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What Factors Should A Company Review Before Deciding To Go Abroad?

This document discusses factors for companies to consider before expanding globally, including understanding foreign markets and regulations. It outlines four stages of internationalization: from no exports to establishing production facilities abroad. Companies should evaluate specific markets based on attractiveness and risk, and consider developed vs developing markets. The major ways to enter foreign markets involve various levels of commitment and control, from indirect exporting to establishing foreign subsidiaries. Companies must adapt their products, pricing, and marketing to each country by balancing global standardization with local customization. Finally, the document discusses organizing international activities through global or multi-domestic strategies.

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124 views

What Factors Should A Company Review Before Deciding To Go Abroad?

This document discusses factors for companies to consider before expanding globally, including understanding foreign markets and regulations. It outlines four stages of internationalization: from no exports to establishing production facilities abroad. Companies should evaluate specific markets based on attractiveness and risk, and consider developed vs developing markets. The major ways to enter foreign markets involve various levels of commitment and control, from indirect exporting to establishing foreign subsidiaries. Companies must adapt their products, pricing, and marketing to each country by balancing global standardization with local customization. Finally, the document discusses organizing international activities through global or multi-domestic strategies.

Uploaded by

ankita_shreeram
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Chapter 21: Tapping Into Global Markets

1. What factors should a company review before deciding to go abroad?


A global firm is one that operates in more than one country and captures R&D, production,
logistical, marketing, and financial advantages in its costs and reputation that are not available to
purely domestic competitors.

Factors to Review

 Some international markets present higher profit opportunity than domestic markets
 Company needs a larger customer base to achieve economies of scale
 Company wants to reduce dependence on any one market
 Company decides to counterattack global competition in their home markets
 Customers are going abroad and require international service

Risks

 Company might not understand foreign preferences


 Company might not understand foreign business culture
 Company might underestimate foreign regulations
 Company might lack managers with international experience
 Foreign country might change its commercial laws, undergo economic or political crisis etc

Four Stages of Internationalization

 No regular export activities


 Export via independent agents
 Establish sales subsidiaries
 Establish production facilities abroad

2. How can companies evaluate and select specific foreign markets to


enter?
How many markets to enter: Waterfall (enter countries in a sequence) or sprinkler approach (enter
simultaneously)

Developed versus developing markets


Regional Free Trade Zones:
• European Union
• NAFTA: North American free trade agreement
• MERCOSUL: Links countries in Latin America
• APEC: Asia pacific economic cooperation forum
• ASEAN: association of South East Asian nations
• SAFTA: South Asian free trade area
Key Developing Markets: Brazil, Russia, China, India, South Africa

Desired Country Characteristics for Market Entry


• Rank high on market attractiveness
• Rank low in market risk
• Possess a competitive advantage

3. What are the major ways of entering a foreign market?

mitment, Risk, Control, Profit Potential

Indirect exporting: work through independent intermediaries

Direct Exporting Methods

• Domestic-based export department


• Overseas sales branch or subsidiary
• Traveling export sales representatives
• Foreign-based distributors or agents

Using a global web strategy

Licensing: Licensor issues a license to a foreign company to use a manufacturing process, trademark,
patent, trade secret or other item of value for a fee. Two ways: contract manufacturing & franchising

4. To what extent must the company adapt its products and marketing
program to each foreign country?
Review the following elements: product features, labeling, colours, materials, sales promotion,
advertising media, brand name, packaging, advertising execution, prices, ad themes

Advantages of global marketing: Economies of scale, Lower marketing costs, Power and scope,
Consistency in brand image, Ability to leverage good ideas quickly, 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

Cultural Dimensions: Individualism vs. Collectivism, High vs. Low Power Distance, Masculine vs.
Feminine, Weak vs. Strong Uncertainty Avoidance

Commandments of Global Branding


• Understand similarities and differences in the global branding landscape
• Do not take shortcuts in brand building
• Establish a marketing infrastructure
• Embrace integrated marketing communications
• Establish brand partnerships
• Balance standardization and customization
• Balance global and local control
• Establish operable guidelines
• Implement a global brand-equity measurement system
• Leverage brand elements

International Product and Communication Strategies

Levels of Product Adaptation


• Production of regional product versions
• Production of country versions
• Production of city versions
• Production of retailer versions

Product invention can be backward (reintroduce an old product) or forward


Dual adaptation means adapting both product and communication.

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

A gray market consists of branded products diverted from normal or authorized distributions
channels in the country of product origin or cross international borders; dealers in lower priced
countries sell products in higher priced countries.

Distribution Channels

 Seller
 International headquarters
 Channels between nations
 Channel within nations
 Final buyers
5. How should the company manage and organize its international
activities?
Global Organization Strategies

 World as Single Market, Multinational, Glocal


 Export division, international division, global organization

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