INTERNATIONAL MARKETING RESEARCH TRADE DATA ANALYSIS MARKET ATTRACTIVENESS/ COMPANY STRENGTH ..ANALYSIS SWOT ANALYSIS

Foreign market portfolios: technique and analysis Company competitive Market attractivness high medium low Invest/grow dominate divest Joint venture Selective strategies Harvest/divest/ License/combine countries international market entry Rajesh Narang

4/14/2018 SWOT Analysis a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors. A SWOT analysis process generates information that is helpful in matching an organization or group’s goals, programs, and capacities to the social environment in which it operates.  international market entry Rajesh Narang

Classify them by their “seriousness” and “probability of occurrence”. 4/14/2018 SWOT Strengths:Positive tangible and intangible attributes, internal to an organization. They are within the organization’s control. Weakness:Factors that are within an organization’s control that detract from its ability to attain the desired goal. Which areas might the organization improve? Opportunities :External attractive factors that represent the reason for an organization to exist and develop. What opportunities exist in the environment, which will propel the organization?Identify them by their “time frames” Threats :External factors, beyond an organization’s control, which could place the organization mission or operation at risk. contingency plans that May address them . Classify them by their “seriousness” and “probability of occurrence”. international market entry Rajesh Narang

international market entry Rajesh Narang 4/14/2018 international market entry Rajesh Narang

Your specialist marketing expertise. 4/14/2018 SW :PRIMO-F People II Resources III Innovation & Ideas II Marketing II Operations II Finance strength could be:What do you do well? Is there anything you do better than most? Better than anyone else? Your specialist marketing expertise. A new, innovative product or service. Location ,Quality processes that adds value to your product or service. A weakness could be:What should be improved? What do you do poorly? What should you avoid, based on mistakes in the past? Lack of marketing expertise. Undifferentiated products ,Poor quality Damaged reputation. international market entry Rajesh Narang

Threats :What obstacles do you face? 4/14/2018 OT Profile Opportunities :Where can you find, or create, a competitive advantage? What are some major trends in your business? - Consolidation / Diversification? Specialization / Generalization? - Changes in technology. Such as computer software .- Changes in the types of businesses in your market.- Changes in social patterns, population profiles, lifestyle. - trends. Changes in demand Threats :What obstacles do you face? What are your competitors doing that may result in a loss of clients, customers, market share? Are the required specifications for your job, products or services changing? Is changing technology threatening your position? Do you have cash-flow problems? international market entry Rajesh Narang

SWOT Analysis Examples 4/14/2018 SWOT Analysis Examples Example 1 - Wal-Mart SWOT Analysis. Strengths - Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store.Weaknesses - Wal-Mart is the World's largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control.Opportunities - To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region. Threats - Being number one means that you are the target of competition, locally and globally. international market entry Rajesh Narang

4/14/2018 Example 2 - Starbucks SWOT Analysis. Strengths - Starbucks Corporation is a very profitable organisation, earning in excess of $600 million in 2004.Weaknesses - Starbucks has a reputation for new product development and creativity. Opportunities - New products and services that can be retailed in their cafes, such as Fair Trade products. Threats - Starbucks are exposed to rises in the cost of coffee and dairy products. Example 3 - Nike SWOT Analysis.Strengths - Nike is a very competitive organisation. Phil Knight (Founder and CEO) is often quoted as saying that 'Business is war without bullets.'Weaknesses - The organisation does have a diversified range of sports products. Opportunities - Product development offers Nike many opportunities. Threats - Nike is exposed to the international nature of trade. . international market entry Rajesh Narang

international market entry Rajesh Narang 4/14/2018 international market entry Rajesh Narang

INTERNATIONAL MARKET ENTRY STRATEGIES International market entry concept & modes Factors affecting the selection of entry mode

Concept of international market entry 4/14/2018 Concept of international market entry mode of entry: an institutional mechanism by which a firm makes its products or services available consumers in international markets. mode of entry determined by: - the ability and willingness of the firm to commit resources - the firms’ desire to have a level of control over international operations - the level of risk the firm is willing to take international market entry Rajesh Narang

Market entry strategies international market entry Rajesh Narang

Market entry strategies Exporting Direct Domestic base Overseas sales branch Traveling sales representative Foreign-based distributors/agent Indirect-occasional, or active exporting Domestic-based export merchant Domestic-based export agent Cooperative organizations Export-management company international market entry Rajesh Narang

Market entry strategies Contractual Agreements Franchising: A contractual arrangement where a wholesaler or retailer (the Franchisee) agrees to make some payment and to meet the operating requirements of a manufacturer or other franchiser in exchange for the right to use the firm’s name and to market its goods or services Foreign Licensing: an agreement that grants foreign marketers the right to distribute a firm’s merchandise or to use its trademark, patent, or process in a specified geographic area. Subcontracting: a contractual agreement where a firm hires a local company to produce goods or services in a specific geographic area. international market entry Rajesh Narang

Market entry strategies International Direct Investment An additional strategy for entering global markets Requires direct investment in foreign firms, production, and/or marketing facilities Advantages cheaper labor cost in some countries government incentives creates better image deeper relationships with government, customers, suppliers and distributors full control of operations and marketing Risks involved: economic difficulties of the host country political instability and negative perception international market entry Rajesh Narang

Modes of international market entry Production in home country exports: production is carried out in home country and finished goods are shipped to the overseas markets for sale indirect exports: process of selling products to an export intermediary in the company’s home country who in turn sells the products in the overseas markets direct exports: process of selling the firm’s products directly to an importer in the overseas market international market entry Rajesh Narang

Modes (contd) complementary exporting: use of distribution channels of an overseas firm to make the product available in the overseas market provide offshore services: to overseas clients with the help of information and communication technology international market entry Rajesh Narang

Production in a foreign country Modes (contd) Production in a foreign country contractual entry modes international licensing: process by which a domestic company allows a foreign company to use its intellectual property and specific business skills for a compensation (royalty) international franchising: transfer of intellectual property and other assistance over an extended period of time with greater control compared to licensing international market entry Rajesh Narang

Selecting the International Entry Mode, continued Licensing Licensor offers know-how, shares technology, and shares brand name with licensee Licensee pays royalties Lower-risk entry mode; limits exposure to economic, financial, and political instability Permits the company access to markets that may be closed or that may have high entry barriers DOWNSIDE: Can produce competitor in the licensee international market entry Rajesh Narang

Selecting the International Entry Mode, continued Franchising Franchisor gives franchisee right to use brand name, trademarks and business know-how Less risk, higher level of control Very rapid market penetration DOWNSIDE: Can create future competitors who understand the operations of the franchise international market entry Rajesh Narang

Modes (contd) overseas turnkey projects: conceptualize, design, install, construct, and carry out primary testing of manufacturing facilities or engineering structures for an overseas client organisation types : built and transfer (BT), built, operate, and transfer (BOT), built, operate, own (BOO) international management contracts: a company provides its technical and managerial expertise for a specific duration to an overseas firm international market entry Rajesh Narang

Modes (contd) international strategic alliance: the relationship between two or more firms that cooperate with each other to achieve common strategic goals but do not form a separate company international contract manufacturing: a contractual arrangement under which a firm’s manufacturing operations are carried out in a foreign countries international market entry Rajesh Narang

International Strategic Alliances Typically, the term refers to nonequity alliances; for example: Manufacturing Contract manufacturing, engineering, technological, and research and development alliances Marketing One firm handles marketing for another, or some aspect of the marketing process Distribution One firm handles the distribution for another, or some aspect of the distribution process international market entry Rajesh Narang

Investment entry modes Modes (contd) Investment entry modes assembly in overseas markets: refers to exporting various components of the product in completely knocked down (CKD) condition and assembles them overseas international joint ventures: equity participation of two or more firms resulting into formation of a new entity international market entry Rajesh Narang

Selecting the International Entry Mode, continued Joint Venture Preferred entry mode of governments of developing countries Help develop local expertise If production is exported, helps with country’s balance of trade Foreign company and local company establish a jointly-owned new company Parties share capital, equity, labor 70% of all joint ventures break up within 3.5 years DOWNSIDE: Joint-venture partners can turn into viable competitors; and 70% of all joint ventures break up within 3.5 years. international market entry Rajesh Narang

Selecting the International Entry Mode, continued Consortia Involve three or more companies Monopoly effect Allowed where expensive R&D is involved in underserved markets in markets where the government and/or the marketplace can control its activity international market entry Rajesh Narang

Factors for selecting partners for cooperation the alliance partner should have some strength which can be translated into business values for the alliance the alliance partners should be committed to cooperative goals it is preferable that the alliance partner should have multi-cultural business environment international market entry Rajesh Narang

Investment mode (contd) Wholly owned foreign subsidiaries to have complete control and ownership of international operations a firm opts for foreign direct investment through: 1. acquiring a foreign company and all its resources in a foreign market (acquistion) 2. the establishment of production and marketing facilities by a firm on its own from scratch (green field) international market entry Rajesh Narang

Selecting the International Entry Mode, continued Wholly Owned Subsidiaries Can be developed by the company – greenfielding – or can be purchased (acquisition or merger) Involve long-term market commitment High cost High control of operations Greatest level of risk international market entry Rajesh Narang

Selecting the International Entry Mode, continued Branch Offices Entities are part of the international company, rather than a new company (as in the case of the subsidiary) Involves substantial investment sales office showroom Engages in a full spectrum of marketing activity High level of control international market entry Rajesh Narang

Comparison of Market Entry Strategies Form Control Risk Advantage Export Very limited Low Low cost Licensing Limited Moderate Low cost Joint Ventures Shared Moderate Local expertise Ownership Total High Control Internet Total High No physical presence required As organizations became “less ignorant” and more confident about marketing in the international arena, they tended to become more reliant on their international operations. And in becoming more reliant on their international operations, they acquired the expertise to enter new markets differently depending upon market conditions, laws and the degree of risk they wanted to face in any given market. If you look at the above as a continuum export is on one end and ownership of non-domestic operations is on the other. With licensing on the end toward export and JVs on the end toward ownership. The main thing to note is that as you move to full ownership a company gains control but looses local market expertise and has added risk. The important thing to remember here is, again, with the possible exception of total “ownership” of non-domestic operations, a company is doing business very differently “abroad” than the way it conducts its activities in its home market. And finally, as we discussed earlier, what we have described here is the way “business” has been traditionally done as organizations became more reliant on sales from its non-domestic market to supply cash for its revenue stream. international market entry Rajesh Narang

Factors affecting the selection of entry mode External factors Market size Market growth Government regulations Level of competition Level of risk political economic operational Production and shipping costs international market entry Rajesh Narang

Factors affecting the selection of entry mode (contd) Internal factors Company objectives availability of company resources level of commitment international experience flexibility international market entry Rajesh Narang

Foreign market portfolios: technique and analysis Company competitive Market attractivness high medium low Invest/grow dominate divest Joint venture Selective strategies Harvest/divest/ License/combine countries international market entry Rajesh Narang

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