INTERNATIONAL MARKETING MANAGEMENT SESSION 13: GLOBAL PORTFOLIO STRATEGY 1

2 CHANGING MARKET ORIENTATION PHASE #1 PHASE #2 PHASE #3 domestic countries firm sub firm sub

Tangible Assets  Production, R&D, Advertising Intangible Assets  Image, Experience, Ideas 3 LEARNING LEVERAGING: ECONOMIES OF SCALE

Shared Physical Assets  Production, Warehousing Shared External Relations  Suppliers, Distributors Shared Experience  R&D, Country Knowledge LEVERAGING: ECONOMIES OF SCOPE 4 BUILDING

Country-focused international expansion (e.g. acquisition, local expansion) Trend to industry consolidation and growth of global competition Forces towards global market integration  Need to:  re-center direction for growth  Improve coordination across national boundaries  adopt global perspective 5 TRIGGERS TO GLOBAL RATIONALIZATION

6 PHASE 3: GLOBAL RATIONALIZATION world markets

7 PHASE 3: KEY STRATEGIC DECISIONS n Establish Global Portfolio of Countries, Products, Market Segments n Develop Global Marketing Strategy – Broad-Based, Focused, Hybrid n Improve Efficiency of Production and Logistics

Scale Efficiencies (Tangible and Intangible) Learning Transfer of Ideas, Products, Programs, Experience and Know- how (Best Practices) LEVERAGING: SYNERGIES 8 LEADING

TYPICAL FIRMS IN INTEGRATION PHASE 9

10 Products/Product Lines Existing New Segments/Customers New Existing Countries/Regions Existing New Stage in Value Chain Existing New GLOBAL MARKET GROWTH DIRECTIONS

12 RE-ENGINEERING THE GLOBAL PORTFOLIO

13

14

15 Market Attractiveness low high Competitive Strength Asia Latin America Africa U.S. Europe SBU PORTFOLIOS: REGION

16 COMPETITOR A Market Attractiveness Low High Competitive Strength Japan Argentina Brazil China Germany France U.K. U.S. COMPETITOR B Market Attractiveness Low High Competitive Strength Japan S. Korea Brazil China Germany France U.K. U.S. Hungary Key Countries FOOD AND BEVERAGE PORTFOLIOS

17 n Market Strength  sales volume  market share and market share growth  rank in industry  gross/net profits n Market Presence and Coverage  geographic market coverage  presence in key markets  degree of vertical integration n Innovativeness  investment in R&D  # patents  new product introductions ILLUSTRATIVE INDICATORS FOR ASSESSING CS

18 Macro-Economic n Import/Exports Between Countries n Air Traffic n Mail Flows n Communication (media links) n Tourist Flows n Geographic Proximity Product-Market n Flows of Goods n Common Distributors Retailer Organization n Network of Service Organizations n Gray Markets and Parallel Importation n Presence of Same Competition n Presence of Same Customers Firm Specific n Family Branding/Corporate Name n Common Production Facilities n Common Suppliers n Shared R&D Expenditure n Shared Warehousing Facilities n Shared Marketing Expenditure n Common Sales force n Shared Distribution Facilities GEOGRAPHIC MARKET LINKAGES

19 FOOD AND BEVERAGE EXPANSION OPTIONS FOR A COMPANY

20 n Growth vs. Mature Markets n Risk Diversification n Geographic Concentration (Market Interconnectedness) BALANCING THE PORTFOLIO

21 Dragon Low High Growth Markets Mature Markets Market Interconnectedness Tiger GoatOx BALANCING THE GLOBAL PORTFOLIO

22 n Need to chart direction for long-run growth n Importance of balancing growth vs. mature markets n Growing integration of markets impacts expansion choice IMPLICATIONS