Business Marketing Strategies for Global Markets Chapter 8

Capturing Global Advantage What are RDEs? What are RDEs? Why are they important? Why are they important?

Sources of Global Advantage Three major types of advantages Three major types of advantages Cost advantagesCost advantages Market access advantagesMarket access advantages Capabilities advantagesCapabilities advantages

Cost Advantages 20-40% savings in landed costs 20-40% savings in landed costs What are landed costs?What are landed costs? Lower Operating Costs Lower Operating Costs Wage differencesWage differences Business process outsourcingBusiness process outsourcing Lower Capital Costs Lower Capital Costs Capital and equipments costsCapital and equipments costs 30% savings30% savings Hidden costsHidden costs

Market Access Advantages Access to Growing Markets Access to Growing Markets ChinaChina Following customers Following customers

Capabilities Advantage Gain knowledge and skills Gain knowledge and skills China and IndiaChina and India How does this help? How does this help? Improve R&DImprove R&D Address unmet consumer needsAddress unmet consumer needs Tailor products to local marketTailor products to local market

To Outsource or not to Outsource? THAT is the question THAT is the question To outsource: To outsource: To not outsource: To not outsource:

International Market Entry Options Exporting Exporting Contracting Contracting Strategic Alliances Strategic Alliances Joint Venture Joint Venture

Market Entry Options Exporting Exporting Goods are produced ___________Goods are produced ___________ Sales are made through __________________Sales are made through __________________ Lowest commitment and riskLowest commitment and risk DisadvantagesDisadvantages

Market Entry Options Contracting Contracting Two typesTwo types Licensing Licensing What can be licensed?What can be licensed? AdvantagesAdvantages DisadvantagesDisadvantages Management contracts Management contracts Turnkey operationsTurnkey operations

Market Entry Options Strategic Alliances Strategic Alliances “Collaborations among partners involving the commitment of capital and management resources with the objective of enhancing the partner’s competitive positions.”“Collaborations among partners involving the commitment of capital and management resources with the objective of enhancing the partner’s competitive positions.” AdvantagesAdvantages DisadvantagesDisadvantages

Market Entry Options Joint Ventures Joint Ventures Why?Why? AdvantagesAdvantages DisadvantagesDisadvantages Choosing a Mode of Entry Choosing a Mode of Entry FactorsFactors

Multidomestic v. Global Multimdomestic Multimdomestic Global Global

International Strategy and the Value Chain Primary activities Primary activities UpstreamUpstream DownstreamDownstream Competitive Advantage Competitive Advantage DownstreamDownstream UpstreamUpstream Coordination Coordination Configuration Configuration

General Framework 1. Build a Unique Competitive Position 2. Emphasize a Consistent Positioning Strategy 3. Establish a Clear Home Base for Business What’s a home base? What’s a home base? HPHP 4. Leverage Product Line Home Bases at Different Locations

General Framework 5. Disperse Activities to Extend Home Base Advantages Purchase from cost-effective vendors Purchase from cost-effective vendors Improve market access Improve market access Tap competitive advantages in other places Tap competitive advantages in other places 6. Coordinate and Integrate Dispersed Activities Establish clear global strategy Establish clear global strategy Develop info and accounting systems Develop info and accounting systems Encourage personal relationships Encourage personal relationships Rely on incentive systems Rely on incentive systems