Internationalisation theory PDF

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internationalisation theory - models, reasons, generic strategies...

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Going to market in international markets The decision to internationalise Proactive motives - Profit and growth goals (A&F found lot of online orders from abroad so expanded from US) - Managerial international experience - Unique product - Tax benefits Reactive motives - Local competitive pressures (Honda set up in Ohio and other auto parts companies followed) - Excess capacity - Psychic distance - EOS (Apple manufactured in China to take advantage of lower costs to produce) PDP = psychic distance perception The more different a foreign environment is as compared to that of a firms (or individuals) country of origin, the more difficult it will be to collect, analyse and correctly interpret information about it and the higher therefore the uncertainties and difficulties of doing business there. Political - Services, infrastructure, tax policy, regulation Economic - Growth rate, inflation, labour costs Social/cultural - Demographics, education, cultural norms, income Technological - Emerging technology, R&D efforts Legal - Laws Ecological - Energy, climate change, health of workforce Standardisation vs. localization To what extent will the company need to adapt marketing communications to the local market? Will the same product appeal to the same people? Will it have to be priced differently? How will the company get the product into people’s hands? Standardisation = use of the same/similar marketing mix (4Ps) across the globe e.g. aircrafts, Coca Cola. Costs reduced, EOS increased e.g. Coca Cola, Mcdonalds, Nandos. Localisation = corporation modifies marketing mix for virtually every country to suit national taste and culture. Expensive e.g. KFC adapts menus and retailing strategies across countries.

Porter’s Generic Strategies

Cost leadership – no frills, reduce cost of organization of delivering products e.g. EasyJet Differentiation – uniquely desirable products and services, different and more attractive to competitor’s incl. features, support, brand image e.g. McDonalds. Focus strategy – concentrate on niche markets and unique needs of customers within. Build strong brand loyalty . Product decisions: 1. Straight extension – same product marketed to world except for labeling and language. Not culture sensitive and EOS present e.g. cameras. 2. Product adaptation – physical product the same but modifications are made to meet local conditions e.g. Jaguar adapt car in India to have all features in back. 3. Product invention – making a new product to appeal to global markets e.g. alcohol free beer. 4. Backward invention – existing product re-engineered or dumbed down by company to be released in less developed countries at a cheaper rate. E.g. National Cash Register Company reintroduced a dumbed down version of its crank-operated cash register at a lower cost for South American and African markets. How the organisation operates internationally depends upon its orientation: Ethnocentric – view native country as superior and looks for similar countries; practices and policies of the headquarters are transferred to international subsidiaries which need to comply. Polycentric – each country unique; subsidiaries are managed as autonomous units who are allowed to manage their operations as they see fit. Not as heavily staffed from headquarters. Regiocentric – global regions share similarities and differences; group together those with similar marketing characteristics and apply the same marketing mix to those. Geocentric – world is one big market; employees recruited from all over the world so the best people are recruited.

E.g. Tata Nano

Split the low cost car (LCC) into advanced markets (mini car...