Export problems (I) 1.Culture  culture differs and is difficult to understand  self-reference thinking  sterotyping 2.Market factors  distribution structure  customs & duties  specific norms, specifications, laws  market information  media habits

Export problems (II) 3.Financial factors  securing payment  exchange rates 4.Organisational factors  finding labour force  control and coordination

The seven deadly traps 1.Entering markets in order of size or growth of demand go where strategy will work best 2.Underestimate foreign competitors 3.Expectations that customer motivations will be similar worldwide the real world is not a global village 4.Entering markets at the wrong price 5.Market entry without planning the expansion process 6.Association with poor partners 7.Losing brand exclusivity (Simmonds 1999)

Key success factors  Planning and controlling  Product strength and uniqueness  Service  Product adaptation  Support to intermediaries  International competence and experience  Commitment  Low price? High price?

Key success factors - 2  Service aspects  Quality  Brand image  Export experience and scale  Financial resources for export  Information  Physical distribution

International marketing management process Strategic export decision Market screening/country selection Product/marketing strategy - entry strategy - attack strategy - competitive positioning - expansion strategy Marketing-mix planning - adaptation vs. standardisation - coherence, synergy Implementation & control

Reasons to go abroad Proactiv e  managerial urge  growth & profit  unique product or competencies  economics of scale  foreign market opportunities  change agents  preemptive move Reactiv e  spreading risk  extend sales of seasonal product  excess capacity  unsollicited orders  follow key customer  small home market  stagnant or declining market (position)  countercompetition InternalExternal

A model for selecting foreign markets Filter 1 preliminary opportunities + Filter 2 potental opportunities + Filter 3 Macro-level research (General market potential) - socio-economic statistics - geographical factors - political stability/openness Product-class related factors - cultural framework - growth trends similar products - stage of development Macro-level research (General market potential) - competition - customer buying behaviour - channels - key success factors vs. strengths/weaknesses - profit potential  Target markets prority listing  Entry strategy - Rejected markets Rejected markets - + Rejected markets -

Strategy in Globalizing Markets  Preparedness for internationalization -international sales ratio -market presence in key markets -modes of operation: level of control and involvement -dominant market position  Industry globality -concentrated industry -homogeneity and cross-border demand -liberal trade & investment policy - market interdependence Solberg, 1997

The Nine Strategic Windows Frame (Solberg, 1997) Preparedness for internationalization High Middle Low MiddleHigh Industry Globality

The Nine Strategic Windows Frame (Solberg, 1997) Enter new business Prepare for globalization Strengthen your global position Consolidate your export markets Consider expansion in international markets Seek global alliances Stay at home Seek niches in international markets Prepare for a buy-out Preparedness for internationalizatio n High Middle Low MiddleHigh Industry Globality

The European/Global challenge Customer Global convergence Efficiencies convergence Efficiencies Pan-European or Pan-European or Global Approach Global Approach - Economies of Scale - Economies of Scope

Risks of Pan-European marketing  Cultural differences persist  Differences in market infrastructure  Differences in competitive structure  Different legal context  Internal friction  Costs of co-ordination

Standardization  Product Policy  Brand Name  Logistics  Positioning But …

Adaptation required for:  Local Selling  Customized Service  Local Pricing  Local Distribution  Local PR and Sales Promotion

Adaptations due to:  Legal Differences  Competition  Buyer Behaviour  Distribution Structure  Market Position  Market Development

The Belgian Compromise Global Local Global Local Glocal Glocal - A subtle mix … - Coordination - A strategic frame but flexibility - Alliances when needed - Communication systems - Global management as team player

Standardization strategy toward CEE (1)  Typical elements of standardization strategy for CEE markets - value-based positioning ( Q, image) - product and brand elements -pricing -pioneering strategy in high end markets -exporting approach

Standardization strategy toward CEE (2)  Typical adaptations - non-core elements ( packaging, sales promotion) - creative selection ( product-mix, advertising) - regional management

Key problems identified by head- quarter executives  Lack of qualified local managers  Operational focus, no long run view  Lack of marketing competence  ‘fire fighters’

Key problems identified by subsidiary executives  Short term goals block our strategic expansion  Reaching decisions takes too long due to bureaucracy and paper work  HQ feels that what works in one market should work everywhere  Too much marketing constraints

Comparison Matrix for Entry Modes Criteria Modes InvestmentSalesCosts Profit Contributio n Market Share Reversibilit y ControlRiskOther Indirect Export Agent/ Distributor Export Branch/ Subsidiary Export Licensing Franchising Other Contractual Agreements Investment: New Establishment Investment Acquisition Joint Venture Mixed

Evolution of a Manufacturer’s Decision on Entry Mode Branch export/subsidiary Sole ventur e Joint venture Agent/distributor export Licensing Indirect export Risk Time Control 0

Entry Strategies (I) Experience Entry strategy Suitable type of Countries/Situation s Do’sDont’s Export Joint venture Countertrade

Entry Strategies (II) Experience Entry strategy Suitable type of Countries/Situation s Do’sDont’s Licensing Acquisition Greenfield FDI

A process model of international market withdrawal