Global Marketing
IBL, Year 2
Summary
Chapter 1: Global Marketing in the firm
Five stage decision model in global marketing:
I: Decision whether to internationalize
II: Deciding which markets to enter
III: Market entry strategies
IV: Designing the global marketing program
V: Implementing and coordinating the global marketing program
Global Marketing:
The firm’s commitment to coordinate its marketing activities across national boundaries in order to find and
satisfy global customer needs better than the competition.
Implications:
develop a global marketing strategy based on similarities/differences between markets
exploit the knowledge of the main office through worldwide learning and adaptions
transfer knowledge and ‘best’ practices from any of its markets and use them in international markets.
LSE: large scale enterprise. >250 employees. obtain market reports via consultancy firms.
SME: small and medium sized enterprise. small: <50. medium: 50-250. gather information in a more informal
and personal way.
For LSEs is it easier to obtain economies of scale.
economies of scope: Reusing a resource from one business/country in additional businesses/countries.
Global marketing orientations:
1. Ethnocentric: Needs of the home company is superior and most relevant (McDonald’s, Starbucks)
2. Polycentric: Each country is unique and should be targeted in a different way (Ikea)
3. Regiocentric: Integrate the program within regions
4. Geocentric: Act local
Glocalization:
Development and selling of products or services intended for the global market, but adapted to suit local
culture and behaviour.
, Chapter 2: Initiation of internationalization
Internationalization motives: Fundamental reasons, proactive (stimuli to attempt strategy change, based on
firm’s interest in exploiting unique competences or market possibilities) and reactive (firm reacts to pressures
or threats in its home market of foreign markets and adjusts passively to them by changing its activities over
time), for internationalization
For internationalization to take place, something or someone inside the company must be triggered to initiate
the internationalization.
If any of these triggers are not (enough) present in new market, they will form barriers to internationalization.
Contra process of internationalization is de-internationalization: Process in which multinational company shifts
to a strategic configuration that has a lower international presence.
Barriers hindering (further) process of internationalization:
1. General market risks
*comparative market distance
*competition from other firms
*differences in product usage in foreign markets
*language and cultural differences
*difficulties in finding the right distributor in foreign market
*differences in product specifications in foreign markets
*complexity of shipping services to overseas buyers.
2. Commercial risks:
*exchange rate fluctuations
*failure of export customers to pay due to contract dispute/fraud
*delays/damage in shipment
*difficulties in obtaining export financing
3. Political risks
foreign government restrictions
national export policy
foreign exchange controls
tariffs on imported products
civil strife/revolution
How to avoid/decrease political risks:
no exporting to high-risk markets
diversify overseas markets
insure risks when possible
structure export in a way buyer bears most of the risk
, Chapter 3: Internationalization theories
Historical development of internationalization:
1. Traditional marketing approach
Penrose tradition: traditional marketing focus on firm’s core competences combined with opportunities in
foreign environment. Cost-based view suggests firm must possess ‘ compensating advantage’ to overcome
‘cost of foreignness’.
2. ‘Life cycle’ concept for international trade
Compares ACs and LDCs -> advanced countries & less developed countries
3. Uppsala internationalization model (figure 3.1, page 80)
Additional market commitments are made in small incremental steps: choosing additional geographic markets
with small psychic distances, combined with choosing entry modes with few additional risks.
Johanson and Wiedersheim-Paul distinguish four modes of entering an international market. Each stage
represents a higher degree of international involvement:
Stage 1: no regular export activities (sporadic export)
Stage 2: export via independent representatives (export modes)
Stage 3: establishment of a foreign sales subsidiary
Stage 4: foreign production/manufacturing units
Renewed model:
Stage 1: sales objects
Stage 2: operations methods
Stage 3: markets
Stage 4: organizational structure
Stage 5: finance
Stage 6: personnel
Market commitment is assumed to contain two factors: amount of resources committed and degree of
commitment.
4. Internationalization/transaction cost of approach
Should a firm internationalize within its own boundaries (subsidiary) or collaboration with external party
(externalization)
Transaction costs: friction between buyer and seller, which is explained by opportunistic behavior. This means
acting with self-interest, with guile -> misleading, distortion, disguise and confusion.
Transaction cost = (ex ante costs) + (ex post costs)
= (search costs + contracting costs) + (monitoring costs + enforcement costs)
TCA Analysis: cost minimization explains structural decisions.
Limitations of TCA framework:
Narrow assumptions of human nature
Excluding ‘internal’ transaction costs
Relevance of ‘ intermediate’ forms for SMEs
Importance of production cost is understated
5. Dunning’s eclectic approach
Importance of locational variables in foreign investment decisions. Propensity of a firm to engage itself in
international production increases if following three conditions are met:
ownership advantages: firm that owns foreign production facilities has ownership advantage of firms of
other nationalities
IBL, Year 2
Summary
Chapter 1: Global Marketing in the firm
Five stage decision model in global marketing:
I: Decision whether to internationalize
II: Deciding which markets to enter
III: Market entry strategies
IV: Designing the global marketing program
V: Implementing and coordinating the global marketing program
Global Marketing:
The firm’s commitment to coordinate its marketing activities across national boundaries in order to find and
satisfy global customer needs better than the competition.
Implications:
develop a global marketing strategy based on similarities/differences between markets
exploit the knowledge of the main office through worldwide learning and adaptions
transfer knowledge and ‘best’ practices from any of its markets and use them in international markets.
LSE: large scale enterprise. >250 employees. obtain market reports via consultancy firms.
SME: small and medium sized enterprise. small: <50. medium: 50-250. gather information in a more informal
and personal way.
For LSEs is it easier to obtain economies of scale.
economies of scope: Reusing a resource from one business/country in additional businesses/countries.
Global marketing orientations:
1. Ethnocentric: Needs of the home company is superior and most relevant (McDonald’s, Starbucks)
2. Polycentric: Each country is unique and should be targeted in a different way (Ikea)
3. Regiocentric: Integrate the program within regions
4. Geocentric: Act local
Glocalization:
Development and selling of products or services intended for the global market, but adapted to suit local
culture and behaviour.
, Chapter 2: Initiation of internationalization
Internationalization motives: Fundamental reasons, proactive (stimuli to attempt strategy change, based on
firm’s interest in exploiting unique competences or market possibilities) and reactive (firm reacts to pressures
or threats in its home market of foreign markets and adjusts passively to them by changing its activities over
time), for internationalization
For internationalization to take place, something or someone inside the company must be triggered to initiate
the internationalization.
If any of these triggers are not (enough) present in new market, they will form barriers to internationalization.
Contra process of internationalization is de-internationalization: Process in which multinational company shifts
to a strategic configuration that has a lower international presence.
Barriers hindering (further) process of internationalization:
1. General market risks
*comparative market distance
*competition from other firms
*differences in product usage in foreign markets
*language and cultural differences
*difficulties in finding the right distributor in foreign market
*differences in product specifications in foreign markets
*complexity of shipping services to overseas buyers.
2. Commercial risks:
*exchange rate fluctuations
*failure of export customers to pay due to contract dispute/fraud
*delays/damage in shipment
*difficulties in obtaining export financing
3. Political risks
foreign government restrictions
national export policy
foreign exchange controls
tariffs on imported products
civil strife/revolution
How to avoid/decrease political risks:
no exporting to high-risk markets
diversify overseas markets
insure risks when possible
structure export in a way buyer bears most of the risk
, Chapter 3: Internationalization theories
Historical development of internationalization:
1. Traditional marketing approach
Penrose tradition: traditional marketing focus on firm’s core competences combined with opportunities in
foreign environment. Cost-based view suggests firm must possess ‘ compensating advantage’ to overcome
‘cost of foreignness’.
2. ‘Life cycle’ concept for international trade
Compares ACs and LDCs -> advanced countries & less developed countries
3. Uppsala internationalization model (figure 3.1, page 80)
Additional market commitments are made in small incremental steps: choosing additional geographic markets
with small psychic distances, combined with choosing entry modes with few additional risks.
Johanson and Wiedersheim-Paul distinguish four modes of entering an international market. Each stage
represents a higher degree of international involvement:
Stage 1: no regular export activities (sporadic export)
Stage 2: export via independent representatives (export modes)
Stage 3: establishment of a foreign sales subsidiary
Stage 4: foreign production/manufacturing units
Renewed model:
Stage 1: sales objects
Stage 2: operations methods
Stage 3: markets
Stage 4: organizational structure
Stage 5: finance
Stage 6: personnel
Market commitment is assumed to contain two factors: amount of resources committed and degree of
commitment.
4. Internationalization/transaction cost of approach
Should a firm internationalize within its own boundaries (subsidiary) or collaboration with external party
(externalization)
Transaction costs: friction between buyer and seller, which is explained by opportunistic behavior. This means
acting with self-interest, with guile -> misleading, distortion, disguise and confusion.
Transaction cost = (ex ante costs) + (ex post costs)
= (search costs + contracting costs) + (monitoring costs + enforcement costs)
TCA Analysis: cost minimization explains structural decisions.
Limitations of TCA framework:
Narrow assumptions of human nature
Excluding ‘internal’ transaction costs
Relevance of ‘ intermediate’ forms for SMEs
Importance of production cost is understated
5. Dunning’s eclectic approach
Importance of locational variables in foreign investment decisions. Propensity of a firm to engage itself in
international production increases if following three conditions are met:
ownership advantages: firm that owns foreign production facilities has ownership advantage of firms of
other nationalities
