Muhammad Waqas Global Market Participation Lecture 15

Muhammad Waqas Summary Collecting primary data Analysis by inference Outsourcing research Studying the competition Environmental review Developing a global information system

Muhammad Waqas Learning Objectives List and describe the five reasons why firms internationalize. Differentiate between born-global firms and other companies. Explain the difference between a standalone attractive market and a globally strategic one. Cite the advantages and disadvantages of targeting developed countries, developing countries, or transitional economies. List and describe the filters used for screening national markets. Explain the pros and cons of choosing markets on the basis of market similarity.

Muhammad Waqas Chapter Overview Internationalizing marketing operations Geographic market choices Country selection Selecting a global marekting strategy

Muhammad Waqas Internationalizing Marketing Operations Internationalization = a firm’s expansion from its domestic market to foreign markets

Muhammad Waqas Internationalizing Opportunistic expansion Pursuing potential abroad Following customers abroad

Muhammad Waqas Internationalizing (cont.) Exploiting different market growth rates Globalizing for defensive reasons

Muhammad Waqas Born Globals Firms that recognize from inception that their markets are global Especially true of high-tech start-ups Small percentage of firms

Muhammad Waqas The Costs of Going Global Firms are internationalizing more quickly than in the past But it takes TIME and MONEY – Starbucks expanded internationally in 1996 – first profit 2004; 1650 international stores = only 7% of revenue!

Muhammad Waqas Geographic Market Choices Targeting developed economies Targeting developing economies Expanding in Eastern Europe and Russia Targeting Lead Markets Must-Win Markets

Muhammad Waqas Stand-Alone Market Attractiveness Factors – Market and target segment(s) size – Growth rate – Strength of competition – Market share potential – Government incentives Low taxes Incentives

Muhammad Waqas Strategic Importance of Markets Current and future battlegrounds where global competitors engage each other May not necessarily be attractive as a stand alone market but strategically important

Muhammad Waqas Targeting Lead Markets Vary by industry Major R&D Sites Have demanding customers who push for quality and innovation Examples: – Plastics = Japan – Italy = Textiles, Clothing – France = Wine

Muhammad Waqas Attractiveness of Developing Markets Latin America, Africa, the Middle East and parts of Asia Trade and investment liberalization Market growth may be higher Middle class growth Remittances enhance buying power Competition may be less intense

Muhammad Waqas Challenges of Developing Markets Political risk Economic risk – Big ups and downs; volatility Some trade and investment restrictions remain Middle class may still be small – Predominated by small elite and large impoverished classes

Muhammad Waqas Summary Internationalizing marketing operations Geographic market choices

Muhammad Waqas References Gillespie, K., Jeannet, J.P. and Hennessey, H.D. (2004), Global Marketing: An Interactive Approach, Houghton Mifflin, Boston, NY.