday

• Agreements between persons are

spoken rather than written

• Insiders and Outsiders are distinguished

• Cultural patterns are ingrained and

relatively slow to change

Low-Context Cultures

• shorter relationships

• messages are made explicit

• authority is diffused

• agreements are written rather than spoken

• Insiders and Outsiders are less closely distinguished

• Cultural patterns are relatively fast to change

CONTEXT ORIENTATION IN MAJOR

CULTURES

Japan

China

Arab

Germany

Scandinavia

United States

High Context

Low Context Hall, E. T., 1976. Beyong Culture, Anchor Press / Doubleday

A model of culture

Explicit

Culture

Rituals, dress, codes, contact,

contracts, language, eating

A model of culture

Explicit

Culture

Beliefs, Right

Wrong How things

should be

THE CULTURE ENVIRONMENT

Artifacts

hearm smell,

taste, touch

Values

Rules

Lazy

Value

Human

Nature

Rights

Obligations

Relationship

Dominate

Submissive

Environment

Create Plan

React

Activity

Objective

Social

Truth

Assumptions

Roots

ESSENCE OF

THE CULTURE

Kluckhohn, F. R., and Strodtbeck, F. L.; Variations in value orientations1961, Peterson, New York

מהות התרבות

שורשים ערכים סימנים חצוניים

קשר בין אנשים טבע האדםהתייחסות

לסביבה

התייחסות

לפעילות

התייחסות

לאמת

הכרח

ערך

זכות

מחוייבות

שליטה

התמעה

תכנון

תגובה

אובייקטיבית

חברתית

Cultural Orientations Orientations

1. What is the nature of people?

2. What is the person’s relationship to nature?

3. What is the person’s relationship to other people?

Range of Variations

Good

Evil

A mixture of good and evil

Dominant

In harmony

Subjugation

Lineal (hierarchical)

Collateral (collectivist)

Individualist

Cultural Orientations Orientations

4. What is the modality of human activity?

5. What is the temporal focus of human activity?

6. What is the conception of space?

Range of Variations

Doing

Being

Containing

Future

Present

Past

Private

Public

Mixed

IMPACTS OF CULTURE ON

MANAGERIAL BEHAVIORS

Implicit Explicit Culture Context

Non Task Time Planning Negotiations

Long Informal Short Formal Time, Location

Relevant level Small Same Level Large Participants

Consensus Position Decision Making

HOFSTEDE’S CULTURAL

TYPOLOGY

Uncertainty Masculinity Individual Power

Distance

Equal

Predictability Femininity Collectivist Power

Distance

Unequal

• power distance – the distance between

individuals at different levels of a hierarchy in

an organization.

• uncertainty avoidance – more or less need to

avoid uncertainties about the future

• individualism vs collectivism – the relations

between the individual and his / her fellows

• masculinity vs femininity – the division of

roles and values in society.

HOFSTEDE INDEX

Uncertainty

Avoidance

Masculinity Individualism Power

Distance

65 66 67 35 Germany

35 66 89 35 U.K.

86 43 71 68 France

92 95 46 54 Japan

46 62 91 40 USA

68 53 38 80 Arab

Countries

81 47 54 13 Israel

Family (Asian)

Centralized, Paternalistic,

Loyalty, Personal relations

Village Market(Anglo-Nordic)

Decentralized, Entrepreneurial,

Flexibility, Delegation, Output

Control

“Pyramid of People”(Latin)

Centralized, Elitist, Less

Delegation, Input Control

Well-oiled Machine (German)

Decentralized, Narrow Control,

Compartmentalized, Routines

& Rules

High Low

``

High Hierarchy

Uncertainty Avoidance

Low(Formalization)

THE FIFTH DIMENSION

• LongTerm Orientation: Focusing on the future. Cultural trend towards delaying immediate gratification by practicing persistence and thriftiness

China, Hong Kong, Taiwan, Japan, and South Korea

• Short Term Orientation: Focusing on the past and present, by respecting tradition. Need to follow trends in spending even if this means borrowing money

Pakistan, Philippines, and Bangladesh. All Western countries

Countries scoring Long Term: Higher savings rates than countries scoring Short Term

Hofstede’s five dimensions of

culture

1. Individualism IDV

2. Power distance index PDI

3. Masculinity MAS

4. Uncertainty avoidance index UAI

5. Long-term orientation LTO

(Guidham 1999)

0

20

40

60

80

100

120

PDI IDV MAS UAI LTO

CHINA

USA

JAPAN

GERMANY

UK

FRANCE

WORLD

Source: ITIM 2003

Origin and Application of Chinese

Business Culture Confucianism

--- “Doctrine of the mean”

Neither conservative nor aggressive

--- “Hierarchy & Order”

Interest of collectivity is higher than that of individual

(Fang 1999)

Long-term Orientation, Collectivism, High Power Distance

Origin and Application of Chinese

Business Culture

•Buddhism

“Samara”

The eternal cycle of

birth, suffering, death and rebirth

Fang 1999

Long-term orientation

Origin and Application of Chinese

Business Culture

•Taoism

“Yin & Yang

Reversion of love & hatred, good & bad,

fortune & misfortune

Fang 1999

Long-term orientation

Characteristics of Chinese Culture

• Collectivism

• High Power Distance

• Long-term Orientation

Origin and Application of

American Business Culture

•Protestant Ethic

Pilgrim Fathers

If one works hard, he or she will succeed.

Weber 1958

NATIONAL TRADITIONS IN MANAGEMENT:

D'Iribarne:

• Honor in France,

• The fair contract in the US,

• Consensus in the Netherlands.

Patterns of thinking, feeling, and acting

three levels: the cadres (managers and professionals), the

maitrise (firstline supervisors), and the noncadres (the levels

below).

Hofstede G. (1999) “Problems Remain, But Theories Will Change:

The Universal and the Specific in 21st Century Global Management”

Organizational Dynamics, July 1999 v27 i1 p34

In the US:

• Everybody is supposed to be equal;

• The relationship between management and workers is

contractual

• The immigrants developed a middleclass society which

sought a free association of equal citizens, related by

contractual agreements: "pious merchants."

In the Netherlands:

• Management based on consensus on convincing the other,

a lot of talking, either person to person or in meetings.

• Relationships based on compromise rather than on contract.

•Dutch consensus based on the concern of individuals' quality

of life.

VALUES VERSUS PRACTICES

• Values, are broad tendencies to prefer certain states of affairs over others. Invisible except in their effects on people's behavior.

• Practices, visible to an observer. Ways of behaving as well as artefacts. More superficial and easier to change

• Values: cultural and resilient against technological influences. Practices can be purely social, purely technical, or mixed (sociotechnical)

CULTURE & BUSINESS PROCESSES

Policy & Procedures:

US, low u.a., high formal reporting

UK, low u.a., detailed jobs description

Germany, high u.a., well internalized

Systems & Controls:

French = control(hierarchy), British=coordinate)

US-UK reporting procedures

French: hiring elites

German operational planning

Planning strategic(UK)

Information &

Communication:

French: Compartmentalized

Sweden: Communication

open informal, transparency

Decision Making:

Participation in decision

making (Sweden, Germany-

less hierarchy)

PDG in France –Italy

(Zanussi)

FOUR STAGES OF BUSINESS

NEGOTIATIONS

Persuasion

US: Aggressive persuasive

tactics

Japan: Persuasion behind the

scene

Non task sounding

US: Short period

Japan: time and expense

Concessions and agreement

US: Sequential approach to

decision making

Japan: at the end of the

negotiations

Task related, Info exchange

US: Brief and Direct

Japan: long explanations, in

depth clarifications

Source: Graham J. L. ―A hidden Cause of America’s Trade Deficit with

Japan‖ Columbia Journal of World Business Fall 1981 p 14

Trompenaars’s Alternative

Dimensions

• Focus on values and relationships

• Survey of

– 15,000 managers

– Over 10-year period

– From 28 countries

• Bipolar cultural dimensions

Trompenaars, F., 1993. Riding the Waves of Culture. Nicholas Brealey, London

Trompenaars’ Research

Trompenaars’ dimensions of culture:

Universalism v Particularism

Individualism v Collectivism

Neutral v Emotional / Affective

Specific v Diffuse

Achievement v Ascription

Attitudes to Time

Attitudes to the Environment

Universalism—Particularism

• Universalism

– Performance-based considerations- Objective

truth

• Particularism

– Relationship- or situation-based considerations

Subjective truth

Universalism

• More on rules than relationships,

• Have a preference for legal contracts,

• Believe there is only one truth.

• A deal is a deal.

• Trust is based on honoring your word or contract.

• Fairness is treating all people the same.

Particularism

• Focus more on relationships,

• Change legal contracts easily

• Believe in several perspectives on reality.

• Particularists evolve their relationships to suit

the situations.

Sweden

U.S.

Ireland

UK

Denmark

Germany

Netherlands

Japan

Singapore

China

France

Taiwan

South Korea

Universalism

Particularism

Universalism—Particularism

• Christian Dior, American women less

importance to small details

• Germans no compromise on rules quality,

Dutch insurance suspicion about high returns

• Dutch reasonable quality low price

• Irish conservative Irish accent

• Japan collection of villages service (KFC

twice more people than in USA)

• Global local Lego US Germany

Individualism—Communitarianism

• Individualism

– Frequent use of ―I‖

• Communitarianism

– Frequent use of ―We‖

Individualism

• Defined as societies where people ideally

achieve alone, use "I" frequently and take

vacations singly or in pairs.

• In individualistic cultures, decisions can be made

quickly by representatives at negotiations

Communitarianism

• Use "we" more often, achieve better in groups,

and vacation in organized groups.

• In collective cultures, the representatives must

defer to the organization.

United States

Denmark

Netherlands

UK

Sweden

Germany

Ireland

China

Taiwan

France

Singapore

South Korea

Japan

Individualism

Communitarian

Individualism—Communitarian (cont’d)

• China collective family, team environment in

advertising

• French family car Club Med. Compared advert.

forbidden

• German less TV advertising than USA, public goals

(distribution – planning permit, shopping hours)

• Japan good service (uneconomic lipsticks) Buy

Japanese

• Yakult Japanese yogurt ladies in Japan and

Netherlands (violation of privacy) social train stations

• South Korea small shops community

Neutral—Emotional

• Neutral

– Reserved and composed

• Emotional

– Very expressive

Emotional

• Readily express their thoughts and feelings.

• Expressing feelings relieves tension.

• Emotions flow easily.

• Touching and gestures are common.

• Statements are dramatic and fluent.

Neutral

• Do not openly reveal thoughts and feelings,

• Admire self-possessed behavior

• Frown on physical contact.

Japan

China

South Korea

Singapore

Taiwan

Sweden

Netherlands

United Kingdom

USA

Germany

Denmark

France

Ireland

Venezuela

Spain

Egypt

Kuwait

Neutral

Emotional

Neutral—Emotional (cont’d)

• Dutch China Neutral advertising medical

products

• Club Med emotion / neutral

Specific—Diffuse

• Specific

– Compartmentalize roles

• Diffuse

– Mix personal, professional, and private roles

Specific

• Get to know people easily

• Maintain flexible relationships,

• Make acquaintances for specific or limited

reasons.

Diffuse

• Keep their distance from unknown others.

• Individuals are slower to develop

relationships,

• Once an individual has been accepted in a

diffuse culture that person is in all the way.

Netherlands

USA

Germany

Denmark

Ireland

Sweden

France

UK

China

Taiwan

Japan

South Korea

Specific

Diffuse

Specific—Diffuse (cont’d)

• France diffuse sales person loyalty. US product

• US customer the message, Japan how it is said

• Ireland Smirnoff humor

• Japan diffuse instead of contracts

• France diffuse, Harrods Provencal village L’Oreal

Castle and ladies

• Kyosei Canon: working for the common good

Yamaha Spread joy through music

Achievement—Ascription

• Achievement

– Status linked to goals obtained or

performance

• Ascription

– Status linked to age, connections, class,

or gender

Ireland

United States

United Kingdom

Sweden

Denmark

Germany

Netherlands

Singapore

France

Taiwan

China

Japan

South Korea

Achievement

Ascription

Achievement—Ascription (cont’d)

Ireland : Advertizing, no celebrities excepted Sport

USA, Israel, Europe Yes

China: Shaolin Cola, Great Wall

South Korea High status, experts Samsung singer, teen clothing

line

French TGV Concorde status