International Marketing Strategy Failures

Topics: Marketing, Joint venture, International trade Pages: 6 (1892 words) Published: March 15, 2011
An international marketing strategy involves developing and maintaining a strategic fit between the international company's objectives, competencies, and resources and the challenges presented by its international market or markets (Terpstra, V. and Sarathy, R., 1997). As such, the international strategic plan forges a link between the company's resources and its international goals and objectives in a complex, continuously changing international environment. In deciding to go abroad, the company needs to define its marketing objectives and policies. What proportion of foreign to total sales will it seek? Most companies start small when they venture abroad. Some plan to stay small; others have bigger plans. THE REASONS WHY MARKETING STRATEGIES FAIL IN INTERNATIONAL MARKETS: 1. Inability to leverage ideas to all countries

Companies entering more and more countries in search of new markets are likely to face increasing difficulty in continuously monitoring and controlling their international operations. These firms must monitor not only the constantly changing marketing environment, but also changes in competitive intensity, in competitor product/service quality strategies, in supply chains, and in consumer expectations. 2. Picking the wrong partners

There is a list of difficulties in building alliances; a main limitation is picking partners who do not have the right bundle of capabilities to help reach the local market. Joint ventures involve a foreign company joining with a local company, sharing capital, equity, and labor, among others, to set up a new corporate entity. Joint ventures are a preferred international entry mode for emerging markets. Joint ventures could constitute a successful approach to a greater involvement in the market, which is likely to result in higher control, better performance, and higher profits for the company. In one example, British Petroleum PLC established a joint venture in Russia, under the name Petrol Complex, with ST, a powerful local partner with close ties to the Moscow city government. The company owns 30 BP gas stations, each of which sells an average of 3.5 million gallons of gasoline a year, four times the average of a gas station in Europe. Overall, 70 percent of all joint ventures break up within 3.5 years, and international joint ventures have an even slimmer chance for success (Dave Savona, 1992). Companies can, to a certain extent, control their chances for success by carefully selecting the joint-venture partner; a poor choice can be very costly to the company. Reasons for the failure of joint ventures are numerous. The failure of a partner can lead to the failure of the joint venture—for example, the joint venture between a mid-size company, Bird Corp. of Dedham, Massachusetts, and conglomerate Sulzer Escher Wyss Inc., a subsidiary of Sulzer Brothers Ltd. of Switzerland. Although the joint venture performed well, Bird Corp. experienced serious problems, with unsteady revenues and slim profits, leading to the failure of the joint venture. 3. Unwillingness to adapt and update products to local needs Straight extension means introducing the product in the foreign market without any change. Straight extension has been successful with cameras, consumer electronics, and many machine tools. In other cases it has been a disaster. General foods introduced its standard powered Jell-O in the British market only to find that British consumers prefer the solid wafer or cake form. Campbell Soup Company lost an estimated $30 million in introducing its condensed soups in England; consumers saw expensive small-sized cans and did not realize that water needed to be added. Straight extension is tempting because it involves no additional R&D expense, manufacturing retooling, or promotional modification; but it can be costly in the long run. The rate of change of technology and consequent shorter product life cycles mean that new products must be...
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