ch6-8_stud int

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Published on January 13, 2009

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STRATEGIES FOR SME INTERNATIONALISATION : STRATEGIES FOR SME INTERNATIONALISATION Exporting International niche marketing Domestically delivered or developed niche services Direct marketing including electronic commerce Participation in the international supply chain ch6_2 KEY MOTIVATORS TO INTERNATIONAL MARKETING : KEY MOTIVATORS TO INTERNATIONAL MARKETING Reactive stimuli: adverse domestic market conditions opportunity to reduce inventories availability of production capacity favourable currency movements opportunity to increase the number of country markets and reduce market related risk unsolicited orders from overseas customers Proactive stimuli: attractive profit and growth opportunities ability to easily modify products for export markets public policy programmes for export promotion foreign country regulations possession of unique products economies resulting from additional orders Managerial elements: presence of export minded manager opportunity to better utilise management talent and skills management believes about the value of exporting ch6_3 Source: Katsikeas (1996) THE DIFFERENCE BETWEEN EXPORTING & INTERNATIONAL NICHE MARKETING : THE DIFFERENCE BETWEEN EXPORTING & INTERNATIONAL NICHE MARKETING ch6_6 Marketing strategy Financial objective Segmentation Pricing Management focus Distribution Market information Customer relationship Selling production capacity To amortise overheads Usually by country and customer characteristics Cost based Efficiency in operations Using existing agents or distributors Relying on agent or distributor feedback Working through intermediary Meeting customer needs To add value By identifying common international customer benefit Market or customer based Meeting market requirements Managing the supply chain Analysing the market situation and customer needs Building multiple level relationships Exporting International Marketing FACTORS AFFECTING SME INTERNATIONALISATION : FACTORS AFFECTING SME INTERNATIONALISATION ch6_7 Generic Strategy SME Internationalisation Strategy Country Selection Market Factors Company Factors Segmentation, Targeting, Positioning Motivations Barriers Support Network Customer Segment Owner’s ambition, capabilities and attitude to risk Industry Competitive Structure Stage of Internationalisation GEOGRAPHIC DEVELOPMENT OF SMEs : GEOGRAPHIC DEVELOPMENT OF SMEs ch6_11 Birth Domestic Supply Chain Concentration Network Expansion Global Regional Piggybacking on OEM internationalisation High tech firms, born globals, direct marketing, eCommerce Home market is trading bloc Contracts through family, friends, business & supply chains OUTSOURCING FOR SMES : OUTSOURCING FOR SMES Advantages opportunities for learning from OEM (Original Equipment Manufacturer) security of reliable and predictable ordering able to focus on production and technical issues Disadvantages need for dependence on one/two major customers internationalisation driven by demands of OEM continual pressure to improve product and operations weakening external marketing ch6_14 MEANING OF ‘GLOBALISATION’ : MEANING OF ‘GLOBALISATION’ Market access Market opportunities Industry standards Sourcing Products & services Technology Customer requirements Competition Co-operation Distribution Communication The company’s strategy, business programmes & processes ch7_2 WIDE STRATEGIES : WIDE STRATEGIES ch7_7 Multi-Domestic Regional Global One Global Segment Region is One Market Individual Country Strategy Transnational Strategy Standardised Identity & Values With Composite Strategies CONTINUUM OF STANDARDISATION : CONTINUUM OF STANDARDISATION ch7_8 Pricing Distribution Sales Force Sales Promotion Product Image Objectives Strategy Differentiation Standardisation GLOBALISATION PUSH & PULL FACTORS : GLOBALISATION PUSH & PULL FACTORS ch7_9 Source: Meffet and Bolz (1993) in Hallibuton and Hunerberg (eds) European Marketing Readings and Cases Addison Wesley 1993 ‘Globalisation Pull’ ‘Globalisation Push’ Globalisation of Markets Homogenisation of demand Global market segments Globally active customers Marketing Standardisation Programme standardisation Process standardisation Globalisation of Industries R&D expenses Reduced pay back cycles Experience curve effects Globalisation of Competitors Market interdependence Global competitors Cross subsidisation FORCES DRIVINGA MULTI-DOMESTIC APPROACH : ch7_10 FORCES DRIVINGA MULTI-DOMESTIC APPROACH Industry standards remain diverse Customers continue to demand locally Being an insider remains critically important Global organisations are difficult to manage Management myopia DEMAND FOR CUSTOMISED SOLUTIONS : DEMAND FOR CUSTOMISED SOLUTIONS customers cannot be classified into simple, stable segments the customer in not monodimensional desires guide consumption functional and techonolgoical attributes of products or services are balanced by its aesthetics and cultural attributes quality is now more subjective a wide permanent variety of products is required the quest for authenticity orientates consumption ch7_13 Source: Halliburton (1994) MARKET ENTRY METHODS & THE LEVELS OF INVOLVEMENT IN INTERNATIONAL MARKETS : MARKET ENTRY METHODS & THE LEVELS OF INVOLVEMENT IN INTERNATIONAL MARKETS ch8_2 Wholly-owned subsidiary Company acquisition Assembly operations Joint venture Strategic alliance Licensing Contract manufacture Direct marketing Franchising Distributors and agents Sales force Trading companies Export management companies Piggyback operations Domestic purchasing Levels of involvement SUCCESSFUL MARKET ENTRY #1 : SUCCESSFUL MARKET ENTRY #1 Criteria for Selecting Appropriate Market Entry Method The company objectives and expectations relating to the size and value of anticipated business The size and financial resources of the company Existing foreign market involvement The skills, abilities and attitudes of the company management towards international marketing The nature and power of the competition with the market ch8_3 SUCCESSFUL MARKET ENTRY #2 : SUCCESSFUL MARKET ENTRY #2 Criteria for Selecting Appropriate Market Entry Method The nature of existing and anticipated tariff and non-tariff barriers The nature of the product itself, particularly any areas of competitive advantage, such as trademark or patent protection The timing of the move in relation to the market and competitive situation ch8_4 INDIRECT EXPORTING #1 : INDIRECT EXPORTING #1 Domestic Purchasing Foreign organisation purchases the product for export to another country Gives access to and limited knowledge of the international market Little control over choice of markets entered For longer term, need a more proactive approach Export Management Companies (EMCs) Specialist companies act as the export department for a range of companies Help SMEs to initiate/develop/maintain international sales Deal with documentation, government regulation ch8_6 INDIRECT EXPORTING #2 : INDIRECT EXPORTING #2 Trading Houses Their extensive operations and controls enable operation in more difficult trading areas Manage countertrade activities Piggy Backing An established international distribution network of one manufacturer used to carry products of a second Particularly good for firms from developing countries Often poorly considered terms and conditions ch8_7 IMPORTANT FACTORS FOR SUCCESSFUL EXPORTING : IMPORTANT FACTORS FOR SUCCESSFUL EXPORTING commitment of the firm’s management exporting approach reliant on strong skills base good marketing and information communication system production capacity & capability, product superiority, competitive pricing effective market research effective national export policy ch8_10 Source: Katsikeas et al (1996) AGENTS #1 : AGENTS #1 Selection Criteria for Finding a Suitable Agent Financial strength of the agent Their contacts with potential customers The nature and extent of their responsibilities to other organisations Their premises, equipment and resources (including sales representatives) ch8_11 AGENTS # 2 : AGENTS # 2 Achieving Satisfactory Manufacturer-agent Relationship Allocate time and resources to find a suitable agent Ensure that both understand what each expects of the other Ensure that the agent is motivated to improve performance Provide adequate support on a continuing basis Ensure that there is sufficient advice and information transfer in both directions ch8_12 REASONS FOR SETTING UP OVERSEAS MANUFACTURE : REASONS FOR SETTING UP OVERSEAS MANUFACTURE Nature of product e.g. perishable Costs of transporting and warehousing Barriers to trade e.g. tariffs and quotas Government regulations e.g. local investment Local manufacture viewed favourable by market Contributions to local economy Market information feedback International culture in firm Faster response and just-in-time delivery Lower labour cost ch8_13 FOREIGN MANUFACTURING STRATEGIES WITH DIRECT INVESTMENT : FOREIGN MANUFACTURING STRATEGIES WITH DIRECT INVESTMENT Reasons for investment in local operations To gain new business: local production demonstrates strong commitment To defend existing business To move with an established customer To save costs: e.g. labour, raw materials and transport To avoid government restrictions ch8_16 DRIVING FORCES FOR THE FORMATION & OPERATION OF STRATEGIC ALLIANCES : DRIVING FORCES FOR THE FORMATION & OPERATION OF STRATEGIC ALLIANCES Insufficient resources Pace of innovation and market diffusion High research and development costs Concentration of firms in mature industries Government co-operation Self protection Market access ch8_18

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