Transcript MASTER - Texas Tech University

INTERNATIONAL MARKETING
SECTION 1A
INTRODUCTION AND OBJECTIVES
ALAN L. WHITEBREAD
WHY DO DOES THE GOVERNMENT
HELP AMERICAN BUSINESS?
•
To help the American economy, investors,
and workers by assisting American business
through counseling and advocacy around the
world.
•
To help business in another country
•
•
•
•
increase the variety of products and services for your B2B
and consumer markets;
create jobs at many levels of your economy;
improve industries in your host country and make them
more competitive world-wide; and
potentially increase your country’s exports!
WHY DO WE SEE THE TREMENDOUS
INCREASE IN WORLD TRADE?
•
Governments are recognizing that
–
Trade and investment help bring prosperity
by
•
•
•
Increasing standards of living;
Providing access to products, services, and
more choice for businesses and consumers;
and
International firms tend to 1-pay higher wages
and 2-be more employee friendly and socially
responsible.
WHY DO WE SEE THE TREMENDOUS
INCREASE IN WORLD TRADE?
•
Governments are also recognizing that
–
Trade helps bring peace [just look at
Europe since WW II]
•
•
•
–
Role of the WTO – Improving intellectual
property [IP] protection and reducing and/or
eliminating trade barriers
World Bank and Regional Banks – assisting
countries in need
IMF – assisting with currency stabilization
Product standards [like ISO] are spreading
around the globe.
WHY DO WE SEE THE TREMENDOUS
INCREASE IN WORLD TRADE?
•
Governments are responding to this thinking
by
–
–
–
–
Encouraging more trade and slowly reducing or
eliminating market barriers;
Increasing participation in bilateral and multilateral
trade agreements;
Opening markets to foreign investment; and,
Allowing greater competition in domestic markets
while encouraging local firms to export.
TRENDS AFFECTING WORLD
TRADE
•
The growth of regional economic
agreements [EU, NAFTA, ASEAN, and
many more] have boosted trade.
•
The world is shrinking rapidly with the
improvement of communications.
•
Strategic alliances are the new wave of
international business growth.
TRENDS AFFECTING WORLD
TRADE
•
There has been a major change in multinational
thought recognizing that we can not be efficient at
everything so we need to concentrate on core
competencies and build strategic alliances.
•
Foreign Direct Investment [FDI] continues at or near all-time
highs.
–
–
–
–
–
FDI increases jobs and cash flows in that firm and its domestic
suppliers.
Joint ventures increase jobs and cash flows in that firm and its
domestic suppliers.
Acquisitions provide capital for expansion, jobs, and improve cash
flow.
Affiliate investment provides capital for expansion, jobs, and improve
cash flow.
Strategic alliances provide the opportunity to gain access to other
opportunities.
BARRIERS TO FREE TRADE
• National controls to protect industries for many reasons
[there will be much more later in the course].
• Local business interests that believe they need help, or
assistance, or protection because they are not a
significant player in that item.
• Capital markets are becoming more internationally
interconnected making it easier to legally raise and move
money. Nations that do not actively participate are at an
extreme disadvantage.
BARRIERS TO FREE TRADE
• Fear of
EXPORTING
IMPORTS
It is too risky for the firm.
More competition means more risk.
The firm is unprepared.
Firm is not ready for foreign
competition.
The firm believes it is too small to
succeed.
Large companies are more efficient.
Happy at home – lack the desire to be Happy at home – do not mess things
a global firm.
up with more competition.
BUILD RELATIONSHIPS BY
•
Improving the strategic position of the firm.
•
•
•
•
•
•
Expand and/or find markets to decrease dependence on
a few concentrated markets
Reduce costs of – 1-manufacturing, 2-product
development, 3-customer service
Gain access to resources – 1-natural, 2-human, 3technological, 4-financial
Become more competitive in a national or regional market
Reduce and manage overall risk
Growing corporate interdependence –
multinationals are pulling their suppliers along
INTERNATIONAL MARKETING
SECTION 1B
BUSINESS TOOLS AND THE WORLD MARKETPLACE
ALAN L. WHITEBREAD
WELCOME
•
All information in the lectures is presented with what we refer to as the
stoplight approach. This will help you understand the amount of risk that
may be associated with a concept or approach that you should point out to
your clients.
– If the box is in bright green, it is a common thing to do with the necessary
due diligence. [Low risk]
– If the box is in bright yellow, you should take some extra care/analysis
before pursuing. [Moderate risk]
– When appropriate, if the box or text is in bright red or has “[WARNING]”, it
indicates a high risk item and you need to either take great precaution
before proceeding or doing anything different.
– Examples of concepts, ideas, or theories are in light tan italics OR start
with EX-.
– Things for you to do or questions you may want to ask about a business
are in light blue.
OPTIONAL RESOURCE
The U.S. Department of Commerce’s
A Basic Guide to Exporting,
10TH Edition, 2008, ISBN 9780160792045 from
http://bookstore.gpo.gov/actions/GetPublication.do?stocknumber=003-009-00733-0 .
GENERAL RESOURCES
IMF Data
http://www.imf.org/external/data.htm#data
CIA World Factbook
https://www.cia.gov/cia/publications/factbook/
Numerous other sources for specific
topics will be found in the slides.
GETTING STARTED PART 1 OVERVIEW
• THE WORLD MARKETPLACE
– Examine its history, frames of reference, and some
economic items
• THE IMPACT OF CULTURE ON
INTERNATIONAL BUSINESS
– What is it?
– How does it affect us?
• FIRST STEPS OF INTERNATIONAL
BUSINESS
– Your readiness, keys to success, dangers
PART 1 OVERVIEW - continued
• ECONOMIC GEOGRAPHY
– How do you evaluate different countries?
• STRATEGY, PLANNING, AND
PROGRAM BASICS
– Basics, initial exporting items
• INTERNATIONAL MARKET RESEARCH
– Overview
– Politics, controls, and legal problems [danger]
LETS GET STARTED.
INTERNATIONAL TRADE AND THE FIRM
Legal
Human resources
Management
Environment
Stakeholders
Technologies
Marketing
Capital
INTERNATIONAL Supply Chain
TRADE
Management
Trade
Finance
Competition
Government
ETHICS & CORE VALUES
• Morals and ethics may be different
between cultures.
– MORALS
• The differences between right and wrong.
– ETHICS
• The values of human conduct. Whether an action
is right or wrong, and the good or bad of motives,
means, and ends.
ETHICS & CORE VALUES
• ETHICS
– Personal ethics should exceed legal
requirements.
– If you have to ask about its legality, you are
likely in ethical trouble.
– What is the intent of an action?
• In U.S. criminal and U.S. business law, there are
more severe punishments for the “intent to harm”.
– What are the U.S. government’s ethics?
ETHICS & CORE VALUES
• CORE VALUES
– Values and beliefs: you can not live a dual
life.
– Peter Drucker, one of the great management
philosophers of our time, said “It is extremely
important to do the right thing”. It is equally
important to also do all the right things when
advising U.S. business in your host country.
DESIGNING THE BUSINESS PORTFOLIO
• THE VISION STATEMENT
– broadly defines what the entity should be
like in 10-20 years.
– This statement needs to become part of
the entity’s culture to be most effective.
DESIGNING THE BUSINESS
PORTFOLIO
• THE MISSION STATEMENT
– provides a path to achieve the vision through
clear objectives. It will contain many of the
nine following elements.
• Customers; products/services; markets;
technologies; concern for survival/growth;
philosophy; self-concept; public image; employees
– U.S. Department of State Mission Statement
• Create a more secure, democratic, and prosperous
world for the benefit of the American people and
the international community.
DOMESTIC VS. INTERNATIONAL
DIFFERENCES: PLANNING
DOMESTIC
INTERNATIONAL
Single language [most nations]
Multilingual, multinational, multicultural
Homogeneous market [segments]
Very diverse markets [segments]
Market research is fairly straight-forward
Data collection and analysis present
many difficulties
Well understood legal and regulatory
environments
Multiple environments with different
degrees of stability
Well-understood business environment
Multiple environments with different
degrees of stability
Well-understood financial environment
Wide-ranging from stable to slow to
inflationary
Can you think of another one?
Can you think of another one?
U.S. BUSINESS STRATEGIC
PLANNING
• Set goals / objectives / examine
alternatives
• Develop plans
• Implement plans as soon as there is
enough substance to have a fairly high
probability of success.
• Always have contingency plans in place.
U.S. BUSINESS STRATEGIC
PLANNING
•
•
•
•
What are we now?
What capabilities do we want to develop?
What businesses should we be in?
How do we get there?
– Thought processes
• The American educational approach
• Thinking in different ways
• Assess different strategy options.
• What are the rewards of success?
• The myopia problem
TYPICAL U.S. BUSINESS PLANNING
TOOLS
•
•
•
•
•
•
•
•
•
•
•
Marketing myopia
Core competencies
Key success factors
SBUs and SWOT analysis
BCG and GE models
Scenario planning
Development projects
Ansoff’s Product / Market Expansion Grid
Competitive advantage of the firm
Marketing mix
Gap analysis
“MARKETING MYOPIA”
THEODORE LEVITT ARTICLE
Harvard Business Review reprint, July-August, 2004
• Myopia: defining your business too narrowly
–
–
–
–
Railroads
Corner grocery [1930] vs. supermarket
Color TV [Motorola, GTE, GE]
Lead with price conundrum
• You can always get sales!
• Great marketing organizations rarely have
financial problems!
BUSINESS DEFINITIONS & EXTENSIONS
Fill in different types of businesses that fit the market
oriented definition. Then do the same for your business[es].
COMPANY
PRODUCT
ORIENTED
MARKET
ORIENTED
BUSINESS
EXTENSIONS
DISNEY
Theme parks
Fantasies &
entertainment
Name the
businesses they
are in and could
get into with this
definition.
WAL-MART
Discount stores
Value to middle
class
What is your
answer?
HOME DEPOT
Tools & home
improvement
Advice &
solutions
What is your
answer?
STRATEGIC DIRECTION OF THE FIRM
(“THE CORE COMPETENCE OF THE CORPORATION” ARTICLE)
• CORE COMPETENCY
– The foundations [usually technologies] upon which you build
your business over a very long time. You need to compare your
core competencies with those of your competitors.
• THREE CORE COMPETENCY TESTS
• SUSTAINABLE – Very long term [5+ years]
AND
• COMPETITIVE – Obvious customer benefits
AND
• ADVANTAGE – Access to additional markets or
market segments
KEY SUCCESS FACTORS
• NOT CORE COMPETENCIES
• YOU MUST DO BETTER ALL THE TIME TO
KEEP UP WITH YOUR COMPETITORS.
• Take a few moments now and apply the core
competency tests to the following and see why
they fail one or more of the tests.
• Customer services
• Design
THE STRATEGIC BUSINESS UNIT (SBU)
• A UNIT OF THE FIRM THAT HAS
DIFFERENT OBJECTIVES AND CAN BE
PLANNED SEPARATELY FROM
OTHERS.
• For instance, some of General Electric’s
business units include
– GE Commercial Finance
– GE Consumer Finance
– GE Healthcare
-- GE Industrial
-- GE Infrastructure
-- NBC Universal
THE STRATEGIC BUSINESS UNIT (SBU)
•
SBU ISSUES
– RESOURCE COMPETITION
1. PEOPLE
2. MONEY
3. DEVELOPMENT RESOURCES
– FAIR PERFORMANCE MEASURES
•
How do you reward very different SBUs?
– WHAT IS THE ACCEPTABLE DEGREE OF
AUTONOMY FOR EACH SBU?
SBU
Trucks
Cars
TECHNOLOGIES [fuel cells] /
PRODUCTS/ SERVICES
Tanks
MARKETS /
SEGMENTS
North America Europe Asia Export
Business Consumer Government
A
P
P
Delivery
L
I Transportation
C
War
A
T
I
O
N
S
SWOT ANALYSIS
Complete the analyses for your firm and your major competitors.
STRENGTHS
WEAKNESSES
[constraints]
LEVERAGE
PROBLEMS
OPPORTUNITIES
THREATS
[vulnerabilities]
BOSTON CONSULTING GROUP:
GROWTH – SHARE MATRIX
HIGH
LOW
Relative Market Share Relative Market Share
HIGH
STARS
Market Growth Rate
QUESTION
MARKS
Invest heavily
Decide quickly
LOW
CASH COWS
DOGS
Milk for cash
Divest or
discontinue
Market Growth Rate
GE STRATEGIC BUSINESS
PLANNING MATRIX
• Market Attractiveness
– Market size, growth rate,
potential
– Competition
– Profitability
– Government regulation
– What else?
• Business Strength
– Market share
– Customer & market
knowledge
– Cost efficiency
– Technology
– What else?
GE STRATEGIC BUSINESS-PLANNING
MATRIX*
BUSINESS STRENGTH
Market size, growth rate, potential, …
LOW
MEDIUM
HIGH
MARKET ATTRACTIVENESS
Market share, Customer & market knowledge, Cost efficiency, Technology, …
STRONG
MEDIUM
WEAK
SBU A is going in the
right direction.
SBU B is losing ground.
SBU C is improving.
SBU D is bad and
getting worse.
Invest and Grow
Selective Growth
Divest or Discontinue
SCENARIO PLANNING
• Thoroughly understand the key strategic forces
that impact each scenario.
• Take an issue that is of concern to you and
describe alternative futures by
– Creating alternative paths from the future scenario
back to today.
– Creating alternative paths from today to the future
scenario.
– Analyzing all the paths and select the best
approach—possibly using parts of many paths.
LARGE
P
R
O
C
FIVE TYPES OF DEVELOPMENT
PROJECTS
HARDEST
MORE
R&D ADVANCED
DEVELOPMENT
PROJECTS:
GENETIC
ENGINEERING
E
NEW CORE
PRODUCT
PRODUCT CHANGE
NEXT GENERATION
PRODUCT
ADDITION TO
PRODUCT FAMILY
LESS
DERIVATIVES AND
EXTENSIONS
S
S
ALLIANCES
PARTNERSHIPS
PROJECTS
NEW CORE
PROCESS
C
R&D JOINT
VENTURE
NEXT GENERATION
PROCESS
BREAKTHROUGH
PROJECT:
NEW FAMILY OF
DRUGS
H
A
N
SINGLE
DEPARTMENT
UPGRADE
G
E
SMALL
INCREMENTAL
CHANGE
PLATFORM
PROJECT:
APPLE iMAC:
TRANSLUCENT
PLASTIC
COLORATION
TECHNOLOGY
DERIVATIVE
PROJECT:
SIMPLE SIZE
CHANGE
For more information see Creating Project Plans to Focus Product Development, Harvard Business Review, Vol. 70, No. 2, p.74.
EASIEST
ANSOFF’S PRODUCT / MARKET
EXPANSION GRID
EXISTING
PRODUCTS
NEW
PRODUCTS
EXISTING
MARKETS
1. Market penetration
and / or saturation
2. Product
development [internal
or external]
NEW
MARKETS
3. Market
development
[channels of
distribution]
4. Diversification
[usually by acquisition]
These show ways to grow your business generally go from easiest [#1] to hardest [#4].
COMPETITIVE ADVANTAGE OF THE FIRM:
PORTER’S THREE GENERIC STRATEGIES
COMPETITIVE ADVANTAGE
C
O
M
P
E
T
I
V
E
S
C
O
P
E
INDUSTRY
WIDE
Customer Perceived
Uniqueness
Low Cost Position
DIFFERENTIATION
STRATEGY
OVERALL COST
LEADERSHIP
STRATEGY
Focus on perceived
value.
MARKET
SEGMENT ONLY
Hard to maintain
long term.
NICHE STRATEGY
Understanding and focus.
No direct battles with major competitors.
MARKETING MIX [The 4 P’s]
PRODUCT
-Variety
-Design
-Features
-Branding
-Packaging
PLACE
-Channels
-Coverage
-Transportation
-Logistics
PROMOTION
-Advertising
-Public Relations
-Sales promotion
-Trade Shows
PRICE » VALUE
-List price
-Discounts
-Allowances
-Terms and conditions of sale
FIRST MOVER:
ADVANTAGES AND DISADVANTAGES
POTENTIAL
ADVANTAGE
POTENTIAL
DISADVANTAGE
Increased brand recognition
Channel members need training
Leadership image
Customers need to be educated
Increase distribution
Market segmentation must be
very good
Longer market experience
Cannot maintain first mover
advantage
ATTACKING COMPETITORS:
GAPS—THE THREE DIMENSIONS
CHANNELS OF DISTRIBUTION
[Gap 1 – small gap in one
dimension]
G
G
a
a
p
p
1
3
G
a
p
Gap 2
2
MARKETS / SEGMENTS
[Gap 2 – major gap in all three
dimensions with two market segments]
TECHNOLOGIES
PRODUCTS
SERVICES
APPLICATIONS
[Gap 3 – small
gap in all three
dimensions]
PRODUCT LINE PLANNING*
APPLICATION SUMMARY OF GAP ANALYSIS
PRODUCT
PLACE
PROMOTION
PRICE
COMPETITION
Features
Expand
channels
Stimulate
light users
How to
compete
Brands
Intensify
coverage
Attract nonusers
Penetrate /
Substitute
Market
segments
Use more
each time
Model number
Services added
To maximize your return,
You always pursue price
gaps last.
SECTION 1A & B: REVIEW
• You should now have knowledge of
– International trade and the firm
– Strategic planning tools
•
•
•
•
•
•
•
Core competency, key success factor, SBU
Business portfolio, mission, and vision
SWOT, BCG, GE planning tools
Exploring scenarios
Types of development projects
Product / market expansion or approach
The Marketing Mix and gap analysis
INTERNATIONAL MARKETING
SECTION 2
THE IMPACT OF CULTURE ON INTERNATIONAL BUSINESS
ALAN L. WHITEBREAD
U.S. CULTURE: GENERAL
• THINGS THAT ARE LIKELY DIFFERENT ABOUT
AMERICANS.
– Americans admire individualism and self-reliance.
– Americans are tolerant of different viewpoints and openly
discuss them. “Live and let live” is a good motto.
– Americans take pride in work achievements; e.g. my son the
doctor, or my daughter the lawyer.
– Change is embraced and is a key part of their success.
– They are competitive [aggressive] – winning [being first] is very
important.
U.S. CULTURE: FAMILY
• THINGS THAT ARE LIKELY DIFFERENT
ABOUT AMERICANS.
– Meals and specific foods rarely have the significance they do in
other cultures.
– Meals are mostly informal social events.
– Social contacts and relationships tend to be more work related,
as opposed to neighborhood, community, or religious.
– The family is important but not to the extent you see it in other
cultures.
U.S. CULTURE: MOBILITY
• THINGS THAT ARE LIKELY DIFFERENT
ABOUT AMERICANS.
– Getting ahead is usually done via changing jobs.
– Americans frequently change jobs and move
whatever distance is necessary – even across the
country.
– Social mobility is most often tied to professional or
business accomplishments [money] and only rarely to
family social standing.
U.S. CULTURE: OTHER
• THINGS THAT ARE LIKELY DIFFERENT
ABOUT AMERICANS.
– Most Americans pay their taxes – an example of
following the “rule of law”.
– Americans are very litigious – they have uncommon
confidence in their judicial system to render impartial
decisions in civil and business disputes. They tend to
expect the same outside the U.S.
– Americans love to shop – tangible objects serve as
mementos of travel and unique experiences.
U.S. BUSINESS CULTURE
– Smiles are common even between strangers anytime
there is direct eye contact and frequently include a
“Hi”.
– Greeting – business or strangers: use a firm
handshake [3 or 4 seconds] and maintain good eye
contact during the greeting. The eye contact shows
character, confidence, interest, and sincerity.
– Introductions include your title only if appropriate for
the situation.
– Friends may briefly embrace – much more common in
smaller cities.
U.S. BUSINESS CULTURE
– Business cards are usually exchanged informally
and without any special presentation style
1.
2.
3.
4.
during introductions, or
early in a meeting, or
at a significant point in a meeting, or
rarely when leaving.
– Business meetings are usually informal.
•
•
•
Americans start discussing business very early in the
meeting.
Differences of opinion are common even during a meeting.
Rank in a meeting is generally unimportant – expect anyone
to speak at any time.
U.S. BUSINESS LAWS
•
ILLEGAL BUSINESS PRACTICES – COMPETITION
–
Horizontal agreements among competitors can raise antitrust
suspicions of potentially restricting competition.
–
Any agreement to restrict output is illegal.
–
Boycott agreements
1.
2.
–
among competitors not to deal with another person or business
violates the law if it is used to force another party to pay higher
prices, and
to prevent a firm from entering a market or to disadvantage a
competitor also are illegal.
Agreements among competitors to divide sales territories or
allocate customers are probably illegal. Cartels are illegal.
U.S. BUSINESS LAWS
•
ILLEGAL BUSINESS PRACTICES – COMPETITION
– A professional code of ethics may be unlawful if it unreasonably restricts
the ways professionals may compete. [advertising by some professions]
– Certain kinds of agreements between buyers and sellers, such as a retailer
who buys from a manufacturer, may be illegal if they restrict competition or
show favoritism in any way.
– Manufacturer-imposed limitations on how or where a dealer may sell a
product, e.g., service obligations or territorial limitations, are generally
legal.
– Tie-in sales where the sale of one product is based solely on the condition
that a customer purchase a second product, which the customer may not
want or can not buy elsewhere at a lower price, are illegal if they harm
competition.
•
Americans have very high regard for “the rule of law”. They will not respond
well to suggestions that they break or evade it, even if “everyone else” does.
U.S. BUSINESS PRACTICES
• CONTRACTS
– Americans expect business partners to respect the spirit of the contract,
even more so than the letter. [It defines the relationship – it is not
treated as a starting point.]
– Some business is done informally with just a verbal agreement.
– Most business is done with purchase orders which are an intent to
purchase with usually a lot of legal paragraphs attached but are usually
non-binding.
– Contracts are frequently used, and are always used for large deals.
– Contracts tend to be quite lengthy and are heavily in legal jargon
although there is a trend to simplified verbiage.
SENSITIZING AMERICANS TO
ANOTHER CULTURE
•
Americans are generally quite friendly but forceful in business relationships.
•
They generally have less knowledge of foreign cultures than foreigners
expect of them as citizens of such a prominent country. Do not expect them
to have much more than a basic knowledge of another culture or history. If
they misstep in another culture it is from ignorance. Deliberate insults by
Americans are rare and obvious.
•
Americans are not generally fluent in other languages, although this is
changing among the young.
•
There is no commonly accepted “proper” use of eating utensils.
•
Americans’ posture tends to be relaxed. It does not generally mean they
are disinterested, however.
•
They generally say exactly what they mean – do not look for hidden
meanings or saving face. Interrupting another person is common.
SECTION 2: REVIEW
• You should now have knowledge of
– American culture in general with some
insights into family, mobility, and other
aspects;
– American business culture, business laws,
and common business practices; and,
– Sensitizing Americans to your culture.
INTERNATIONAL MARKETING
SECTION 3A
FIRST STEPS IN INTERNATIONAL BUSINESS - 1
ALAN L. WHITEBREAD
UNDERSTANDING GLOBAL
BUSINESS
• It is more different than you can imagine.
ORGANIZATIONAL GOALS
• The key is to find a structure which allows the
organization to profitably respond to market
differences and market dynamics.
– A market difference is something that is not the same
as in another market [e.g. color preference].
– A market dynamic is something that drives the market
[e.g. interest rates].
• Make a list of examples of market differences
and market dynamics.
ORGANIZATIONAL GOALS
• TRADE-OFF
– the value of centralization comes from
• knowledge
• planning
• co-ordination, implementation, and control
– the value of decentralization comes from
• maximizing response flexibility for a local situation
• minimizing reaction time
• customizing the approach as required
ORGANIZATIONAL STRUCTURE
• Organizational structure is a function of
the situation.
• Multinationals generally use a simple, flat
organization structure with few levels of
management.
– Empowerment
– Speed of decision-making
GLOBAL ORGANIZATION
STRUCTURES
•
•
•
•
•
•
INTERNATIONAL
GEOGRAPHIC / AREA
PRODUCT
FUNCTIONAL
MARKET / CUSTOMER
COMPLEX [large firms]
INTERNATIONAL STRUCTURE
CEO or
VP Marketing
North
America
Central and
South America
List three advantages to this
structure below.
1.
2.
3.
Europe, Africa,
and the
Middle East
Asia and the
Pacific
Export
List three disadvantages to
this structure below.
1.
2.
3.
GEOGRAPHIC STRUCTURE
VP Marketing
Product Manager
Group A
Product Manager
Group B
Advantages of this structure include
Eastern Region
Sales Manager
Western Region
Sales Manager
Marketing
Communications
Manager
1.
simple
Disadvantages to this structure
include
2.
low cost of sales and administration
1.
no specialization
3.
direct customer interaction
2.
controlling how the sales force spends its
time
3.
selling all the products
PRODUCT STRUCTURE
VP Marketing
Product Manager
Group A
Product Manager
Group B
Advantages of this structure include
Sales Manager
Product Group A
Sales Manager
Product Group B
Marketing
Communications
Manager
Disadvantages to this structure
include
1.
driven by product purchases
2.
specialized sales force knowledge for
specialized products
1.
duplication of sales effort selling two
very different product groups
3.
helps forecasting and production
scheduling
2.
higher administrative costs
3.
problem with accounts wanting to buy
both product groups
FUNCTIONAL STRUCTURE
CEO
Marketing and
Sales
Operations
List three advantages to this
structure below.
1.
2.
3.
Finance and
Accounting
Information
Technology
Human Resources
List three advantages to this
structure below.
1.
2.
3.
MARKET / CUSTOMER STRUCTURE
VP Marketing
Product Manager
Group A
Product Manager
Group B
Advantages of this structure include
1.
driven by type of customer and is close
to the customer
National Sales
Manager
Major Accounts
Manager
Marketing
Communications
Manager
National Accounts
OEM Accounts
Federal
Government
Disadvantages to this structure
include
1.
higher selling and administrative costs
2.
sales management controls field sales
and how they spend their time
2.
multiple sales forces compete for product
management’s time
3.
improved feedback throughout the
organization
3.
account assignment to the appropriate
sales organization is critical to the
success of this approach
COMPLEX STRUCTURE
VP Marketing
Product
Management
Group
National Sales
Manager
Direct Sales
Managers
Direct Marketing
Manager
Reseller Sales
Managers
Telesales
Manager
Internet Sales
Manager
National
Accounts
Major Accounts
Manager
Marketing
Communications
Manager
OEM Accounts
Federal
Government
Advantages of this structure
include
Issues of this structure
include
Disadvantages of this
structure include
1.
driven by type of customer and is close
to the customer
1.
1.
requires a lot of coordination
2.
multiple levels of sales skills based on
the customer type
2.
price strategies
Information is widely spread over the
organization and hard to consolidate
3.
consistent program implementation
3.
very heavy work load on marketing
communications
2.
3.
very difficult for competitive analysis
classification and reclassification of
accounts
INTERNATIONAL STRUCTURE
VP Marketing
Product
Management
Group
National Sales
Manager
Direct Marketing
Manager
Major Accounts
Manager
Marketing
Communications
Manager
Customer
Services
Technical Sales
Support
This is a typical U.S. marketing structure for a large organization. At
this size it could look like an international structure at the higher level.
This provides you detail of some of the organizational issues larger
firms face every day.
For instance, where should customer services report – marketing or
sales?
WHO EXPORTS?
Only $1.28 trillion [8.8%] of the U.S. GDP [$14.6 trillion]
was exported in 2010
U.S. is 2nd largest exporter - $16 million ahead of
Germany. China is the largest at $1.58 trillion.
~ 10% of U.S. companies export
Approximately 2,000 firms account for 70% of U.S. exports
Exports account for a significant amount of profits
THE VALUE OF EXPORTING
• Higher revenues, average unit price
[AUP], and profits
• Increased volume
• Potentially lower average unit cost [AUC]
• Potential tax advantages for Americans
• May extend product life cycles
WHY DON’T MORE FIRMS EXPORT?
• They are preoccupied with domestic
issues / content with domestic business.
• International misconceptions
– Fear of the unknown
– Horror stories because of lack of knowledge.
•
•
•
•
I lost money.
I did not get quick results.
It costs too much.
…
INTERNATIONAL ORGANIZATION:
REQUIRED COMPETENCIES
• Knowledge of economic geography, markets,
segments, and customers
• Knowledge of industry and competitive forces
• Knowledge of your country and region
• This is a key value that you provide your
American clients
INTERNATIONAL CORPORATE
CULTURE
• An multi-national corporation [MNC] knows
changing its culture is an important part of
improving its global competitiveness.
• MNC Managers accept and embrace the
mission, thus forming a corporate culture.
• Changing the culture of an organization can be a
long and difficult process.
EXPORTER’S CHECKLIST:
THE FIRM
• Why does the firm want to pursue exports?
• Is senior management committed to a multi-year
effort to succeed in international business?
– Including travel, trade shows, samples, different
collateral, IP protection, …, ?
• What are management’s expectations for the
export effort?
– Are they reasonable [size and time]?
EXPORTER’S CHECKLIST
• WHY DOES THE FIRM WANT TO PURSUE
EXPORT MARKETS?
– COMMON ANSWERS
• We are getting a lot of inquiries.
– BAD ANSWERS
• We need more volume to offset domestic sales.
• The big-game hunting owner thinks there is opportunity in
Africa.
– GOOD ANSWERS
• Your ideas would include …
EXPORTER’S CHECKLIST:
INTERNATIONAL EXPERIENCE
• In which countries are you conducting business?
• How many inquiries have been received from
each country in the last n months?
• Which product [lines] are requested most often?
• How many domestic customers are buying the
product for sale or shipment overseas?
EXPORTER’S CHECKLIST:
INTERNATIONAL EXPERIENCE
• Do you understand competition in the
countries you are selling to or from where
you are receiving inquiries?
• Do you know how to compete in those
countries?
– Use the marketing mix as a quick guide
•
•
•
•
Product
Place
Promotion
Price
EXPORTER’S CHECKLIST:
MANAGEMENT AND PERSONNEL
• What international expertise is needed to
service current and projected customers?
• What in-house international expertise
exists?
– Make a list of your international expertise.
EXPORTER’S CHECKLIST:
PRODUCTS AND SERVICES
• Is the product adaptable?
• Does the product ship complete or as
components?
• Can it ship as components?
• Does the product require any technical
support, training, sales training, or aftersale service?
EXPORTER’S CHECKLIST:
PRODUCTS AND SERVICES
• Can your products / services be strongly
differentiated?
• Do you require a special U.S. license to export?
• Do you or your client require any special import
licenses, permits, registrations, or
documentation?
• Will your product comply with the required
country and international standards, packaging,
and labeling?
– Where can an American company get this information
for a specific country?
SECTION 3A: REVIEW
• You should now have knowledge of
– Global business
• Organizational goals and structures
– International, geographic, product, functional,
market/customer, complex
– The value of exporting
– International business
• Competencies
• Culture
– The Exporter’s Checklist
INTERNATIONAL MARKETING
SECTION 3B
FIRST STEPS IN INTERNATIONAL BUSINESS - 2
ALAN L. WHITEBREAD
KEYS TO SUCCESS:
KNOWLEDGE
• Language, customs, lifestyles, culture, …
• Control with limited flexibility
• Meeting standards and regulations
• Competence in international trade
KEYS TO SUCCESS:
COMMITMENTS AND GOALS
• The long-term commitment of senior
management
• A realistic set of goals
• A logical and defendable marketing plan
• Always protect all your intellectual property
KEYS TO SUCCESS:
BUSINESS RELATIONSHIPS
• Be patient—it takes time to establish
yourself, develop trust, and build
relationships.
• Be very careful selecting international
resellers and / or representatives.
KEYS TO SUCCESS:
MARKETING AND SALES
• FOCUS - do not chase every opportunity.
• Build programs that provide resellers with the
support tools to do a great job.
• Communicate with your customers in the
language of their preference – frequently!
• Seek expert advise and assistance—especially
in the specialized fields of
– contract law, IP, packaging and labeling,
documentation, and language.
KEYS TO SUCCESS:
INTERNATIONAL NEGOTIATIONS
Secular-rational values
[modern, rational, non-religious]
Western Europe
Eastern Europe
Self-expression values
Survival values
U.S.
Australia
Canada
South America
The longer the arrow, the
greater the difference in
values.
Africa
Middle East
Traditional values
[religion, prior behavior]
KEYS TO SUCCESS:
PRINCIPLES OF NEGOTIATIONS
• Conflicts of interests are likely.
– Why is this true?
• All parties are seeking resolution.
– Why is this likely to be true?
• Seek an acceptable solution for all.
– Do not seek the best solution for one.
– Why may this be the best approach?
KEYS TO SUCCESS:
NEGOTIATION PERSPECTIVES
1.
2.
3.
4.
5.
6.
7.
Detail the situation by likely scenarios.
Develop and rank alternative outcomes.
Determine the rules of the game.
What process[es] do we want to use?
What type[s] of interaction do we want?
What tactic[s] will be employed?
How will power be used?
KEYS TO SUCCESS:
NEGOTIATION TYPES
•
•
•
•
•
Heavy-handed - threatening
Collaborative – working together
Sharing – pro-rated to synergistic like JVs
Accommodating - appeasement
Competitive – zero sum game
COMPETITIVE NEGOTIATION
• Competitive negotiation is composed of three major
areas.
– Characteristics involve how the negotiation is to proceed.
– Tactics are the tools you use to accomplish you goals.
– Expressions are ways of forcefully stating your desires.
CHARACTERISTICS
[Control is key; what type of behavior is to be used; how to force
concessions, …]
TACTICS
[Bluffs; promises; rewards; threats, …]
EXPRESSIONS
[Using words to deliver strong messages, …]
COMPETITIVE NEGOTIATION
1. That is not the response we
need. You will have to do better
if we are to continue doing
business with you.
2. There does not appear to be a
quick solution to this issue, so
accept our offer this time and
we will accept yours the next
time.
3. This is a large amount of
business that will help drive
your costs down. We should
see more of that reflected in our
price.
• How do you effectively
respond to each of these?
IMPACT OF CULTURE ON
NEGOTIATION
GOAL
CONTRACT
Attitudes
Win / Lose
Win / Win
Personal Style
Informal
Formal
Communications
Direct
Indirect
Time sensitivity
High
Low
Emotionalism
High
Low
Agreement form
Specific
General
Agreement Building
Bottom Up
Top down
Team Organization
One Leader
Group consensus
Risk taking
High
Low
OR
RELATIONSHIP
WHY ARE THESE STATEMENTS NOT
TRUE FOR AN AMERICAN BUSINESS?
• We can sell our products to anyone we
want, anywhere in the world.
• We know our customers and how to contact
them. That is all that the law requires.
• We only sell our products domestically so
export laws do not apply.
WHY ARE THESE STATEMENTS NOT
TRUE FOR AN AMERICAN BUSINESS?
• We sell to many countries around the
world so we are exempt from U.S. export
control laws.
• Once our buyer pays us we do not have to
be concerned about what they do with the
product.
WHY ARE THESE STATEMENTS NOT
TRUE FOR AN AMERICAN BUSINESS?
• 3PL’s do our international shipping so they
[not us] are responsible for any violations.
• We do not make anything dangerous so
the Export Administration Regulations
[EAR] do not apply.
WHY ARE THESE STATEMENTS NOT
TRUE FOR AN AMERICAN BUSINESS?
• We keep the necessary important records
for our business. The government does
not care about minor details.
• We do not pay bribes to foreign officials so
FCPA does not apply; but we provide
almost any entertainment they want when
they are here.
SPECIAL NOTICE!
• As an American business or citizen, you
have a legally required obligation under
federal law to know your customer, and in
some cases who your customer sells it to,
plus how the product will be used!
EXPORT ASSISTANCE
• US DEPARTMENT OF COMMERCE
– US Foreign and Commercial Service
• Product / Service / Industry Specialists
• Country Desk Officers
– Collect data regarding regulations, tariffs, business practices,
economic and political developments, market size and growth
and trade data
• Country Service Posts / Commercial Service Offices
– These are locations of U.S. DOC offices around the world that
can provide business assistance.
EXPORT ASSISTANCE
• US DEPARTMENT OF COMMERCE
– US Foreign and Commercial Service
• Bureau of Industry and Security
– Formerly called the Bureau of Export Administration [BXA]
– Mission: Advance U.S. national security, foreign policy, and
economic objectives by ensuring an effective export control and
treaty compliance system and promoting continued U.S.
strategic technology leadership.
– See http://www.bis.doc.gov
• National Institute of Standards and Technology [NIST]
– Manufacturing Extension Program
– See http://www.mep.nist.gov/about-mep/overview.html
• National Oceanographic and Atmospheric Administration
[NOAA]
EXPORT ASSISTANCE
• US DEPARTMENT OF COMMERCE
– International Trade Administration
• Mission: to create prosperity by strengthening the
competitiveness of U.S. industry, promoting trade and
investment, and ensuring fair trade and compliance with
trade laws and agreements.
• See http://www.trade.gov/index.asp
• SBA’s SBDC International Trade Centers [ITC] and U.S.
Export Assistance Centers [USEAC]
– A resource listing may be found at
http://www.sba.gov/gopher/BusinessDevelopment/International-Trade/Guide-To-Exporting/trad14.txt
– http://www.sba.gov/oit/export/useac.html
EXPORT ASSISTANCE
• World Trade Centers [WTC]
– bring businesses and government agencies together
to increase foreign trade.
– It is an information hub for
• market research, WTCA OnLine matchmaker, trade shows &
exhibit space, business services, trade education, group
trade missions, and WTC clubs.
– See http://world.wtca.org/portal/site/wtcaonline
• State government agencies
• Local trade associations
EXPORT ASSISTANCE
• US DEPARTMENT OF AGRICULTURE
– Agriculture commodity & marketing programs
•
•
•
•
•
Dairy
Grain & Feed
Tobacco, Cotton, & Seed
Forest Products
http://www.fas.usda.gov/outreach/Matrix.pdf
EXPORT ASSISTANCE [7 of 17]
•
•
•
•
•
•
US DEPARTMENT OF COMMERCE
US DEPARTMENT OF AGRICULTURE
US DEPARTMENT OF STATE
US DEPARTMENT OF THE TREASURY
US AID
OVERSEAS PRIVATE INVESTMENT
CORPORATION [OPIC]
• EXIMBANK
EXPORT ADMINISTRATION
REGULATIONS [EAR]
• The EAR is the complete set of rules and
regulations that control what can be
exported, to whom, and what documents
are required for compliance.
• For more information see
http://www.access.gpo.gov/bis/ear/ear_data.html
EXPORT ADMINISTRATION
REGULATIONS [EAR]
U.S DEPARTMENT OF COMMERCE
-Bureau of Industry and Security [BIS] controls EAR including
“dual-use” items.
-The Census Bureau controls the balance of the export process,
i.e. SED’s, etc.
-U.S. Patent and Trademark Office
U.S. TREASURY DEPARTMENT
-Office of Foreign Assets Control [OFAC] oversees embargo and
sanction lists – OFAC regulations.
EXPORT ADMINISTRATION
REGULATIONS [EAR]
U.S. STATE DEPARTMENT
-Directorate of Defense Trade Controls [DDTC] controls defense
articles, defense services, and related technical data including
most space related agencies [ITAR]
OTHER U.S. GOVERNMENT AUTHORITIES
-U.S. DEPARTMENT OF HOMELAND SECURITY.
-Customs and Border Protection [CBP]
-U.S. DEPARTMENT OF ENERGY
-NUCLEAR REGULATORY COMMISSION
BUREAU OF INDUSTRY AND SECURITY
Export Administration Regulations [EAR] – Part 734
• Items subject to the EAR include all
–
–
–
–
Items moving into or through the U.S., and
U.S. origin items, parts, and components, and
In quantities exceeding de minimis levels, and
Certain items produced outside the U.S. using U.S. origin
technology.
• Items excluded from the EAR are exclusively
controlled by other U.S. departments or
agencies.
• The complete export regulations administration
database may be found at
– http://www.access.gpo.gov/bis/ear/ear_data.html
BUREAU OF INDUSTRY AND SECURITY
Dual-Use Product
• A dual-use product is any item that may
have both commercial and military or
commercial and proliferation applications.
• Purely commercial items without an
obvious military use are also subject to the
EAR due to potential alternative uses.
–F
– Ammonium nitrate fertilizer
BUREAU OF INDUSTRY AND SECURITY
Export Administration Regulations [EAR]
• KNOWING VIOLATIONS
– Corporation - A fine of up to the greater of
$50,000 or five times the value of the exports
for each violation.
– Individual - A fine of up to the greater of
$50,000 or five times the value of the exports
or imprisonment for up to five years, or both,
for each violation.
BUREAU OF INDUSTRY AND SECURITY
Export Administration Regulations [EAR]
• WILLFUL VIOLATIONS
– Corporation - A fine of up to the greater of
$1,000,000 or five times the value of the
exports for each violation.
– Individual - A fine of up to $250,000 or
imprisonment for up to ten years, or both, for
each violation.
BUREAU OF INDUSTRY AND SECURITY
Export Administration Regulations [EAR]
• ADMINISTRATIVE SANCTIONS
• Denial of export privileges [Denied Persons List]
– See http://www.bis.doc.gov/DPL/Default.shtm for more details
– The exclusion from practice; and / or
– The imposition of a fine of up to $12,000 for each
violation, except that the fine for violations involving
items controlled for national security reasons is up to
$120,000 for each violation.
EXPORT COMMODITY CONTROL
LIST
• Approximately 15 pages of items
– Defense articles & services / national security
– Dangerous drugs and narcotics
– Endangered plants and wildlife
– Chemicals
– Radioactive materials
– Explosives
• Access the list at
–
http://www.access.gpo.gov/bis/ear/ear_data.html
BUREAU OF INDUSTRY AND SECURITY
Office of Antiboycott Compliance
• U.S. companies receive requests to engage in
activities that further or support the boycott of
Israel or blacklisted companies.
• Compliance with such requests may be
prohibited by the Export Administration
Regulations [EAR] and may be reportable to the
Department of Commerce.
• See http://www.bis.doc.gov/AntiboycottCompliance/Default.htm for
more details
BUREAU OF INDUSTRY AND SECURITY
Red Flag Indicators - 1
• The customer or its address is similar to one of the
parties found on the US DOC’s Denied Person’s List
[DPL].
• The product's capabilities do not fit the buyer's line of
business.
• Routine installation, training, or maintenance services
are declined by the customer.
• Level of product sophistication far greater than usual
in the intended country.
BUREAU OF INDUSTRY AND SECURITY
Red Flag Indicators - 2
• A freight forwarding firm is listed as the product's final
destination.
• When questioned, the buyer is evasive and especially
unclear about whether the purchased product is for
domestic use, for export, or for re-export.
• Cash only transactions.
• See http://www.bis.doc.gov/Enforcement/redflags.htm for examples.
BUREAU OF INDUSTRY AND SECURITY
Entities List
• The Export Administration Regulations [EAR] provide
that the Bureau of Industry and Security may inform
exporters, individually or through amendment to the
EAR, that a license is required for exports or reexports to
certain entities. This is known as the Entities List.
• These end users have been determined to present an
unacceptable risk of diversion to developing weapons of
mass destruction or the missiles used to deliver those
weapons.
• http://www.bis.doc.gov/Entities/Default.htm
BUREAU OF INDUSTRY AND SECURITY
Unverified List
• The Unverified List includes names and countries of
foreign persons who in the past were parties to a
transaction with respect to which BIS could not conduct
a pre-license check (“PLC”) or a post-shipment
verification (“PSV”) for reasons outside of the U.S.
Government’s control. Any transaction to which a listed
person is a party will be deemed by BIS to raise a “red
flag” with respect to such transaction within the meaning
of the guidance set forth in Supplement No. 3 to 15
C.F.R. Part 732. The “red flag” applies to the person on
the Unverified List regardless of where the person is
located in the country included on the list.
•
http://www.bis.doc.gov/Enforcement/UnverifiedList/unverified_parties.html
OFFICE OF FOREIGN ASSETS CONTROL [OFAC]
Specifically Designated Nationals and Blocked Persons
7TH APRIL CARD BOARD FACTORY, Tajoura, Libya
[LIBYA]
‘ABD AL-RAHMAN, Humam ‘abd al-Khaliq (a.k.a. ABDAL-GHAFUR, Humam abd-al-Khaliq; a.k.a. ABD ALGHAFUR, Humam Abd al-Khaliq; a.k.a. GHAFUR,
Humam Abdel Khaleq Abdel; a.k.a. RASHID, Humam
‘abd al-Khaliq); DOB 1945; POB ar-Ramadi, Iraq;
Minister of Higher Education and Research; Passport No.
M0018061/104 (Iraq) issued 12 Sep 1993; nationality
Iraqi (individual) [IRAQ][IRAQ2]
From list on January 29, 2004
http://www.treas.gov/offices/eotffc/ofac/sdn/t11sdn.pdf
OFFICE OF FOREIGN ASSETS CONTROL [OFAC]
Sanctions Program and Country Summaries
Sanctions Program and Country Summaries
To view or print the PDF content on this page, download
the free Adobe® Acrobat® Reader®.
Balkans
Overview of Sanctions
Guidelines and Information
Burma (Myanmar)
Overview of Sanctions
Guidelines and Information
Cuba
Overview of Sanctions
http://www.treasury.gov/offices/enforcement/ofac/programs/
U. S. DEPARTMENT OF STATE
List of Debarred Parties
• Persons or entities with which no
American person or entity can conduct
business.
• http://www.pmddtc.state.gov/debar059intro.htm
• http://www.state.gov/index.htm
U.S. GOVERNMENT ENFORCEMENT
LISTS
• Be sure to review the “Enforcement Lists”
in detail in the READINGS section.
• You may want to keep some of these
available to give to your American clients
as you deem appropriate.
THE SALES CYCLE [center] AND PROSPECT
FUNNEL
MARKETING
DEPARTMENT LEADS
VS. COLD CALLS
PROSPECT
EFFECTIVENESS
APPROACH & QUALIFY
NEEDS &
VALUE
FAB
REAL, FALSE, STALLS
PRESENT
DEMONSTRATE
QUALIFIED !
HANDLE OBJECTIONS
HOT PROSPECT
TRIAL & ACTUAL CLOSE
COGNITIVE DISSONANCE
CLOSE
CUSTOMER
FOLLOW-UP
CONTINUING CUSTOMER
Copyright A. Whitebread, 2001-2007.
HANDLING INQUIRIES
• Understand where you are in the sales
cycle.
• When
– should I acknowledge correspondence?
– should I provide information?
– should I refer the inquiry to a reseller?
– should I check credit and other references?
– should I provide a quote including terms?
– should I send a sales person?
SECTION 3B: REVIEW
• You should now have knowledge of
– Keys to success
• Knowledge, commitment, relationships, focus, negotiations: types,
characteristics, tactics, and expressions
– Misconceptions about what an American firm can and
can not legally do in international business.
– Export assistance
• U.S. Departments of Commerce, State, Treasury and Agriculture,
World Trade Centers
– Bureau of Industry & Security, EAR, dual-use, antiboycott, red flag indicators, lists to check
– Handling inquiries
– Comparative business culture: Americans and You