Tapping into Global Markets Chapter 16. Copyright © 2012 Pearson Education, Inc. Publishing as...

Tapping into Global MarketsChapter 1

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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 2 of 31

Discussion Questions1. What factors should a company review

before deciding to go abroad?

2. How can companies evaluate and select specific foreign markets to enter?

3. What are the differences between marketing in a developing and a developed market?

4. What are the major ways of entering a foreign market?


Discussion Questions5. To what extent must the company adapt its

products and marketing program to each foreign country?

6. How do marketers influence country-of-origin effects?

7. How should the company manage and organize its international activities?


Figur

e

21.1

Decisions in International Marketing

Deciding whether to go abroad

Deciding on the marketing program

Deciding how to enter the market

Deciding which markets to enter

Deciding on the marketing organization


Deciding Whether to Go Abroad

Higher profit potential

Economies of scale

Reduce single market dependency

Counterattack competitors

Customers going abroad


Risks of Going AbroadLack:• An understanding of foreign preferences• An understanding foreign business culture• Experienced managers

Foreign country may:• Change commercial laws• Devalue its currency• Undergo political revolution

Underestimate:• Foreign regulations


Deciding Which Markets to Enter

Developed versus developing markets

Evaluating potential markets

How many markets


Deciding How to Enter the Market

Joint Venture

Licensing Direct Investment

Export


Figur

e

21.2

Five Modes of Entry into Foreign Markets

Direct Investment

Direct Exporting

Licensing

Joint Ventures

Indirect ExportingCom

mitm

ent,

Risk

, Con

trol

, and

Pro

fit P

oten

tial


Indirect and Direct Export

Indirect

Direct

Indirect Export = company work through independent intermediaries by : Domestic-based export merchants & agents includes trading companies, Cooperative organizations and export-management companies.

Direct Exporting = companies eventually may decide to handle their own exports by : Domestic-based export department/division, Overseas sales branch or subsidiary, Traveling export sales representatives and foreign-based distributors/agents.


Licensing

Management Contracts

Franchising

Contract Manufacturing

Licensing/Franchising = licensing is a simple way to engage in international marketing. The licensor issues a license to a foreign company to use a manufacturing process, trademark, patent, trade secret, or other item of value for a fee or royalty. The licensor gains entry at litle risk; the licensee gains production expertise or a well know product or brand name


Joint Ventures & Direct InvestmentJoint Venture

Direct Investment

Joint ventures = foreign investors have often joined with local investor to create a joint venture company in which they share ownership and control.

Direct Investment = the ultimate form of foreign involvement is direct ownership of foreign-based assembly or manufacturing facilities. The foreign company can buy part of full interest in a local company or build its own facilities.


Recomendation

Licensing / FranchisingLicensing/Franchising is more approriate strategy for company to tapping into global market. The licensor gains entry with lower investment and risk. The franchisor offers a complete brand concept and operating system. In return, the franchisee invests in and pays certain fees to the franchisor. Example : McDonalds and KFC

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