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February 1, 2014 Chris Schrage, CGBP, Certified CGBP Trainer. Global Marketing Management. Shrinking Globe. Source: David Harvey, The Condition of Postmodernity (Oxford and Cambridge, Mass.: Basil Blackwell, 1989), p. 241, plate 3.1. Speed of globalization of markets.

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february 1 2014 chris schrage cgbp certified cgbp trainer
February 1, 2014

Chris Schrage, CGBP, Certified CGBP Trainer

Global Marketing Management

shrinking globe
Shrinking Globe

Source: David Harvey, The Condition of Postmodernity(Oxford and Cambridge, Mass.: Basil Blackwell, 1989), p. 241, plate 3.1.

speed of globalization of markets
Speed of globalization of markets

Change in transportation technology

Change in communication technology

reason for trade
reason for trade

Access to products not available at home

Raw materials for products

Better quality of life

Comparative Advantage

new realities
New realities
  • Capital movements replaced trade levels
  • Production “uncoupled” from employment
  • World economy dominate-country economies are secondary
  • End of the capitalism/socialism struggle
  • E-commerce changes all models
    • Business and national
impact of 1989 to 1991
Impact of 1989 to 1991

Break up of Soviet Union

Apartheid over- sanctions ended

Privatization of public companies in Brazil, France and England,

Special Economic Zones in China

Democracy started in Latin America

a tale of two nations
A tale of two nations

March 7, 1957

Independence from Great Britain through peaceful negotiations

1957

End of the Korean Conflict and devastation from war

slide9

1st British African colony to win independence (1957).

  • Nkrumah espoused pan African socialism.
  • High tariffs.
  • Anti-exporting policy.
slide10

Kept lowering tariffs on manufactured goods.

  • Created incentives to export.
  • Reduced quotas.
  • Reduced subsidies.
  • 1950s: 77% of employment in agriculture. Now 20%.
  • Manufacturing GNP went from 10% to over 30%.
the impact of trade policies
The Impact of Trade Policies
  • Ghana
  • 1970
    • GNP/capita
      • $250
  • 1992
    • GNP/per capita
      • $450
    • GNP Growth/year
      • 1.5%
  • Shift from productive uses (cocoa) to unproductive uses (subsistence agriculture).
  • Korea
  • 1970
    • GNP/per capita
      • $260
  • 1992
    • GNP/per capita
      • $6790
    • GNP Growth/year
      • 9%
  • Shift from non-comparative advantage uses (agriculture) to productive uses (labor-intensive manufacturing).
south korea today
South Korea today
  • With a GDP per capita of $25,800 in 2010
  • Eighth largest exporter in the world
  • In 2010 ranks 14th out of 225 nations at 1243 billion US dollars
ghana today
Ghana today
  • GDP - per capita: purchasing power parity - $1,300 (2010)
  • In 2010 ranks 100 at 30.14 billion US dollars
reasons to go beyond domestic
Reasons to go beyond domestic

Mature market at home

Underutilized capacity

Leverage competitive advantage

Compete in home market of others.

kenichi ohmae
Kenichi Ohmae

Global companies understand the balance of standardization and customization required in the world’s marketplace.

micheal porter
Global Industry

Competitive advantage gained by integrating and leveraging operations on a global scale

Five forces analysis can assist a company in formulating the appropriate strategy to gain a competitive advantage

Micheal Porter
porter s force 1 threat of new entrants
Porter’s Force 1: Threat of New Entrants
  • New entrants mean downward pressure on prices and reduced profitability
  • Barriers to entry determine the extent of threat of new industry entrants
threat of new entrants barriers to entry
Threat of New Entrants: Barriers to Entry
  • Economies of scale
  • Product differentiation
  • Capital requirements
  • Switching costs
  • Distribution channels
  • Government policy
  • Cost advantages independent of scale economies
  • Competitor response
porter s force 2 threat of substitute products
Porter’s Force 2: Threat of Substitute Products

Substitute products limits prices

High prices induce buyers to switch to the substitute

porter s force 3 bargaining power of buyers
Porter’s Force 3: Bargaining Power of Buyers
  • Buyers = manufacturers and retailers, not consumers
  • Buyers seek to pay the lowest possible price
  • Buyers have leverage over suppliers when
    • They purchase in large quantities (enhances supplier dependence on buyer)
    • Suppliers’ products are commodities
    • Product represents significant portion of buyer’s costs
    • Buyer is willing and able to achieve backward integration
porter s force 4 bargaining power of suppliers
Porter’s Force 4: Bargaining Power of Suppliers
  • When suppliers have leverage,
    • Raise prices enough> affect customer profits
    • Leverage accrues when
      • Suppliers are large and few in number
      • Supplier’s products are critical inputs, are highly differentiated, or carry switching costs
      • Few substitutes
      • Suppliers are willing and able to sell product themselves
porter s force 5 rivalry among competitors
Porter’s Force 5: Rivalry Among Competitors
  • Refers to all actions taken by firms in the industry to improve their positions and gain advantage over one another
    • Price competition
    • Advertising battles
    • Product positioning
    • Differentiation
national competitive advantage
National Competitive Advantage

Strategy,

Structure,

Rivalry

Demand Conditions

Factor Conditions

Related and Supporting Industries

Activity in any one of the four points of the diamond impacts all the others and vice versa

related and supporting industries
Related and Supporting Industries

The advantage that a nation gains by being home to internationally competitive industries in fields that are related to, or in direct support of, other industries

growth matrix
Growth Matrix

Product Orientation

Existing Markets

MarketOrientation

New Markets

EXISTING

pRODUCTS

new

pRODUCTS

competitive advantage
Competitive Advantage
  • Achieved when there is a match between a firm’s distinctive competencies and the factors critical for success within its industry
  • Two ways to achieve competitive advantage
    • Low-cost strategy
    • Product differentiation
generic strategies for creating competitive advantage
Generic Strategies for Creating Competitive Advantage
  • Broad market strategies
    • Cost leadership—low price
    • Product differentiation—premium price
  • Narrow market strategies
    • Cost focus—low price
    • Focused differentiation—premium price
building layers of advantage
Building Layers of Advantage

Build a wide portfolio of advantages

Develop portfolios by establishing layers on top of one another

Move along the value chain to strengthen competitive advantage

searching for loose bricks
Searching for Loose Bricks
  • Search for opportunities in the defensive walls of competitors whose attention is narrowly focused
    • Focused on a market segment
    • Focused on a geographic area to the exclusion of others
changing the rules of engagement
Changing the Rules of Engagement
  • Refuse to play by the rules set by industry leaders
  • Ex: Xerox and Canon
    • Xerox employed a huge direct sales force; Canon chose to use product dealers
    • Xerox built a wide range of copiers; Canon standardized machines and components
    • Xerox leased machines; Canon sold machines
collaborating
Collaborating

Use the know-how developed by other companies

Licensing agreements, joint ventures, partnerships, or strategic alliances

slide35

4 Cs to partner selection

  • Complementary skills
  • Cooperative cultures
  • Compatible goals
  • Commensurate levels of risk
slide36

Efforts here are impacted by Differences here

Communication Strategy

Product Attributes

Competition

GovernmentRegulations

Infrastructure

Pricing Strategy

Standards

Product Attributes

Culture

Economy

current issues
Current Issues
  • In today’s business environment, market stability is undermined by
    • Short product life cycles
    • Short product design cycles
    • New technologies
    • Globalization
  • Escalation and acceleration of competitive forces
  • Difficult to achieve one sustainable advantage
    • Build a series of unsustainable but effective advantages
  • Marketing focus needs to be on innovation
    • Learn to create new markets
  • Must forget “that’s the way we always have done it”
slide38

Innovative organizations spend neither time nor resources on defending yesterday. Systematic abandonment of yesterday alone can transfer the resources . . . for work on the new.

—Peter Drucker

anheuser busch
Anheuser-Busch
  • Global Advertising Strategy
    • Contemporary Relevance
      • SPEAKS TO “Consumer’s Heart”
      • Knows my language- relevant to my lifestyle
    • Brand Quality
      • SPEAKS TO “Consumer’s Head”
      • Value perception
anheuser busch1
Anheuser-Busch

Right

Product

Right

Distribution

Brand Development Basics

Right

Profit

Right

Image

for global positioning
For Global Positioning

Miller Time is the “MILLER WAY”

Rooted in the “urban cool” mindset

Globalmiller.com website

heritage foundation economic freedom
Heritage Foundation Economic Freedom
  • Free
    • 20 nations (includes US)
  • Mostly Free
    • 52 nations
  • Mostly Unfree
    • 73 nations
  • Repressed
  • Unrated
corruption
Corruption
  • Foreign Corrupt Practices Act
u s legal considerations
U.S. Legal Considerations
  • Foreign Corrupt Practices Act
  • Grease Payments
  • U.S. Embargoes
    • Sanctions
    • Against US
  • Export Controls
  • Antitrust Laws
    • The Sherman Antitrust Act
    • Federal Trade Commission Act
  • Product liability
    • No contingency payment programs
    • Loser pays fees of both parties
stages of market development
Stages of Market Development

High-Income Countries

GNP > $10,666

Upper-middle-income Countries

GNP ≥ $3,256 ≤ $10,065

86% of the world’s population

Lower-middle-income Countries

GNP ≥ $826 ≤ $3,255

Low-Income Countries

GNP < $825

philosophy for developing products and services for bop market

FORTUNE AT THE BOTTOM OF THE PYRAMID, Prahalad

Philosophy for Developing Products and Services for BOP market
  • The basic economics of the BOP market are based on
    • small unit packages,
    • low margin per unit,
    • high volume,
    • high return on capital employed.
true nature of bop market

FORTUNE AT THE BOTTOM OF THE PYRAMID, Prahalad

True Nature of BOP market
  • There is Money at the BOP
  • Ease of access to BOP markets
  • BOP Markets are brand-conscious
    • Extremely value conscious
  • BOP Market is connected
  • BOP Customers accept advanced technology readily
slide50

Purchases aircraft from Boeing

    • 10% down payment
    • Rest upon delivery (5 years later)
  • Revenues of JAL in Yen
  • Payments in USD
  • In 1985- entered into 10 year forward exchange contract
    • Value of Yen surged against dollar from ¥240 to ¥99 in 1994
    • Misjudgment cost JAL 86 percent more per each aircraft.
    • Admitted loss of USD 45 million or ¥45 billion
rates of duty

Column 1

GENERAL

Duties for all products that do not qualify for special tariff treatment.

SPECIAL

Duties levels for those countries that fit into special tariff treatment programs- see listing included

(Example NAFTA)

Column 2

Rate of duties for any products imported directly or indirectly from specific countries- currently:

Cuba and North Korea

Rates of Duty

protecting intellectual property
Protecting Intellectual Property
  • International Convention for the Protection of Industrial Property
    • Paris Convention
    • Honored by 100 countries
    • Facilitates multi-country patent registration, ensures that once a company files, it has a “right of priority” in other countries for 1 year from that date
  • Patent Cooperation Treaty
  • European Patent Convention
  • Madrid System
traditional motivations
Traditional Motivations

Sales to other markets

Changing Domestic Conditions

Lower Cost Structures

expanding the vision
Expanding the vision

Exploit Global Presence

Global Money Flows

other expansion views
Other Expansion Views
  • Enhance domestic competitiveness
  • Increase sales and profits
  • Gain global market share
  • Reduce dependence on existing markets
    • Especially during periods of recession
  • Exploit corporate technology and know-how
    • Competitive advantage
  • Extend the sales potential of existing products
  • Stabilize seasonal market fluctuations
  • Enhance potential for corporate expansion
  • Sell excess production capacity
  • Gain information about foreign competition