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INTERNATIONAL MARKETING MANAGEMENT: NATURE & SCOPE

By Elisante Ole Gabriel (Tanzania) Chartered Marketer egabriel@edenconsult.net, www.olegabriel.com +255-784-455-499

KEY AREAS TO BE COVERED


Nature and Scope of International Business International Business Environment International Markets entry strategies The Role of World Trade Organisation Management Tools for International Business International Payment systems & Risks
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NATURE & SCOPE OF IMM


Deriving from the word International it suggests that IBM is about managing business between nations. These nations could be separated by geographical or Political boundaries. Think of Tanzania & Malawi Vs Tanzania & Kenya at the scenario when we shall have the EACM (East African Common Market)
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Globalization
This is a concept considering the whole world as one

huge homogeneous market. Globalisation is hinged


on a number of assumptions. It is however on two major dimensions: Globalization of production Globalization of markets

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Domestic marketing and international marketing decisions


Overseas Environmental Challenges (Uncontrollables) Domestic Environmental Challenges (Uncontrollables) Economic Economic (Controllables) Product Political

Marketing Challenges in country Y

Legal

Competition

Marketing Challenges in country X Place Political Marketing Challenges in country Z

Consumer

Price Socio Cultural

Promotion Competition Infrastructure Logistics

Legal

Geography elisante_gabriel@yahoo.com, 0784-455-499

Reasons for entering international markets


growth profitability achieving economies of scale Achieving economies of scope (re-usability) risk spread access to imported inputs uniqueness of product or services

marketing opportunities due to life cycle


spreading R&D cost
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Key issues in export growth


Developing a proactive approach to international trade

Promoting Foreign Direct Investments


Promoting Competitiveness Simplification of procedures

Encouraging large-scale manufacturers


Reducing transaction costs Infrastructure development

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Identifying opportunities in international markets


Extreme focus product strategy Products-country matrix strategy Growth-share matrix of exports

Market focus strategies

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MODES OF ENTREING INTERNATIONAL MARKETS


This is an institutional mechanism by which a firm makes its products or services available for consumers in international markets. Mode of entry is determined by: - the ability and willingness of the firm to commit

resources
- the firms desire to have a level of control over international operations

- the level of risk the firm is willing to take


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Modes of international market entry


Production in home country
Exports: production is carried out in home country and finished goods are shipped to the overseas markets for sale indirect exports: process of selling products to an export intermediary in the companys home country who in turn sells the products in the overseas markets direct exports: process of selling the firms products directly to an importer in the overseas market

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Modes (contd)
complementary exporting: use of distribution channels of an overseas firm to make the product available in the overseas market
provide offshore services: This is to support the overseas clients with the help of information and communication technology

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Modes (contd)
Production in a foreign country
contractual entry modes
international licensing: process by which a domestic company allows a foreign company to use its intellectual property and specific business skills for a compensation (royalty) international franchising: transfer of intellectual property and other assistance over an extended period of time with greater control compared to licensing

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Modes (contd)
overseas turnkey projects: conceptualize, design, install, construct, and carry out primary testing of manufacturing facilities or engineering structures for an overseas client organisation types : built and transfer (BT), built, operate, and transfer (BOT), built, operate, own (BOO) international management contracts: a company provides its technical and managerial expertise for a specific duration to an overseas firm

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Modes (contd)
international strategic alliance: the relationship between two or more firms that cooperate with each other t o achieve common strategic goals but do not form a separate company international contract manufacturing: a contractual arrangement under which a firms manufacturing operations are carried out in a foreign countries

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Modes (contd)
Investment entry modes
assembly in overseas markets: refers to exporting various
components of the product in completely knocked down

(CKD) condition and assembles them overseas

international joint ventures: equity participation of two or


more firms resulting into formation of a new entity

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Factors for selecting partners for cooperation


The alliance partner should have some strength which

can be translated into business values for the alliance


The alliance partners should be committed to

cooperative goals
It is preferable that the alliance partner should have

multi-cultural business environment

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Factors

(contd)

Wholly owned foreign subsidiaries


To have complete control and ownership of international operations a firm opts for foreign direct investment through: 1. acquiring a foreign company and all its resources in a foreign market (acquisition) 2. the establishment of production and marketing

facilities by a firm on its own from scratch (green field)

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Factors affecting the selection of entry mode


External factors

Market size
Market growth Government regulations Level of competition Level of risk
political economic

operational

Production and shipping costs


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Factors affecting the selection of entry mode (contd)


Internal factors
Companys objectives availability of company resources

level of commitment
international experience flexibility

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Finally

Benefits of IMM
More opportunities Avenue for learning new concepts and challenges Possibility of developing a global brand A room to benefit from economies of scale & scope Spread of risks AND Wider scope for innovation and creativity.
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