Select one country in Latin America and one in Europe and develop screening criteria to use in evaluating the two countries. Make any additional assumptions about your company that are necessary.
This is a library-type project. Whatever the details of the screening criteria, the major points that should be considered are: (1) company objectives and goals, (2) product-use characteristics, (3) country environmental characteristics.
The dichotomy drawn between export marketing and overseas marketing is very misleading, for in fact they are but alternative methods of approaching the foreign markets. Yet, on the other hand, these approaches are often interrelated in the complete marketing structure. Both exporting and overseas marketing can be successfully interchanged to reach various heterogeneous markets. Depending on market structure, competition, and company policies, the organizational structure can be so devised so as to use exporting, overseas marketing, or a combination of both to successfully reach a wide assortment of foreign markets. In one country, due to high tariff rates, overseas production and marketing might be advised; on the other hand, poor communications or resources might necessitate exporting.
The differences between entering a fully developed market and an untapped foreign market are many and extremely varied. Some of these differences are channels of distribution which may or may not be developed. Governmental attitudes toward business, foreigners, and industry may be very liberal in a growing economy, while an established market may be very restrictive. Communication and transportation may be highly limited in untapped markets and highly developed in successful countries. The amount of capital, banks, and exchange-rate systems will vary according to the market’s development. Finally, the degree and amount of competition will vary accordingly. To this list, endless factors could be added such as cost of entering the market, social customs, laws, etc.
An international marketing plan should optimize the resources committed to stated company objectives. The organizational plan includes the type of organizational arrangements to be used, and the scope and location of responsibility. Many ambitious multinational plans meet with less than full success because of confused lines of authority, poor communications, and lack of cooperation between headquarters and subsidiary organizations.
Companies are usually structured around one of three alternatives: global product divisions responsible for product sales throughout the world; geographical divisions responsible for all products and functions within a given geographical area; and a matrix organization consisting of either of these arrangements with centralized sales and marketing run by a centralized functional staff, or a combination of area operations and global product management.
Market-oriented firms are finding greater competitiveness in world markets makes it essential to assume a global perspective in planning and organizational structure. Global competition also requires quality products designed to meet ever-changing customer needs in the face of rapidly growing competition from every corner of the world. Cost containment, escalating technology, customer satisfaction and a greater number of players mean that every opportunity to refine international business practices must be examined in light of company goals. Strategic international alliances, strategic planning and alternative market entry strategies are important avenues to global marketing that must be implemented in the planning and organization of global marketing management.
International business decisions should reflect the culture of the country in which they will be implemented. Thus the decision should be as close to the country where it is to be implemented as possible.
Joint ventures have become popular for a number of reasons. One important marketing reason is to gain access to markets. Nearly all of the developing countries, and many developed countries, require some degree of local participation for operating in their country. Mergers with distributor companies or companies which already have well-established local distribution may provide rapid market access and distribution to foreign companies entering a country. Sometimes companies join forces in order to broaden the line of merchandise that they have available, thereby gaining marketing efficiency and better public image. Another market reason for joining ventures is that local firms possess market information and the marketing know-how which would take years for a foreign company to acquire. Such participation minimizes the risk of market failure and speeds the marketing effort. Joint ventures may also arise for financial and manpower reasons. Financially it is sometimes desirable to merge with foreign companies because the merger provides access to local capital markets and combines the resources and fund raising capabilities the companies have. It may also give access to a higher quality and more capable managerial manpower.
Joint ventures involve the partners in a new venture and usually require significant inputs of both capital and management. In licensing, the companies retain separate identity. Usually the licensor is little affected by his licensing actions.
Both use foreign direct investment although Whirlpool is the most advanced. Maytag exports from the United States.
This exercise can lead to a good class discussion of multinational and/or global companies and strategies. These two global giants probably are among the first real global companies. From their beginning they viewed the world as their market and still follow that direction.
Chapter 13 – Products and Services for Consumers
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