1. © 2010 South-Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 6 Strategic Planning Principles of International Marketing 9th Edition

2. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Global Marketing Globalization reflects a business orientation which believes that: –The world is becoming more homogeneous and –Distinctions between national markets are not only fading but would eventually disappear.

3. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 6.1: Global Marketing Evolution

4. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Global Marketing Globalization drivers –Market factors – Include purchasing power, developed infrastructures, technology, globalization of distribution channels, and cross-border retail alliances. –Cost factors – Involve avoiding cost inefficiencies and duplicated efforts. –Environmental factors – Include reduced governmental barriers and rapid technological evolution; born globals are taking advantage of today’s more open trading regions and newer technologies. –Competitive factors – Include rapid product innovation, introduction, distribution.

5. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 6.3 – The Global Landscape by Industry and Market

6. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Strategic Planning Process Formal strategic planning contributes to both financial performance as well as non financial objectives such as: –Raising the efficacy of new product launches. –Reducing the operation cost. –Improving product quality. –Market share performance.

7. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Strategic Planning Process Three broad dimensions to be kept in mind while undertaking formal strategic planning: –The potential benefits for the company in the short and long term. –The costs in terms of management time and process realignment. –The presence of the necessary management resource to undertake the endeavor.

8. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 6.4 - Global Strategy Formulation

9. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Strategic Planning Process Understanding and adjusting the core strategy –Begins with a clear definition of the business for which the strategy is to be developed. –The strategic business unit (SBU) represents groups organized around product market similarities based on: Needs or wants to be met, End user customers to be targeted, Products or services used to meet needs of specific customers. –Requires the participation of executives from different functions.

10. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Strategic Planning Process Market and competitive analysis –Help balance risks, resource requirements, competitive economies of scale, and profitability to gain stronger long-term positions. –Help understand the structure of the global industry and identify the forces that drive competition and determine profitability. Internal analysis –Examine the readiness and capability of the firm to undertake strategic moves with its current resources.

11. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Strategic Planning Process Formulating a global marketing strategy –Choice of competitive strategy –Country-market choice –Segmentation

12. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 6.5 - Competitive Strategies

13. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Strategic Planning Process Country-market choice –A market expansion policy will determine the allocation of resources among various markets; basic alternatives being concentration and diversification. –Factors that determine country market selection: The stand-alone attractiveness of the market. Global strategic importance of the market. Possible synergies offered by the market.

14. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 6.7 - Factors Affecting the Choice between Concentration and Diversification Strategies

15. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Strategic Planning Process Segmentation –This approach looks at markets on a global or regional basis, thereby ignoring the political boundaries that otherwise define markets in many cases. –Allows global marketers to take advantage of the benefits of standardization while addressing the unique needs and expectations of a specific target group.

16. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 6.8 - Bases for Global Market Segmentation Environmental Variables Environmental Variables Marketing Management Variables Marketing Management Variables Geographic Variables Geographic Variables Political Variables Political Variables Economic Variables Economic Variables Cultural Variables Cultural Variables Promotion Variables Promotion Variables Product Variables Product Variables Price Variables Price Variables Distribution Variables Distribution Variables Bases for International Market Segmentation

17. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Global marketing program development - Marketing related decisions will have to be made in four areas: –The degree of standardization in the product offering. –Marketing approach - Uniformity is sought in elements that are strategic in nature, while taking care to localize necessary tactical elements; this approach is called glocalization. –Location and extent of value-adding activities. –Competitive moves - Cross-subsidization may be the competitive advantage needed for the long term. The Strategic Planning Process

18. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Strategic Planning Process Challenges of global marketing –Insufficient research and the tendency to over- standardize. –Inflexibility in planning and implementation. –Local resistance in the form of not-invented-here syndrome (NIH), which occurs when country organizations are not part of the planning process, or if adoption is forced on them by headquarters.

19. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Strategic Planning Process How to avoid the NIH syndrome –Ensure that local managers participate in the development of global brand marketing strategies. –Encourage local managers to develop ideas for regional or global use. –Maintain a product portfolio that includes local as well as regional and global brands. –Allow local managers control over their marketing budgets so that they can respond to local customer needs and counter global competition.

20. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Strategic Planning Process Localizing global marketing –Management processes Globalization enhances the flow of information, leading to idea exchange and strengthening of organizational values. Encourage personnel interchange to gain experience abroad. Coordinate and leverage resources of the corporation. Permit local managers to develop their own programs within specified parameters and subject to approval. Minimize the influence of the NIH syndrome by using motivational policies.

21. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Strategic Planning Process Localizing global marketing –Organization structures Establish global or regional product managers and their support groups at headquarters. The matrix structure is considered more effective in today’s global marketplace. Execute global account management programs to build relationships with important customers and allow development of internal systems and interaction.

22. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Strategic Planning Process Localizing global marketing –Corporate culture Affects and is affected by the manner in which a company holds its operations together and makes them a single entity, and commitment to the global market place. The management development system has to be transparent; non-national executives should have an equal chance for the fast track to top management. Implement compensation and mobility policies to avail the best talent regardless of job location.

23. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Local Company in the Global Environment The degree and strength of globalization in an industry will determine the pressure that the local marketer will be under. The extent to which the company’s assets are transferable will determine the opportunity dimension. Multiple strategies are available to local marketers when global markets and marketers challenge them.

24. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 6.10 - Competitive Strategies for Local Companies

25. © 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Local Company in the Global Environment The following six-part strategy for success has been proposed: –Create customized products and services. –Develop approaches that overcome key obstacles. –Utilize the latest technology for advantage. –Scale up operations locally, regionally, and globally. –Exploit low-cost labor. –Invest in talent to sustain their growth and expansion.