Copy of Ch 1 - Global Marketing in the firm + Intro modified

Svend HollensenGLOBAL MARKETING 4th Edition 1 Global marketing in the firm ISBN 978-0-273-70678-6 Hollensen, Global Marketing 4e, © Pearson Education 2008 1-2 Hollensen, Global Marketing 4e, © Pearson Education 2008 1-3 Hollensen. Global Marketing 4e. © Pearson Education 2008 1-4 . © Pearson Education 2008 1-5 .Hollensen. Global Marketing 4e. Globalization is for debate …. Global Marketing 4e. Hollensen. © Pearson Education 2008 1-6 . Hollensen. © Pearson Education 2008 1-7 . Global Marketing 4e. Learning objectives -Characterize and compare the management style in SMEs and LSEs -Identify drivers for global integration and market responsiveness -Explain the role of global marketing in the firm from a holistic perspective Hollensen. © Pearson Education 2008 1-8 . Global Marketing 4e. Global Marketing 4e. © Pearson Education 2008 1-9 .Learning objectives (2) -Describe and understand the concept of the value chain -Identify and discuss different ways of internationalizing the value chain Hollensen. and distributing products in many countries and regions of world Hollensen. © Pearson Education 2008 1-10 . selling. Global Marketing 4e.Internationalization Firms must decide whether to stay at home or strengthen the global position Globalization reflects trend of buying. 1 Nine strategic windows Hollensen. Global Marketing 4e. © Pearson Education 2008 1-11 .Figure 1. Global marketing Hollensen.What is this? The firm’s commitment to coordinate its marketing activities across national boundaries in order to find and satisfy global customer needs better than the competition is known as ______. Global Marketing 4e. © Pearson Education 2008 1-12 . © Pearson Education 2008 1-13 .Hall’s Low-Context. Global Marketing 4e. cultural clues are critical to communication Hollensen. High-Context Approach Low-context: words used by speaker explicitly convey speaker’s message High-context: the context in which a conversation occurs is just as important as the words spoken. © Pearson Education 2008 1-14 Chinese Korean Japanese Vietnamese Arab Greek Spanish Italian Britain U. Global Marketing 4e.and Low-Context Cultures Hollensen.High.S./ Canadian High Context Scandinavian Swiss German Low Context . 000 goes to Japan for sophisticated high-tech parts (engines. Singapore. © Pearson Education 2008 1-15 © 2004 The McGraw-Hill Companies. Inc.000 goes to Ireland for data processing $7.Example of Globalized Production Of the $20. and Japan for small parts $500 goes to Great Britain for advertising and marketing services $1. electronics) $800 goes to Taiwan. All rights reserved.600 goes to GM and its external professional firms in the United States McGraw-Hill Hollensen.000 goes to South Korea. Global Marketing 4e. transaxles.000 sticker price of a General Motors Automobile LeMans: $6. where the car was assembled $3. . Global Marketing 4e. © Pearson Education 2008 1-16 .Q-1 Characterize and compare the development of the Global Marketing concepts? EPRG framework of business activities Ethnocentric Polycentric Geocentric Regiocentric Hollensen. Global Marketing 4e. © Pearson Education 2008 1-17 .Parent-Country Nationals (PCN’s Host-Country Nationals (HCN’s) Third-Country Nationals (TCN’s) Hollensen. Global Marketing 4e.Approaches to Staffing Factors affecting approaches to staffing General staffing policy on key positions at headquarters and subsidiaries Constraints placed by host government Staff availability Ethnocentric Polycentric Geocentric Regiocentric Hollensen. © Pearson Education 2008 1-18 . Limited subsidiary autonomy. PCNs manage subsidiaries. © Pearson Education 2008 1-19 .Ethnocentric Strategic decisions are made at headquarters. Key positions in domestic and foreign operations are held by headquarters’ personnel. Global Marketing 4e. Hollensen. Global Marketing 4e.Ethnocentric Approach Advantages: To ensure new subsidiary complies with overall corporate objectives and policies Has the required level of competence Assignments as control Disadvantages: Limits the promotion opportunities of HCNs. leading to reduced productivity and increased turnover among the HCNs Longer time for PCNs to adapt to host countries. © Pearson Education 2008 1-20 . high authority. and increased standard of living may relate to lack of sensitivity Hollensen. leading to errors and poor decisions being made High cost Considerable income gap. View that each part of the organization makes a unique contribution. Global Marketing 4e. promotion and development. © Pearson Education 2008 1-21 . Hollensen.Geocentric A global approach . Color of passport does not matter when it comes to rewards. Nationality is ignored in favor of ability: Best person for the job.worldwide integration. HCNs. and TCNs need to be sent across borders Reduced independence of subsidiary management Hollensen. © Pearson Education 2008 1-22 . Global Marketing 4e.Geocentric Approach Advantages: Disadvantage: Ability of the firm to develop an international executive team Overcomes the federation drawback of the polycentric approach Support cooperation and resource sharing across units Host government may use immigration controls in order to increase HCNs employment Expensive to implement due to increased training and relocation costs Large numbers of PCNs. HCNs manage subsidiaries who are seldom promoted to HQ positions. © Pearson Education 2008 1-23 .Polycentric Each subsidiary is a distinct national entity with some decision-making autonomy. Global Marketing 4e. PCNs rarely transferred to subsidiary positions. Hollensen. cultural differences) HCN managers have limited opportunities to gain experience outside their own country PCN managers have limited opportunities to gain international experience Resource allocation and strategic decision making will be constrained when headquarter is filled only by PCNs who have limited exposure to international assignment Hollensen. Global Marketing 4e.Polycentric Approach Disadvantages: Difficult to bridge the gap between HCN subsidiary managers and PCN managers at headquarters ( language barriers. © Pearson Education 2008 1-24 . conflicting national loyalties. Global Marketing 4e. rather than globally. Staff transfers between regions are rare. Hollensen.Regiocentric Reflects a regional strategy and structure. Staff move within the designated region. © Pearson Education 2008 1-25 . Regional autonomy in decision making. Global Marketing 4e. not the parent country headquarters Hollensen.Regiocentric Approach Advantages: Disadvantages: Allow interaction between executives transferred to regional headquarters from subsidiaries in the region and PCNs posted to the regional headquarters Provide some sensitivity to local conditions Help the firm to move from a purely ethnocentric or polycentric approach to a geocentric approach Produce federalism at a regional rather than a country basis and constrain the firm from taking a global stance Staff’s career advancement still limited to regional headquarters. © Pearson Education 2008 1-26 . What is this? What term refers to the development and selling of products or services intended for the global market. Global Marketing 4e. © Pearson Education 2008 1-27 . act locally)? Glocalization Hollensen. but adapted to suit local culture and behaviour (think globally. 2 Knowledge transfer Core global business strategy (HQ) Country A Country B Country C Country D Feedback Feedback Internationalizing the strategy Transferring global know-how and ‘best practices’ between countries with feedback to HQ Hollensen.Figure 1. © Pearson Education 2008 1-28 . Global Marketing 4e. 3 Convergence of orientation Hollensen.Figure 1. © Pearson Education 2008 1-29 . Global Marketing 4e. Comparison of the global marketing and management style of SMEs and LSEs ? Recourses Formation of strategy Organization Risk Taking Flexibility Economies of Scale and scope Use of information sources Hollensen.Q2. © Pearson Education 2008 1-30 . Global Marketing 4e. 4 Intended and emergent strategy Int en str ded ate gy De libe rate stra teg y Realized strategy Unrealized strategy n e g er m E gy e t ra t st Source: Mintzberg. No. © Pearson Education 2008 1-31 . 1987. Vol. 30. 1. Hollensen. p.Figure 1. Copyright © 1987 by the Regents of the University of California. Global Marketing 4e. By permission of the Regents. Reprinted from the California Management Review. 14. Figure 1. © Pearson Education 2008 1-32 . Hollensen.g. Global Marketing 4e.5 Incremental change and strategic drift E. 6 Entrepreneurial decision-making model Hollensen. © Pearson Education 2008 1-33 . Global Marketing 4e.Figure 1. © Pearson Education 2008 1-34 . Global Marketing 4e.What is this? When accumulated volume in production results in lower cost price per unit. _____ occur. Economies of scale Hollensen. © Pearson Education 2008 1-35 . Global Marketing 4e.Finding economies of scale  Reducing operating costs per unit and spreading fixed costs over larger volume due to ‘experience curve effects’  Pooling global purchasing gives the opportunity to concentrate global purchasing power over suppliers  Building of centres of excellence by using larger scale and focusing talent in one location Hollensen. Economies of scope Hollensen. © Pearson Education 2008 1-36 .What is this? When resources can be reused from one business/country in additional business/countries. Global Marketing 4e. _____ occur. Global Marketing 4e.Production orientation vs marketing orientation Hollensen. © Pearson Education 2008 1-37 . © Pearson Education 2008 1-38 .Explain the forces for global integration and market responsiveness? Global integration Market responsiveness Hollensen. Global Marketing 4e.Q3. 7 Global integration/ market responsiveness grid Hollensen. Global Marketing 4e. © Pearson Education 2008 1-39 .Figure 1. Global Marketing 4e.Forces for global coordination/ integration  Removal of trade barriers  Global customers  Relationship management  Standardized worldwide technology  Worldwide markets  Global village  Worldwide communication  Global cost drivers Hollensen. © Pearson Education 2008 1-40 . Global Marketing 4e.Forces for market responsiveness Cultural differences Regionalism/ protectionism Deglobalization trend Hollensen. © Pearson Education 2008 1-41 . Hollensen. Global Marketing 4e. © Pearson Education 2008 1-42 . Earning their trust. Management in the countries in which we operate is made up of local employees who typically represent 95 percent of the management team.unilever.com) Hollensen.Around the world our foods and home and personal care brands are chosen by many millions of individual consumers each day.Question: How globalized is Unilever?? Unilever Worldwide . anticipating their aspirations and meeting their daily needs are the tasks of our local companies. They bring to their consumers our best brands and both our international and local expertise. © Pearson Education 2008 1-43 . (source: www. We strongly believe that meeting the specific needs of all our consumers is best achieved through our local employees and managers who can draw upon the best of Unilever's international expertise to meet the mosaic of aspirations of consumers across the globe. Global Marketing 4e.A Multi-local Multinational Unilever is dedicated to meeting the everyday needs of people everywhere. © Pearson Education 2008 1-44 . and to a willingness to embrace new ideas and learn continuously. to working together effectively. We will bring our wealth of knowledge and international expertise to the service of local consumers – a truly multi-local multinational. Hollensen.Our corporate purpose Our deep roots in local cultures and markets around the world give us our strong relationship with consumers and are the foundation for our future growth. Our long-term success requires a total commitment to exceptional standards of performance and productivity. Global Marketing 4e. and our business partners. our people. © Pearson Education 2008 1-45 . This is our road to sustainable. Hollensen. profitable growth. and the environment on which we have an impact. the highest standards of corporate behaviour towards everyone we work with. Global Marketing 4e. the communities we touch. creating long-term value for our shareholders.To succeed also requires. we believe. Hollensen. ? Activity not core to business. ? Does not have specific competencies. ? Does not see sufficient added value. ? Does not wish to invest but wishes to expand. ? Does not have scale of operations. ? Does not have geographic reach. © Pearson Education 2008 1-46 .Why is Unilever Interested in Engaging with Value Chain Partners? ? Applies Up and Down the Value Chain e.g. ? Seek synergies with local partner. ? Wishes to be flexible-particularly in innovation cycle. ? Risk not acceptable. Global Marketing 4e. Peters and Robert H. Global Marketing 4e. Jr. Waterman. Copyright © 1982 by Thomas J. Reprinted by permission of HarperCollins Publishers. Jr.Q4 -Explain the Value Chain as a framework for identifying international competitive advantage? Structure Strategy Shared Values Systems Skills Style Staff Source: ‘McKinsey 7S Framework’ from In Search of Excellence: Lessons from America’s Best Run Companies by Thomas J. Waterman. Hollensen. Inc. © Pearson Education 2008 1-47 . Peters and Robert H. Figure 1.9 The value chain Support activities Firm infrastructure Human resource management Technology development Procurement Inbound Outbound Marketing Operations Service logistics logistics and sales Primary activities Upstream value activities Downstream value activities Source: Reprinted with permission of The Free Press, a division of Simon & Schuster Adult Publishing Group, from Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter. Copyright © 1985, 1998 Michael E. Porter. Hollensen, Global Marketing 4e, © Pearson Education 2008 1-48 Figure 1.10 A simplified value chain Research and development Upstream Production Marketing Sales and service Downstream Hollensen, Global Marketing 4e, © Pearson Education 2008 1-49 Important Terms Value Chain A categorization of the firm’s activities providing value for the customers and profit for the company. Deglobalization Moving away from the globalization trends and regarding each market as special with its own economy, culture and religion. Hollensen, Global Marketing 4e, © Pearson Education 2008 1-50 Strategic 2. Global Marketing 4e. Operational Research and development Production Marketing Hollensen.11 Strategic pyramid 1.Figure 1. © Pearson Education 2008 Sales and service 1-51 . Managerial 3. © Pearson Education 2008 1-52 .Figure 1.13 Centralization in the value chain Hollensen. Global Marketing 4e. Exhibit 1. Global Marketing 4e. Madrid Upstream Granada Ventures. UK Pocoyo sold to 100 countries (beginning of 2007) Downstream Hollensen.4: Pocoyo Zinkia Entertainment. © Pearson Education 2008 1-53 . Figure 1.14 Value shop and the service chain Hollensen. © Pearson Education 2008 1-54 . Global Marketing 4e. Global Marketing 4e.What is this? What term refers to an extension of the conventional value chain. where the information processing itself can create value for customers? Virtual value chain Hollensen. © Pearson Education 2008 1-55 . 15 Virtual value chain Physical value chain R&D Production Define information problem Organize. Global Marketing 4e.Figure 1. gather information Marketing Sales and service Value Synthesize information Distribute information Value Virtual value chain Hollensen. select. © Pearson Education 2008 1-56 . © Pearson Education 2008 1-57 .Creating value by using information Managing risks Reducing costs Offering products and services Inventing new products Hollensen. Global Marketing 4e. For discussion (1) What is the reason for ‘convergence orientation’ in LSEs and SMEs? How can an SME compensate for its lack of resources and expertise in global marketing when trying to enter export markets? Hollensen. © Pearson Education 2008 1-58 . Global Marketing 4e. Global Marketing 4e.For discussion (2)  What are the main differences between global marketing and marketing in the domestic context?  Explain the main advantages of centralizing upstream and decentralizing downstream activities?  How is the ‘virtual value chain’ different from the ‘conventional value chain’? Hollensen. © Pearson Education 2008 1-59 . CASE STUDY 1. © Pearson Education 2008 1-60 . Global Marketing 4e.1: Vermont Teddy Bear Should Vermont Teddy Bear go abroad? Hollensen. Global Marketing 4e. © Pearson Education 2008 1-61 .Hollensen. © Pearson Education 2008 1-62 .Hollensen. Global Marketing 4e. Global Marketing 4e. How would the communication mix in the chosen countries differ from the US-market? 1. © Pearson Education 2008 1-63 . Hollensen.Questions: What kind of difficulties would the Vermont Teddy Bear meet if it were to internationalize its business? 2. In what part of the world should the company start its internationalization? 3. How should the company penetrate the foreign markets: (a) by Internet? (b) by physical stores? (c) by a combination of the two? (d)     by other means? 4.