Navigating Internationalization: Strategies and Challenges for Businesses

1. Chapter 3: Internationalization As A Business Strategy

2. Factors Affecting Internationalization • More complex, diverse compared to domestic operations • Marketing implementation strategies differ from market to market • Unique factors include market structure, socio/political environment, technology, etc

3. Uncontrollable and Controllable Elements • Controllable elements include price, product, promotion and distribution • Uncontrollable elements include competition, economic restraints, cultural factors • A successful marketer will fit and mold the controllable elements to the uncontrollable elements of a particular market

5. External Factors • Target Market • Primary element • Sales volume potential • Production • Determined by costs and infrastructure capabilities • Environmental • Encompasses economic, political, and socio-cultural elements • Dual economic structures demand unique marketing programs

6. Internal Factors • Product • Highly differentiated products do not have to compete on price, export strategy • Poorly differentiated products forces local production outlets • Resource/Commitment • Levels of human capital, technology, production, and marketing skills determine entry mode options

7. What Are Managerial Challenges? • Identifying the appropriate international market for the product/service • Developing effective market entry strategies • Developing expansionary strategies after successful market entry • Creating/maintaining renewal and change strategies that competitors cannot match • Relationship marketing • Open communication with host government, vendors, customers, banks, communities

8. The Challenges of Going International • Many managers shy away from international business due to perceived risk • Evidence indicates lack of legitimate information holds businesses back from exporting • Firms face historical, cultural, and institutional difficulties

10. The Challenges of Going International • Geographic distance makes distribution more difficult • Multiple environments hinder transition • Trade barriers, competitive forces • Exchange rates • Differences in ethics, values, business customs

11. Strategic Alignment for Internationalization • Needs to be in tune with current organizational capabilities, environments • Must explore five major areas • Business Background • Motivation for Going International • Top Management Commitment • Product Strengths • Market-Specific Strengths

13. Company Competitiveness • Continuous improvement practices are a function of a SWOT analysis • Research suggests that many companies consider international competitors as a growing threat • Must leverage existing core competencies to gain competitive advantage abroad

15. International Integration Through Information Technology • Global Connectivity • Transforming communication outlets • Supply/Value chain integration • Multimedia Technology and Information Technology • Facilitates global information sharing (extranets, intranets) • Cost-effective, real-time information

17. Types of Management Control Systems • Belief Systems • Framework of shared beliefs and values • Strengthens corporate culture • Boundary Systems • Limits and rules that guide acceptable behavior • Diagnostic Systems • Feedback used to evaluate/enhance organizational performance • Interactive Systems • Using employee innovation/creativity

19. Chapter 4: Export Marketing and Sourcing

20. Key Market Characteristics • Firms chose attractive marketplaces by using relevant market research to help identify critical elements • Based on INFORMATION (not speculation, hunches, suspicions, or feelings)

21. Key Market Characteristics • History of Country Risk • Compare risk rating over last couple of years • High risk markets should be avoided • GDP Growth Rate • Emerging markets commonly have a growing GDP • Low risk and high growth rates are attractive • Per Capita Income • Use purchasing-power parity scale to determine financial clout of target consumer

22. Key Market Characteristics • Share of World Trade • Determine performance of key industries • History of Economic Liberalization • Familiarity with Western management • Can growth and development be sustainable over the long term?

23. Key Market Characteristics • Foreign Trade Policy Drivers • Accommodating Western businesses through infrastructure capabilities, favorable terms and conditions • Cultural Factors • Intangible elements that create barriers for doing business • Common for Western managers to project values/beliefs on host country

24. What are the Guidelines? • Export marketing in relation to infrastructure/ large commodity or equipment purchases typically consists of six phases: • Scanning • Approach • Competitive bidding • Negotiations • Completion • Follow-up

26. Marketing Process in Emerging Marketing Step 1: Scanning • Examination of internal and external factors to assess new opportunities (i.e. market surveillance) • Evaluating information and plan preparation • Selecting exclusive or non-exclusive representative

27. Marketing Process in Emerging Marketing Step 2: The Approach • “First Mover” advantage • First to supply relevant information to buyer • Affect the tender specifications before feasibility report • Importance of social contacts and human judgment • Consideration of further time and resources

29. Marketing Process in Emerging Marketing Step 3: Competitive Bidding • Handling legal, financial, and political issues • Identifying key decision-makers • Marketer needs to have a grasp on government procurement regulations • No regulations for private firms

30. Marketing Process in Emerging Marketing Step 4: Negotiations • Buyers play bidders against one another • Compare based on financial terms • Balance of trade is problematic • Desire to improve exports gives the seller greater leverage • “Grease payments” are common when dealing with host government • Buyers looking for sellers who will provide additional buying power, especially government

31. Marketing Process in Emerging Marketing Step 5: Completion • Combination of construction, personnel training and project management • Suppliers should expect numerous problems and delays and have the necessary steps in place to handle them Step 6: Follow-Up • Generates spin-off sales • Maintain client contact for developing project, after-sales service

32. Emerging Markets as Sourcing Locations • Firms have both proactive and reactive motives to source from abroad • Strategy is to exploit economies of scale, gain competitive edge!