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INTERNATIONAL MARKETINGMANAGEMENT:
NATURE & SCOPE
ByElisante Ole Gabriel (Tanzania)
Chartered [email protected], www.olegabriel.com
+255-784-455-499
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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 managingbusiness between nations.
These nations could be separated bygeographical or Political boundaries.
Think of Tanzania & Malawi Vs Tanzania &
Kenya at the scenario when we shall havethe 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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Competition
Consumer
MarketingChallengesin country Z
MarketingChallengesin country Y
MarketingChallengesin country X
Place
Promotion
Price
(Controllables)
Product
Legal
SocioCultural
Competition
Political
Economic
Infrastructure
Domestic EnvironmentalChallenges
(Uncontrollables)
Political
Overseas EnvironmentalChallenges (Uncontrollables)
Legal
LogisticsGeography
Economic
Domestic marketing and international marketing decisions
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Reasons for entering internationalmarkets
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 ENTREINGINTERNATIONAL MARKETS
This is an institutional mechanism by which a firmmakes its products or services available for consumersin 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 andfinished goods are shipped to the overseas markets forsale
indirect exports: process of selling products to anexport intermediary in the companys home country whoin turn sells the products in the overseas markets
direct exports: process of selling the firms productsdirectly 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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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 withgreater control compared to licensing
Modes (contd)
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overseas turnkey projects: conceptualize, design, install,construct, and carry out primary testing of manufacturingfacilities or engineering structures for an overseas clientorganisation
types : built and transfer (BT), built, operate, and transfer(BOT), built, operate, own (BOO)
international management contracts: a companyprovides its technical and managerial expertise for a
specific duration to an overseas firm
Modes (contd)
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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
Modes (contd)
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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
Modes (contd)
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Factors for selecting partners forcooperation
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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Wholly owned foreign subsidiariesTo have complete control and ownership ofinternational 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)
Factors (contd)
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Factors affecting the selection of entrymode
External factorsMarket size
Market growth
Government regulations
Level of competition
Level of risk
political
economic operational
Production and shipping costs
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Internal factors
Companys objectives
availability of company resources
level of commitment
international experience
flexibility
Factors affecting the selection of entrymode (contd)
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Benefits of IMM
More opportunities
Avenue for learning new concepts andchallenges
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.
Finally