Chapter 1: Global marketing in the firm
I. Introduction to globalization
Globalization: reflects the trend of firms buying, developing producing and selling products and service in most countries and regions of the world. Benefits for the firm which do an international expansion:
New and potentially more profitable markets
Increase the firm’s competitiveness
Facilitates access to new product ideas, manufacturing innovations and the latest technology
Internalization: doing business in many country of the world, but often limited to a certain region (ex: Europe).
A. Industry globalism
The strategic behaviour of firms depends on the international competitive structure within in industry. In the case of high degree of industry globalism, there are many interdependencies between markets, customers and suppliers, and the industry is dominated by a few large powerful players (global). Example of global industries: PCs, IT, records, movies and aircrafts. The other land (local) represents a multidomestic market environment, where markets exist independently from one other. Example of local industries: hairdressing, foods and dairies. B. Preparedness for internationalization
The degree of preparedness is dependent on the firm’s ability to carry out strategies in the international marketplace and the actual skills in international business operations. The well-prepared company has a good basis for dominating the international markets and consequently it would gain higher market shares.
expansion in international market
Stay at home
Seek niches in international
II. Development of the “global marketing” concept
Global marketing consists of finding and satisfying global customer needs better than the competition, and of coordinating marketing activities within the constraints of the global environment. This implies that the firm is able to: Develop a global marketing strategy, based on similarities and differences between markets Exploit the knowledge of the headquarters (home organization) through worldwide diffusion (learning) and adaptations Transfer knowledge and “best practices” from any of its markets and use them in other international markets
EPRG framework (Perlmutter):
Ethnocentric: the home country is superior and the needs of the home country are most pertinent. Polycentric (multidomestic): each country is unique and should be targeted in a different way. Regiocentric: the world consists of regions (ex: Europe, Asia). The firm tries to integrate and coordinate its marketing programme within regions, but not across them. Geocentric (global): the firm may offer global product concepts but with local adaptation (“think global, act local”). Glocalization: the development and selling of products or services intended for the global market, but adapted to suit local, culture and behaviour. (Think globally, act locally).
III. Forces for “global integration” and “market responsiveness” Global integration: recognizing the similarities between international markets and integrating them into the overall global strategy. Market responsiveness: responding to each market’s needs and wants.
A. Forces for “global integration”
Removal of trade barriers (deregulation): both tariff (import taxes) and non-tariff (safety regulations) have constituted barriers to trade across national boundaries. Deregulation has an impact on globalization, it reduces the time, costs and complexity involved in trading across boundaries. Global accounts/customers: customers become global and rationalize their procurement activities, that’s why thy demand suppliers provide them with global services to meet their...
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