Lecture 3

Question 1

What are the four growth strategies for any company?

Answer 1

• market penetration
• market development
• product development
• diversification

Look at the figure in lecture notes!

Question 2

What is market penetration?

Answer 2

how much of the potential of this product is left in the original country. Example, nutella. In Europe 97% were buying the product. This makes it very hard to grow in this region, the market is already fulfilled. Solution is to go outside of the market and penetrate new markets.

Question 3

What are some of the key driving forces for facilitating international trade?

Answer 3

The factors that are facilitating international trade are many.

1. Free trade agreements (regional trade agreements)
   If we eliminate or lower the import tax in both countries we can trade more. Benefits the economy for all countries involved.

EU, NAFTA, ASEAN

2. Global market needs and wants (global culture driven

Adidas as a brand use global vehicles for their brand. For example Pharrell and snoop dog

3. Technology progress

New communication tools have lowered the communication cost. for ex. Skype/zoom and Voip/whats app. Before, only big companies could afford to have this type of international trade, because it costs a lot.

4. Transportation cost optimisation

New tools and organization models have significantly reduced transportation costs.

Ex. Containers have lowered the transportation costs. Fills a lot more, logistically it’s more effective and allows for more international trade.

Question 4

Why do companies go international?

Answer 4

No room for growth in the original country, close to 100% penetration

increase profit, the same product can be sold for higher because of the price of the market (switzerland for example)

Cannot grow more due to difficult competitive situation in the local market

need to absorb overcapacity. Ex Heineken. They acquire many small producers/breweries , for ex in poland. This means that they immediately get buyers. Sometimes close the newly acquired factory and produce somewhere else where you can reach 100 % capacity.

Economies of scale

establish international presence for future growth opportunities
Ex. when LV entered china. The luxury market was very small at this time bc of the war. LV invested in this country to build their presence and get experience. They knew the market would eventually grow.

Increase profit margins

access advances local technology

acquire established brands

Question 5

what is the Internationalization decision process

Answer 5

1. Deciding whether to go abroad
2. Deciding which markets to enter
3. Deciding how to enter the market
4. Deciding on the marketing program
5. Deciding on the market organization

Question 6

What are some factors that affect international marketing programs?

Answer 6

• Culture
  The most important one!!
• Facilities
  Infrastructure. Some products are affected by temperature. In some countries
  Ferrero rocher are withdrawn from the stores in the summertime.
• Distance
• Trade practice
• economy
• law

Question 7

What’s the definition of culture

Answer 7

“The sum of learned behaviours, norms and values that are shared by members of society.”
Typical example is Switzerland, different parts have different culture (german side/italian side).

Question 8

What are the 5 components of cultures?

Answer 8

• Symbols

Monaco. has a specific symbol that makes you belong to a “club”. “the prince”

• Heroes

Local role models. In france

• Rituals

campari.

• Values

Core of the culture.
American values: “American dream”, freedom, individuality
Japanese values: collectivity, obligation to the group, behaving according to status, harmony

• Norms

dos and donts

Question 9

What is the cultural iceberg?

Answer 9

Surface culture/Deep culture. Explain the picture!