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International marketing strategy

International marketing strategy. At the end of this session you will…. Be aware of some of the basics of marketing strategy Understand the concept of the resource-based view of the firm in the context of international marketing. Porter’s view: strategic objectives*.

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International marketing strategy

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  1. International marketing strategy

  2. At the end of this session you will….. • Be aware of some of the basics of marketing strategy • Understand the concept of the resource-based view of the firm in the context of international marketing

  3. Porter’s view: strategic objectives* • Strategic analysis should result in one of 5 strategic objectives: • Divest • Harvest • Maintain • Grow • Enter *The competitive advantage of Nations, 1990

  4. Porter’s View: generic strategies* • Cost leadership • Differentiation • Focused cost leadership • Focused differentiation • But these may not work in international marketing? *The competitive advantage of Nations, 1990

  5. Doyle’s view: the purpose of strategy* • To increase shareholder value by maximising the net present value of long run cash flow. • Cashflow is dependent on: • Repatriation policy • Timing • Longevity • Risk * ’Value-based marketing’, Wiley 2000

  6. Kaplan and Norton: the balanced score card* • Strategy must be viewed from four perspectives: • Financial – how do we want shareholders to see us? • Customer –how do we want customers to see us? • Internal business –what must we excel at? • Innovation and learning –how do we continue to improve and create value? • Note these are not solely short term financial considerations Harvard Business Review, Jan-Feb 1996

  7. The resource-based view of international of international marketing

  8. Hamel and Prahalad: competing globally • Challenged the conventional reasons for entering international markets: • a saturated home market • the potential for standardisation • economies of scale/cost reduction * ‘Do you really have a global strategy’? HBR, July-Aug. 1985

  9. Hamel and Prahalad: competing globally • Challenged the conventional international marketing strategies: • multi-domestic/polycentric strategy • Global (transnational)/geocentric strategy

  10. Hamel and Prahalad: the nature of global competition • It is retaliatory • It requires cross-subsidisation E.g. • Company A uses its cash resources to attacks company B in its (saturated) home market. • Company B retaliates by attacking company A in its home market • Result: • Company A has less cash to cross subsidise market share gains in company B’s home market

  11. Hamel and Prahalad: Michelin vs Goodyear example • 1970s-Michelin used its European profits (cash) to attack Goodyear in its U.S. market • Goodyear attacked Michelin its European market • Michelin’s cash position was weakened, but it had been able to establish distribution in U.S. • Goodyear failed • to defend its share of the home market and • to establish strong distribution in Europe

  12. Hamel and Prahalad: lesson 1 • Plan a defence as well as an attack strategy • Win distribution (preferably in countries with low competitive rivalry) • Use cash to engage in cross-subsidisation * Newly Industrialising Countries

  13. Hamel and Prahalad: the nature of global competition • Low manufacturing costs/economies of scale are necessary but not sufficient • These can change thro’: • X rate fluctuations • Changing labour market conditions • Technological development reducing lead times • Global branding is essential • It becomes a resource

  14. Hamel and Prahalad: Japanese entry into the TV market example • Invested in low-cost, high quality manufacturing systems but... • Entered markets e.g. US TV market thro’: • Building distribution by supplying US brands with ‘own label’ sets • Establishing a brand franchise by exploiting a legal loophole and marketing portable sets

  15. Hamel and Prahalad: the nature of global competition • Establish a sustainable competitive advantage by creating barriers to entry: • Invest (spend cash) on • core technologies and innovation • Strong distribution partnerships thro’: • high levels of channel utilisation • e.g. acceleration of the PLC • developing related products such as audio equipment for cars.

  16. Hamel and Prahalad: the nature of global competition • To be successful in the global marketplace companies need: • A world wide market share big enough to support • economies of scale and • cash for product/brand development • A country market share big enough to • influence the pricing behaviour of the competition • drive down competitive margins/reduce cash available for retaliation

  17. The importance of size (and the need for mergers/consolidation) • To build sustainable competitive advantage in the global marketplace companies need: • To invest in • world-scale manufacturing • global distribution • brand franchises • product development • Build barriers to entry

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