Session 21 Flashcards
(27 cards)
Why go global (3 reasons)?
- Canada is a relatively small market (~39 million)
* Small market size and potential
* The world population is ~8 billion - Rising globalization, technological trends
make the world more open to companies - Reacting to global competition and costs
Firms can lower costs due to economies of scale
Firms can often compete better in their home
markets if they reduce costs in host markets
What makes a desirable international market? (5)
- STP: Focus on regions where your best audiences are found
- 3C’s: Research competitors in each locale
- Distribution channels: Develop region-based strategies and
partnerships - Branding/Promotions: Localize your branding and campaigns
- Overall: Be aware of cultural and language differences
What are political/regulatory forces to evaluate when entering an int’l market? (6)
- Political stability
- Industry priorities
- Government regulations
- Trade sanctions, boycotts
- Trade agreements
- Tariffs
What are economic forces to evaluate when entering an int’l market? (4)
- Economic Development & Infrastructure
- Consumer Income & Purchasing Power
- Income distribution; Projected growth
- Exchange Rate
Sociocultural: see slide 21
What are 2 types of trusts?
- Cognitive trust (task based)
- Affective trust (relationship based)
What aspect of technological forces is evaluated when expanding internationally? (1.5)
Existing technological infractructure:
1. Transportation
2. Distribution channels
3. Communications
4. Commerce
5. Production
What demographic forces are evaluated when expanding internationally? (6)
- Size of population
- Rate of population growth
- Degree of urbanization
- Population density
- Language
- Age structure/composition of the population
2 ways to enter a market?
- Standardize
- Customize
What is standardization? (2)
- Treat entire world as a single country
- Consistent strategy across countries (product, campaigns, prices, distribution channels)
What are pros of standardization? (3)
- Economies of scale
- Lower R&D expense
- Lower advertising expense
What is customization strategy?
Adjusting marketing strategy according to the market
* Adapt to cultural, regional, and national differences
Pros of customization strategy?
Closer to local customers wants/needs (but more complex, resource-intensive)
Ways to enter a market (4)
- Exporting
- Licensing
- Joint venture
- (foreign) direct investment
What is exporting?
Producing goods in one country and selling them in another country
What are 2 ways to export?
- Direct exporting: through own distribution
- Indirect exporting: through intermediaries
What are advantages of exporting? (2)
- Make least number of changes in the marketing strategies]
- (indirect exporting) low risk
What are disadvantages of exporting?
Less local employment in host country
What is licensing?
Offering the right to use a trademark, patent, or other similarly valued items of intellectual property in return for a fee
* Types: contract manufacturing, contract assembly,
franchising
What are advantages of licensing? (3)
- Low rusk and capital free
- Licensee gains exclusivity and competitive advantage
- Creates local employment
What are disadvantages of licensing? (2)
- Licensor forgoes control and obtains less profit
- Licensee may gain bargaining power over time
What is a joint venture?
Agreements between two or more firms to invest together to create a local business, sharing ownership, control, and profits of the new company.
What are advantages of joint venture? (2)
- Greater control
- Leverage local partner’s resources
What are disadvantages of joint venture? (3)
- Requires financial, physical, and managerial resources to enter
- Endure higher risk
3, Disagreement on strategic decisions
