A market-responsive approach
Svend Hollensen Second Edition 2001 ISBN 0-273-64644-3
PART 1 Chapter 1
THE DECISION WHETHER TO INTERNATIONALIZE
Global marketing in the firm
SME: small medium sized enterprises LSE: large scale enterprises Companies wit little international experience and a weak position in their home market have little reason to try to perform on global markets. Instead they should try to establish a stronger position on their home market. A firm that finds itself as a dwarf on the global market may seek ways to increase their net worth by seeking partners, suited for a buy-out on longterm. If a firm already has international competences, it can overcome some of it’s competitive disadvantages by going into alliances with companies representing complementary competences. If you are ready for global marketing or not is bases on two things: 1. The industry of your business (how global is / can it be) 2. The preparedness for internationalisation 1 can be divided into mature; adolescent; immature 2 can be divided in local; potentially global; global Given the character of a company in both segments, one of the nine possible strategies can be chosen. You can find these in figure 1.1 on page 4 of Global Marketing. Difference between management styles of LSE and SME: Many LSE have begun downsizing their companies operations, so in reality, many LSE act like a lot of small differ operations. It can be noted that SME are working more on long term strategies, while LSE’s are working les on it. The consequence of both movements is maybe an action orientated approach, where firms use the strength of both orientations. What are the differences in starting points? LSE have traditionally bases their strategy on taking advantage of “economies on scale” by launching standardized products on a worldwide basis. SME have always seen national markets as independent from each other. But as international competitiveness evolved, they have begun to see the connection between different international markets. They have recognized the benefits of putting all different national marketing strategies together, into economies on scale for R&D, production and marketing. Therefore it can be noted that both LSE and MSE, are acting more towards “thinking globally and acting locally”. Characteristics: SME: lack of financial resources LSE: SME owners are usually technical or crafts experts, and is unlikely to be trained in business disciplines. Owners of LSE are more involved in the selling and marketing process. A realized strategy is usually a mix of the intended (planned) strategy and the emerged strategy (not planned). All enterprises have some elements from both into their strategies. In the case of deliberate (planned) strategies (mainly LSE), managers try to formulate their intentions as precisely as possible, and strive to apply them with a minimum of distortion. Sometimes the incremental (rise of value) adjusted strategic changes and the macro market changes move apart so a strategical drift arises. This is explained in the LEGO case on page 9 of Global Marketing. The issue is that LEGO believed it’s concept was superior, but did not think about changes in what kids want. Computers and Internet, for example take away a big part of their market. This is why LEGO is an a strategical drift. An SME is characterized by the entrepreneurial decision making model. It states that the one that handles it has to make intuitive, loose and unstructured changes for seeking new opportunities. Compared to an LSE the employees of an MSE are usually closer to the entrepreneur. The influence of the entrepreneur on employees must be conform.
Another difference is that LSE are not as sensitive to risks as an MSE. An MSE is always depending on circumstances. On the other hand, SME are more flexible. The role of global marketing in an holistic perspective: According to a book by Peters & Waterman, a...