“Identifying and analyzing International Marketing Opportunities”

International Marketing
The performance of business activities that direct the flow of a company’s goods and
services to consumers or users in more than one nation for a profit.

Marketing is the process of determining the consumer needs, converting them into
products or services to satisfy the user needs and earning profit there from.

Main Functions in International Marketing

• Choosing the basic route for international marketing

• Market selection and product selection
• Selection of distribution channels
• Developing pricing strategy
• International marketing communication
• Organizational adaptations
• Handling business ethics

The Four Risk Matrix

POLITICAL ENVIRONMENT

Political forces influence the legislations and government rules and regulations under
which the firm operates. Every company faces political constraints in the form of
antitrust laws, fair trade decisions, tax programs-, minimum usage legislation, pollution
and pricing policies, administrative activities and many other actions, aimed at
protecting the consumers and the local environment.

These laws, rules and regulations affect a company's profits.

However, there are other political actions such as patent laws, government subsidies
and product research grants that support business activities. Thus, political forces
influence the organization both positively and negatively. Political activity also influences
three additional functions, viz. the supplier function, the customer function and the
competitor function.

SOCIAL ENVIRONMENT

The social environment is an important factor as changes in the values, beliefs,

attitudes, opinions and lifestyles in society create potential opportunities for an
organization. For a company to grow, it is necessary to take advantage of societal
changes.
The cultural, demographic, religious, educational and ethnic conditioning of individuals
in society affects the social environment

ECONOMIC ENVIRONMENT

Every market is unique and consumption patterns change along with the wealth of the
consumers in various market segments. For strategic planning all the economic trends
at national and international levels have to be considered.

Prime interest rates, inflation rates and trends in the growth of the Gross National
Product (GNP), general availability of credit, the level of disposable income and the
propensity of people to spend are the economic trends that have to be analyzed.

LEGAL ENVIRONMENT

The move toward deregulation, which involves the elimination of many legal restrictions,
is a significant trend. Due to this, entry barriers are minimized leading to enormous
competition among the firms in an industry. In 1979, the airline industry faced problems
due to deregulation. There were fare-wars that lasted for many years.

Another legal problem pertains to the depletion of the ozone layer, acid rain and global
warming. These problems are caused due to air pollution by chloroflouro carbons and
other pollutants that are out in the atmosphere become hazardous to the environment .
As a result governments will implement environmental regulations to minimize this
pollution.

OPERATING ENVIRONMENT

The operating environment includes factors in the immediate competitive situation

regarding the procurement of resources, profitability for the company from their products
and services etc.

The operating environment consists of factors like :

– Competitive position,
– Customer profile,
– Reputation among suppliers and creditors,
– An accessible labor market.

This environment is also called the competitive or task environment.

The Bargaining Power of Suppliers

The bargaining power of suppliers determines the company's profitability when the
suppliers are able to force the price that the buyer must pay for the product.

The Threat of Substitute Products

Substitute products can match the needs of the customer in the same way as the
original product. Coffee, tea and soft - drinks, all serve the consumer's need for
refreshment. Due to the existence of substitutes such as tea and soft drinks, the prices
charged by companies in the coffee industry are restricted. If coffee prices are hiked,
customers have the option of switching over to tea or soft drinks, which are its
substitutes.

A close substitute is a potential threat to the company's product. The existence of a

substitute limits the price which can be charged for a product and therefore the
profitability of the company.

Deciding How to Enter the Market

– Indirect Exporting
– Direct Exporting
– Licensing
– Joint Ventures
– Direct investment
– Acquisitions
– Production Sharing
– Management Contracts
– Turnkey Operations

Indirect Exporting

– Domestic exporter
– Domestic based exporting agent
– Export management company
– Cooperative organization

Direct exporting

– Foreign based distributors or agents

– Overseas sales branch or subsidiary
– Traveling Export Sales Representatives
– Domestic based export department or division
Licensing

A license will be given by a licensor to the foreign company to use its production
process, trademark, patent, trade secret or other item of value for a fee or royalty. The
entry of a manufacturer in the foreign market will be of little risk.

Joint ventures

Foreign investors and local manufacturers join together to form joint ventures.
Technological transfer, market sharing and investment sharing are involved in a joint
venture. The ownership and control is shared by the foreign investor and local produce

Direct investment

This is the ultimate way of going international. The involvement of a company in

ownership and control of foreign-based assembly or manufacturing or service facilities
is included in direct investment. The foreign company can buy part of the local
manufacturing facilities or can buy full interest in the local company, or can build its own
facilities on its own.

Acquisitions

It is better for a foreign company to acquire an already established company in the host
country rather than start from scratch. The established company can be purchased by
the foreign company in its entirety rather than on a piece meal basis.

Production sharing

The higher labor skills and technology available in developed countries with the lower
cost labor available in developing countries is combined by production sharing.

Management contracts

A large amount of management talent is available at large MNC’s. Management

contracts offer a means through which an MNC may use part profits and personnel to
assist a firm in a host country for a specified fee and period of time. Until the local
management is trained and developed, the MNC can continue its operations by earning
some income from its investment.

Turnkey operations

For the construction of operating facilities in exchange for a fee, turnkey operations
come into the picture. After completion, the facilities are transferred to the host country.
Normally, the government department or agency is the customer in many turnkey
projects. The foreign company’s supply some of its own equipment for the project.
Attractive opportunities
– Breakthrough opportunities are best
– Opportunities that help innovators develop hard-to-copy marketing strategies
that will be very profitable for a long time.
– It’s hard to continue providing superior value to target customers if
competitors can easily copy your marketing mix.
– Competitive advantage is needed--- At least
– A firm has a marketing mix that target market see as better then a
competitor’s mix.
– There are three basic types of advantage: lower cost, higher quality, and
customer focus.

Types of Opportunities

Four Basic Types of Opportunities

Opportunity Evaluation

Developing and applying screening criteria

Criteria

1. Qualitative

Based on Sales, profit, Return on Investment.

2. Qualitative

Some kind of Statement, news.

Industry Attractiveness

HIGH Business Strength = Growth

Medium Business Strength = Borderline

Low Business Strength = No Growth

Considering International Opportunities

– Smaller World
– Competitive Advantage
– Better Trends
– Early Start

Environmental Sensitivity

Insensitive: Industrial Products

General: Basic Commodity type consumer Products.

Sensitive: Consumer Products that are linked to cultural Variables.

Evaluate Opportunities

BUSINESS STENGTHS

– Size
– Growth
– Share
– Position
– Profitability
– Margins,
– Technology position
– Image
– Pollution
– Strength/ weakness

INDUSTRY ATTRACTIVENESS

– Size
– Market growth
– Price
– Market diversity
– Competitive structure
– Industry profitability
– Technical role
 – Environment factors

Analyzing Consumer Markets and Buying Behavior

– customers is never simple

– They change in the last minute
– Say one thing; do another
– Companies profit from understanding how and why customers buy “Olive Oil”

Cultural Factors

– Fundamental determinant of a person’s wants and behaviors.

– They are shaped by parents, or family and other close matched institutions.
– Set of values and preferences.
– Subculture is a more specific form within a culture.

Buyer’s characteristics

– Cultural
– Personal
– Social
– Psychological

World Trade Organization

Location: Geneva, Switzerland

Established: 1 January 1995
Created by: Uruguay Round negotiations (1986-94)
Membership: 146 countries (as of 4 April 2003)
Budget: 154 million Swiss francs for 2003
Secretariat staff: 550
Head: Supachai Panitchpakdi (director-general) (2003)

Functions:
• Administering WTO trade agreements
• Forum for trade negotiations
• Handling trade disputes
• Monitoring national trade policies
• Technical assistance and training for developing countries
• Cooperation with other international organizations

– Represents 90% of world trade

 – 9 of 10 disputes satisfactorily settled
– Tariff reduction from 40% to 5%
– Trade volume of manufactured goods has increased 20 times
– Policing organization for Services

WTO at work

 280 disputes brought to WTO between 2000 and 2007

 US is biggest WTO user

 Big wins - beef - bananas

 Big loss - Kodak

Case Study
Archer Global Company

SWOT ANALYSIS

Strengths

– Wholly owned production facility.

– Pioneer of Biodegradable packaging materials.
– Competitive prices.
– Designers solution to customer for packaging.
– Location is South China so we use duty free HK port.
– Providing complete packaging solutions under one roof.
– Nominations of all big buyers.
– Worldwide offices to serve at customer’s door.
– Research & development.

Weakness

– Limited production facility of 38 forty foot containers.

– Factory management doesn’t know English, so they use few numbers of
translators.

Opportunities

– We can establish more manufacturing units in different countries.

– Many more markets to explore.
– Research & Development to bring more ideas for customers

Threats

– Local players.
– Competition.

Organizational Culture
 • Archer Global Company is Way-emphasizes the speed and flexibility of decision-
making.

• Flat-networked organization with a certain amount of bureaucracy.

• Equality of opportunities and employee participation.

• Our company Values are Customer Satisfaction, Respect, Achievement, and

Renewal.

Mission

To provide products, services and solutions of the highest quality and deliver more
value to our customers that earns their respect and loyalty.

Products

Low and Non-Toxic PVC/PP/PE/EVA/PEVA bags and boxes, PVC soft case bags,
Garment bags, Rigid PVC boxes, Paper bags / boxes, Corrugated / Corruplast boxes,
Blister, Zipper, PVC Film, Paper Sticker, Clear Sticker, Hangtag / Insert card.

Direct exporting
Currently we are exporting directly from China to other countries round the world,
recently our factory situated in South China and using HK free port for all the shipments.

And soon we are establishing one more unit in West China near Shanghai to increase
our production facility and also working on Join venture in Pakistan for a new factory.

Attractive Opportunities
In 1995 our company established office in Georgia to stay in contact with buyers like
Walmart, Target directly to add ourselves in their suppliers list and soon we succeed
and got the direct nomination and started offering them packaging directly from China to
USA warehouses.

In 2002 our company entered in Turkey and established first sales office there.

2006 I joined Archer Global Company and established office in Pakistan and started
following customer from Pakistan and India, very next year in 2007 India office was
established once we got some good response from India market.

Packaging Industry in Pakistan

In Pakistan there is no standardized packaging manufacturing company except

Packages, but they aren’t dealing in Vinyl materials. So our company decided to avail
this opportunity of introducing vinyl packaging solutions to Pakistan industry.

Toxic free packaging

Up till now here Toxic free packaging materials are not available in Pakistan which is
basic need of current Era, everyone getting conscious about use of packaging that
should be Toxic free, Toxics may cause different kind of allergies and diseases to
human.

Legal Factors

In Pakistan there is duty of total 45% if we import packaging material for internal use,
but 0% duty if importing for re-export purpose. Exporters were our target market so that
we avoid extra duties on our packaging material imports from China to Pakistan.

Textile Industry

Textile Industry have big portion in Pakistan’s total Exports, our main Target market is
Textile industry and especially Faisalabad is main city of Textiles, on second number
here is Karachi city having many Home made ups manufacturers and few other cities
like Lahore and Sialkot.

Market Research
We held a research of target market to a get better picture, results were positive in a
sense that no Local supplier is offering up to standard material which is basic
requirements of buyers from Europe and USA.

Customers were also seeking quality in packaging that was our main object to offer
them in shape of standard material and quality product along with competitive prices
and better services.

Prices

Prices of local market are high and our prices are competitive even after paying freight
from HK port to Pakistan port, so it was another big benefit for us.

Competitor

There was only one competitor in Pakistan whom had already established their office
here and covering big portion of market but offering high prices and we realized that
was trading agent instead of manufacturer.

Business Growth

There are high chances of business growth in this sector, cause ultimate buyer of those
products are USA and Europe markets, so they are getting conscious about the quality
packaging and innovations.

Eco Friendly

In Textile sector buyers started asking about the Eco friendly packaging since USA
Govt. took some steps after realizing that packaging performing big role in damaging
environment, so they want packaging that should be Eco friendly.

Innovative Packaging Solution

Archer Global Company is pioneer of Introducing Biodegradable materials to the World

known as “PEVA”, these materials do not affect environment and totally toxic free, the
main advantage is auto dissolve factor of our material, after using the product
packaging reaches to garbage, once it go to water or buried in soil, biodegradation
process starts and after 6 months to maximum 5 years material get dissolve in
environment without releasing any toxics.

Our company appreciated for developing such materials and got huge business from
USA and Europe market, and recently introduced another material known as “MPE”
which is faster in degradation as compare to previous material,

Covering more countries

Now we have established offices in India, Egypt, Brazil and getting huge business from
all these markets and planning more to expand in Bangladesh very soon.

Manufacturing plants in Pakistan

Our company working on Joint Venture with a local company to establish another
factory in Pakistan covering business from India and Pakistan and middle east.

This new factory establishment require 1 million US Dollars investment and working on
feasibility report is already been proceeded.

Promotions

We are promoting our company by taking part in Exhibitions and business weeks held in
USA and round the world.