International Marketing Week 2 Decision Making PDF

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DEFINITION OF INTERNATIONAL MARKETING PLAN

Market planning activities •

Strategy made explicit in the form of plans

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Systematic analysis of business environment

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Definite and precise strategic objectives

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Procedures for searching for solutions to problems

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Evaluating many options and alternatives against strategic objectives

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Procedures for achieving strategic objectives

STRUCTURE OF AN INTERNATIONAL MARKETING PLAN

a. Decision to internationalize b. Foreign country screening c. Analysis of international environment d. International marketing objectives e. Foreign market entry strategy f. International marketing programme g. Implementation h. Control

Usefulness of international marketing planning (Doole and Lowe, 1999, p. 175) Whilst the majority of companies recognise that planning and control are essential elements of effective management, many managers are unclear or even suspicious about the true purpose of the planning process. In international marketing the very complexity of handling the diverse range of factors that must be considered, make planning and control a difficult activity to carry out satisfactorily.

ALTERNATIVE TO MARKETING PLANNING IN AN EXPORTING CONTEXT  IMPROVISATION

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Improvisation in firms = fact

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Exporting less formal than domestic marketing

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Exporters negotiate with intermediaries o "negotiators improvise – it is unavoidable" (Balachandra et al., 2005, p. 417)

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“Improvisation is said to exist when deliberate but unplanned actions are executed, aiming to help the organisation in its effort to respond to unforeseen opportunities or threats” (MendonEa et al, 2004, p. 210).

Dimensions of improvisation •

Creativity: innovative behavior based on instinct

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Spontaneity: thinking on the spot

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Action-orientation: seeing ideas through to implementation

So what, is it good or bad? – universally or under specific conditions? And if so, under what conditions?

Outcomes of export decision-making

Key reading: Nemkova, Souchon, Hughes, and Micevski (2015) Exporting enables organizations to diversify risk and generate multiple income streams. In turn, the ability to make good export decisions is purported to be a main determinant of

performance. Export decision making has been identified as one of the key drivers of a firms success within the international environment (Tantong et al., 2010).

Decision making and export performance H1. Export planning is negatively related to export customer performance. 

Customer preferences often change rapidly, which necessitates fast responses based on the current conditions.

H2. Export planning is positively related to export economic performance. 

Formalized planning helps firms to successfully communicate their initial intentions with employees and unites those employees in terms of pursuing the same economic goal.

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Allows managers to ensure that the most potentially profitable solution is chosen.

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Entails appropriate resource allocation. The nature of the planning process ensures that resources are used as effectively as possible as a result of the optimal option having being chosen.

H3. Spontaneity, creativity and action orientation are positively related to export customer performance. 

Spontaneity enables actions to be undertaken quickly/immediately (Barrett, 1998) o Companies need to offer instant solutions.

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Creativity enables an export function to come up with solutions to unusual customer problems o … and also enhances product differentiation, which can result in increased customer loyalty and satisfaction. o It benefits learning and understanding about the market, which in turn enables exporters to respond appropriately to customer needs.

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Action orientation enables to stay focused on the customer problem at hand

H4. Spontaneity, creativity and action orientation are positively related to export economic performance.

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Improvisation can create a competitive advantage: makes it difficult for competitors to anticipate what the firm is going to do next, it is at the core of meeting export sales targets.

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Can directly target novel problems at a faster rate than planned decisions

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Cost effective: makes use of currently available resources thus increased profitability.

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Creativity reduces company costs: has a positive effect on competitive differentiation, sales growth and profitability o It can be a substitute for a lack of information and save export function from spending additional capital. o Economic success is more probable: solving product related problems through divergent thinking

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Action-orientated allows companies to transform existing problems into opportunities so that they don’t lose its focus on economic objectives o Increased efficiency and effectiveness in their goal achievement activities

Decision making and responsiveness Companies must ensure that they are able to make timely decisions in response to external opportunities and threats to survive and prosper in the international environment

H5. Spontaneity, creativity and action orientation are positively related to responsiveness of the export function. 

Spontaneous actions are vital when an immediate response to an opportunity or aggravated problem is required

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The ability to generate creative ideas is crucial to an effective response to changing market needs. To respond to external opportunities and threats, managers are expected to make decisions that are unusual, innovative, and different from the norm.

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Managers are facing increased information overload, which can create confusion. Action orientation is the ability to focus on the problem at hand and not be distracted from goal-relevant thoughts. This will reduce the time in the decision making process.

H6. Export planning is negatively related to responsiveness of the export function. 

Responsiveness implies that the ability to make fast decisions should be embedded in the decision-making process

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Formalized planning however seems to be incongruent with responsiveness, as the need for quick responses to environmental changes is in conflict with the timeconsuming nature of planning

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Even if managers make amendments to the plan, it may not be able to do so effectively because there are limited time resources.

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"Right action at the wrong time" – not being able to respond in time: inflexibility

H7. Export responsiveness is positively related to export customer performance. 

Customer satisfaction and retention depends on keeping customers happy

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Responsiveness reflects an ability to react quickly to changes in the market – positive connotations for customer performance

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Better understanding of customer preferences and thus able to deal with customer requests more effectively

H8. Export responsiveness is positively related to export economic performance. 

Market changes are beyond the control of the managers. Therefore companies need to be able to adapt quickly to such market changes to ensure long-term economic success

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Cadagon et al (2012) claim that companies who have high level of export responsiveness, it can better achieve its short-term and long-term objectives

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A suboptimal but timely response can actually be more profitable in the long run than a delayed correct response

Moderating role of improvisation Improvisation can give you 5 steps ahead, but equally you can make great mistakes and they take you ten steps back

H9. Spontaneity, creativity and action orientation positively moderate the relationship between export planning and export customer performance.

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Planning process gives companies long-term direction, but also allows room for improvisation

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Spontaneity ensures that that the export function undertakes actions without substantial delays to meet these needs

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Creativity helps firms deal with unusual customer requests and avoid routinization

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Action-orientation helps firms consider customers needs and preferences in the planning process

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Therefore, improvisation within the planning process will lead to greater customer satisfaction and loyalty.

H10. Spontaneity, creativity and action orientation positively moderate the relationship between export planning and export economic performance. 

Use planning proactively to find new markets and deal with established activities but relies on improvisation to react to market opportunities

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This decision-making approach has led to company growth, and export sales growth in a new market. It generates the necessary flexibility to overcome inaction/inertia that can occur

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Export planning likely provides a platform for developing the optimum strategy for being competitive and achieving economic returns. There needs to be a willingness to improvise

H11. Spontaneity, creativity and action orientation positively moderate the relationship between export planning and export responsiveness. 

Formalized export planning is generally argued to be a barrier to export responsiveness. However, improvisation can facilitate adaptation to environmental changes through the adjustment of existing planning structures to new problems

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Planning provides additional information about the environment. Whereas improvisation results in quick responses to environmental changes and greater variability of responses o This enables companies to simultaneously create clear directions for future growth, detect when changes occur in the market and respond more quickly to the external environment and unanticipated situations.

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Because planning is inflexible, creativity ensures that decision making considers new, emergent requirements.

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Because planning can lead to delays in market responses because of time-consuming additional resource requirements, action-orientation ensures that resources are flexibly allocated

Figure 2: Planning enhances economic performance under low spontaneity Figure 3: Planning enhances export responsiveness under low creativity Figure 4: Planning enhances export responsiveness under high action-orientation

Summary: •

Planning enhances economic performance and responsiveness BUT reduces customer performance

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Combining planning with excessive spontaneity and creativity is detrimental

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This is mitigated by the fact that improvisation benefits responsiveness, and actionorientation enhances customer performance.  Export decision-making is a balancing act  Importance of embedding contingencies in plans

MARKET DRIVEN VS. MARKET DRIVING APPROACHES

Export decision-making approaches

Planning takes a slower process (t1 (design) occurs before t2 (implementation)), whereas improvisation is faster whereby t1 and t2 occur simultaneously.

Innovation of the global context •

“Innovation distinguishes between a leader and a follower.” -Steve Jobs, Apple, Inc.

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“Innovation is the primary source of economic growth, job creation and competitiveness in today’s global economy.” -Barack Obama, President, United States of America on the America Invents Act

Examples of top global innovators (reuters) •

Apple Inc (US)

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Intel Corporation (US)

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General Electric Company (US)

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Hewlett-Packard Company (US)

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Honda Motor Company Ltd (Japan)

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Microsoft Corporation (US)

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Samsung Electronic Co Ltd (S. Korea)

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Toyota Motor Corporation (Japan)

Market-driven vs. market-driving innovations •

"a world leader in market-driven innovation and science" http://www2.dupont.com/corp/en-us/our-company/index.html o DuPont is a science company dedicated to solving challenging global problems, while creating measurable and meaningful value for its customers, employees and shareholders.

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"Apple leads the digital revolution" http://investor.apple.com/faq.cfm?FaqSetID=6...