Postgraduate & mid – career Development Unit

Faculty of Management & Finance

Introduction
University of Colombo
Despite the many challenges in the international arena
(shifting borders, unstable governments, foreign-
exchange problems, corruption, and technological
pirating), companies selling in global industries need to
internationalize their operations.
Programme : MBA in HRM and MBA in Marketing (2009 - 2011)

Course : MBA 536 – Marketing Management In deciding to go abroad, a company needs to define its
Topic : Globalization of Brands
international marketing objectives and policies.

Lecturer : Dr. K. Kajendra

Kajendra,, Senior Lecturer (Ph.D., M.B.A., M.Com.,
M.Com.,
B.Com.(Special)
B.Com .(Special) Department of Marketing,
University of Colombo

COMPETING ON A GLOBAL BASIS

• Two hundred giant corporations together have sales that exceed
¼ of the world’s total economic activity.
Concept of Globalization
• Many companies have conducted international marketing for
decades.
• Domestic companies who never thought about foreign
competitors suddenly find them in their backyards.
• The better way to compete is to continuously improve products
at home and expand into foreign markets.
• A global industry is an industry in which the strategic positions
of competitors in major national markets are fundamentally
affected by their overall global positions

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• Global firms plan, operate, and coordinate
their activities on a worldwide basis
• A company doesn’t need to be large to sell
globally.
• Small and medium-sized firms can practice
global nichemanship.
• For a company of any size to go global it must
make a series of decisions.
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Globalization Strategies
In the process of globalizing their business
operation. A firm has to pass through three
critical phases:
1. Initial entry to foreign market
2. Expanding the overseas market base
3. Globalization of business
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Why Globalization
– Slow growth of domestic market
– Economy of Scale
– Converging consumer tastes and requirements
– New communication and transportation technologies are bringing people
together into one global village. The differences in tastes and
requirements are shrinking
– Shorter product life cycle
– With the advancement in technology, the rate of innovation has gone up,
resulting in a shorter product life cycle. Therefore, to take full advantage,
it is better to go beyond the boundary.
– Diminishing trade barriers and restrictions
– International economic and trade agreements and conventions, and the
emergence of new world trade norms have made it possible for firms to
select any country.
– Government support to business firms
Major Decisions in
International Marketing
Deciding whether to go
Deciding which markets to enter
Deciding how to enter
Deciding on the
marketing program
Deciding on the
marketing organization
 DECIDING WHETHER TO GO ABROAD
• Most companies would prefer to remain domestic
if their domestic market were large enough.
• Several factors are drawing more and more
companies into the international arena:
• Some international markets present higher profit
opportunities than the domestic market.
• The company needs a larger customer base to
achieve economies of scale.
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Before making a decision to go abroad the
company must weigh several risks:
• The company might not understand foreign customer
preferences and fail to offer a competitively attractive
product.
• The company might not understand the foreign
country’s business culture or know how to deal
effectively with foreign nationals.
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• The company wants to reduce its dependence
on any one market.
• Global firms offering better products or lower
prices can attack the company’s domestic
market. The company may want to
counterattack these competitors in their home
markets.
• The company’s customers are going abroad
and require international servicing.
• The company might underestimate foreign
regulations and incur unexpected costs.
• The company might realize that it lacks
managers with international experience.
• The foreign country might change its
commercial laws, devalue its currency, or
undergo a political revolution.
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Four Stages of Internationalization
No regular export activities
Export via independent agents
Establish sales subsidiaries
Establish production
facilities abroad
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DECIDING WHICH MARKETS TO ENTER
• In deciding to go abroad, the company needs to
define its marketing objectives and policies.
• The company must decide how many countries
to enter and how fast to expand.
• The company must also decide on the types of
countries to consider.
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The first task is to get companies to move step by step:
• Studying how firms make their first export decisions (hire
agents).
• A company then engages further agents to enter additional
countries.
• Later it establishes an export department to manage its agent
relationships.
• Still later, the company replaces its agents with its own sales
subsidiaries in its larger export markets.
• To manage these subsidiaries the company replaces the export
department with an international department.
• If certain markets continue to be larger and stable, the company
takes the next step in locating production facilities in those
markets.
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• A nation’s readiness for different products and services and
its attractiveness as a market to foreign firms depend upon
certain environments:
• Economic
• Political-legal
• Cultural
• Many companies choose to sell to neighboring countries
because they understand these countries better and can
control their costs more effectively.
• In general, a company prefers to enter countries:
– That rank high on market attractiveness.
– That are low in market risk.
– In which it possesses a competitive advantage.
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 Desired Country
Characteristics for Market Entry DECIDING HOW TO ENTER THE MARKET
• Once a company decides to target a
• Rank high on market particular country, it has to determine the
attractiveness best mode of entry.
• Rank low in market risk
• Possess a competitive
advantage

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Five Modes of Entry into Foreign Markets

Indirect Exporting
• Occasional exporting
• Active exporting takes place when the
Indirect Direct
Licensing
Joint Direct company makes a commitment to expand
exporting exporting ventures investment into a particular market.
• In either case, the company produces its
Commitment, Risk, Control, Profit Potential goods in the home country and might or
might not adapt them to the international
market.

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 • Companies typically start with indirect
exporting—working through independent
intermediaries.
– Domestic-based export merchants buy the
manufacturer’s products and then sell them abroad.
• Domestic-based export agents seek and
negotiate foreign purchases and are paid a
commission (including trading companies).
• Export-management companies agree to manage
a company’s export activities for a fee.
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Direct Exporting Methods
• Domestic-based export department
• Overseas sales branch or subsidiary
• Traveling export sales representatives
• Foreign-based distributors or agents
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Indirect export has two advantages.
– It involves less investment.
– It involves less risks
Companies eventually may decide to handle
their own exports, the investment and risk are
greater, but so is the potential return.
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Using a Global Web Strategy
• One of the best ways to initiate or extend export
activities used to be to exhibit at an overseas
trade show.
• With the Web, it is not even necessary to attend
trade shows to show one’s wares.
• Electronic communication via the Internet is
extending the reach of companies large and small
to worldwide markets.
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 Major marketers doing global e-commerce are using
the Web to reach new customers: Global Marketing
Advantages
– Outside their home countries
• Economies of scale
– To support existing customers who live abroad
• Lower marketing costs
– To build global brand awareness • Power and scope
• Consistency in brand image
• Ability to leverage
• Uniformity of marketing
practices
Disadvantages
• Differences in consumer
needs, wants, usage
patterns
• Differences in consumer
response to marketing mix
• Differences in brand
development process
• Differences in environment

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What Marketing Aspects Might Be Adapted for International Product and Communication
International Marketing? Strategies
• Product features • Brand name
• Labeling • Packaging
• Colors • Advertising execution
• Materials • Prices
• Sales promotion • Advertising themes
• Advertising media

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 Price Choices
• Set a uniform price
everywhere
• Set a market-based
price in each country
• Set a cost-based price
in each country

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