Ch17_Longnecker MSB_AISE

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Business-Finance

Published on January 13, 2009

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Managing Small Business, 14e : © 2008 Cengage Learning. All rights reserved. 17–1 Managing Small Business, 14e CHAPTER 17 Global Marketing Part 4 Focusing on the Customer: Marketing Growth Strategies Moore • Petty • Palich • Longenecker Dr. Santidhorn Pooripakdee Small Businesses as Global Enterprises : © 2008 Cengage Learning. All rights reserved. 17–2 Small Businesses as Global Enterprises Globalization The expansion of international business: Converging market preferences Falling trade barriers Integration of national economies. Born-global Firms Small companies launched with cross-border business activities in mind Size does not necessarily limit a firm’s international activity, Questions to Consider Before Going Global : © 2008 Cengage Learning. All rights reserved. 17–3 Questions to Consider Before Going Global What are management’s objectives? Reasons, commitment, expected payoff How prepared is management to go global? In-house expertise, responsibility for and time allocated to international operations, organizational structure. Is there sufficient production capacity? Present capacity, effect of international operations on local production Is there enough financial capacity? Capital available for marketing, expansion, payback Questions to Consider Before Going Global : © 2008 Cengage Learning. All rights reserved. 17–4 Questions to Consider Before Going Global 17-1 Source: Adapted from U.S. Department of Commerce, A Basic Guide to Exporting, cited in John B. Cullen and K. Praveen Parboteeah, Multinational Management: A Strategic Approach, 3rd edition (Cincinnati, OH: South-Western College Publishing, 2005), p. 208. Before Going Global : © 2008 Cengage Learning. All rights reserved. 17–5 Before Going Global Decide if firm is up to the task of globalization. Study different cultural, trading systems, political and business practices in foreign markets. North American Free Trade Agreement (NAFTA) European Union (EU) Prepare to modify products to meet design specifications that may vary from county to country. Basic Forces Driving Global Enterprises : © 2008 Cengage Learning. All rights reserved. 17–6 Basic Forces Driving Global Enterprises 17-2 Expanding the Market:Making the Most of Experience : © 2008 Cengage Learning. All rights reserved. 17–7 Expanding the Market:Making the Most of Experience Experience Curve Efficiencies Per-unit savings gained from the repeated production of the same good. Learning Effects Insights gained from experience, that lead to improved work performance. Economies of Scale Efficiencies that result from the expansion of production. Expanding the Market : © 2008 Cengage Learning. All rights reserved. 17–8 Expanding the Market Factors in Competing Internationally Gaining Access to Resources Capitalizing on Special Features of Location Cutting Costs Strategy Options for Global Enterprises : © 2008 Cengage Learning. All rights reserved. 17–9 Strategy Options for Global Enterprises 17-4 Strategy Options for Global Firms : © 2008 Cengage Learning. All rights reserved. 17–10 Strategy Options for Global Firms Exporting Selling products in the home country to customers in another country. Trade mission A trip organized to help small business owners make direct contact with potential buyers abroad and learn about cultural and regulatory obstacles in foreign markets. Importing Selling goods produced in another country to buyers in the home country. Global sourcing strategy—connecting with overseas suppliers that can provide products or services a company needs to operate successfully. Strategy Options for Global Firms (cont’d) : © 2008 Cengage Learning. All rights reserved. 17–11 Strategy Options for Global Firms (cont’d) Foreign Licensing Allowing a company in another country to purchase the right to manufacture and sell a company’s products in international markets Licensee The company buying the licensing rights Licensor The company selling the licensing rights Royalties Fees paid by the licensee to the licensor for each unit produced under a licensing contract Strategy Options for Global Firms (cont’d) : © 2008 Cengage Learning. All rights reserved. 17–12 Strategy Options for Global Firms (cont’d) International Franchising Selling a standard package of products, systems, and management services to a company in another country. International Strategic Alliances A combination of efforts and/or assets of companies in different countries for the sake of pooling resources and sharing the risks of an enterprise Strategy Options for Global Firms (cont’d) : © 2008 Cengage Learning. All rights reserved. 17–13 Strategy Options for Global Firms (cont’d) Locating Facilities Abroad Cross-border acquisition The purchase by a business in one country of a company located in another country Greenfield venture A wholly owned subsidiary formed “from scratch” in another country Challenges to Global Business : © 2008 Cengage Learning. All rights reserved. 17–14 Challenges to Global Business Political Risk The potential for political forces in a country to negatively affect the performance of businesses operating within Economic Risk The probability that a government will mismanage its economy and thereby change the business environment in ways that hinder the performance of firms operating there. Exchange rate—the value of one country’s currency relative to that of another country. “Country Risk Rankings” Map : © 2008 Cengage Learning. All rights reserved. 17–15 “Country Risk Rankings” Map 17-5 Source: Paul Pedzinksi, “Country Risk Poll,” Euromoney, Vol. 37, No. 443 (March 2007), pp. 171–176. Challenges to Global Business (cont’d) : © 2008 Cengage Learning. All rights reserved. 17–16 Challenges to Global Business (cont’d) Managerial Limitations Product planning Marketing Finance Management Accounting Legal issues Assistance for Global Enterprises : © 2008 Cengage Learning. All rights reserved. 17–17 Assistance for Global Enterprises Analyzing Markets and Planning Strategies Small Business Administration Resources Office of International Trade Department of Export Promotion Publications Department of Commerce International Trade Administration Speak to a recent returnee Visit the foreign country Assistance for Global Enterprises (cont’d) : © 2008 Cengage Learning. All rights reserved. 17–18 Assistance for Global Enterprises (cont’d) Connections With International Customers Trade Leads Trade Missions Trade Intermediaries An agency that distributes a company’s products on a contract basis to customers in another country Assistance for Global Enterprises (cont’d) : © 2008 Cengage Learning. All rights reserved. 17–19 Assistance for Global Enterprises (cont’d) Financing Private banks Letters of credit An agreement issued by a bank to honor a draft or other demand for payment when specified conditions are met. Bill of lading A document indicating that a product has been shipped and the title to that product has been transferred.

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