Session4 By Dr Ravindra Pratap Gupta ISSUED IN

Session-4 By Dr. Ravindra Pratap Gupta

ISSUED IN PUBLIC INTEREST Advisable “All material in slides need not be understood. Use your current working environment and experience to relate to situations. Errors and omissions regrettable. Subject to corrections on Being brought to notice”

Syllabus � Market Selection Process; determinants of Market Selection; market Profiling; Market Segment Selection; � Market Entry Strategies; Licensing & Franchising; exporting; contract Manufacturing; Turnkey contracts; Fully owned manufacturing facilities; assembly operations; joint ventures; third country location; mergers & acquisitions; strategic alliances; counter trade; entry strategy of Indian firms;

Contents � International Business Essential Areas � Internationalization Strategies � International Planning Process � Major International Marketing Decisions

International Business Essential Areas Strategic/Marketing plan. -the capstone of a company’s global marketing activities will be its marketing plan. Best organizational setup -to implement its global plans effectively, a company needs to reflect on the best organizational setup that enables it to successfully meet the threats and opportunities posed by the global marketing arena. Environmental differences must be taken into account if firms are to market products and services at a profit in other countries � � � � Laws Customs Cultures Self-reference criteria and ethnocentrism limit t 0 check international marketer’s abilities to understand adapt to differences prevalent in foreign markets

Basic Issues An organization willing to “go international” faces 3 major issues. • Marketing – which countries, which segments, how to manage, how to enter, with what information. • Sourcing – whether to obtain products, make or buy. • Investment & Control – Joint Venture, global partner, acquisition.

Internationalization Strategies � Waterfall Approach – more time to plan, less risk involved. Apple launches across the world. � Sprinkler Approach – first mover advantage, high competitive intensity, more risks. Sprinkler Approach – Microsoft Products

International Planning Process

Major International Marketing Decisions

Looking At The Global Marketing Environment: � International Trade System � The World Trade Organization and GATT � Regional Free Trade Zones � Industrial Structure � Political-Legal Environment � Cultural Environment

Looking at the Global Marketing Environment The International Trade System: Restrictions—tariffs & non-tariff trade barriers as import duties and as quotas, exchange controls. The World Trade Organization and GATT: Helps Trade—reduces tariffs and other international trade barriers. Regional Free Trade Zones: Groups of nations organized to work toward common goals in the regulation of international trade.

The International Trade System: Tariffs are taxes on certain imported products designed to raise revenue or to protect domestic firms Nontariff barriers include quotas, embargoes, sanctions, levies and other restrictions and are frequently used by large and developed economies. Quotas are limits on the amount of foreign imports a country will accept in certain product categories to conserve on foreign exchange and protect domestic industry and employment Exchange controls are a limit on the amount of foreign exchange and the exchange rate against other currencies

Industrial Structure � Shapes a country’s product and service needs, income levels, and employment levels. Subsistence Economies Raw Material Exporting Economies Industrializing Economies Industrial Economies

Industrial Structure Subsistence economies have a large majority of people engaged in agriculture. They consume most of their output and barter the rest for simple goods and services. They offer few market opportunities. Example Ethiopia, Tanzania, Ireland & Finland Raw material exporting economies are rich in one or more natural resources. They are good markets for large equipment, tools, supplies, and trucks. If there is a wealthy upper class, then they are also a market for luxury goods. Example Canada, China Industrializing economies have manufacturing that represents 10 percent to 20 percent of the economy and needs imports of raw textile materials, steel, and heavy machinery and fewer imports of finished textiles, paper products, and automobiles. These economies create a rich upper class and a small but growing middle class that demand new types of imported goods. Example Korea, Taiwan, Hong Kong & Singapore Industrial economies are major exporters of manufactured goods, services, and investment funds. They trade among themselves and export to other economies. They represent an attractive market for all types of goods and services. Example China, India, Mexico, South Africa, Brazil

Political-Legal Environment � Political Stability � Government Bureaucracy � Monetary Regulations-involve the stability of exchange rates and currency limitations � Attitudes Toward International Buying-involves the country’s receptiveness to foreign business

Cultural Environment � Consumers Though Process & Acceptance: � Sellers must examine the ways consumers in different countries think about and use products before planning a marketing program. � Business norms vary from country to country. � Companies that understand cultural nuances can use them to advantage when positioning products internationally.

Cultural Differences When Nike learned that this stylized “Air” logo resembled “Allah” in Arabic script, it apologized and pulled the shoes from distribution.

Deciding Whether to go Abroad: -Reasons to consider going global � Reduce dependency on single market � Follow customers who are expanding � Foreign attacks on domestic markets � Stagnant or shrinking domestic markets � Foreign markets with higher profit opportunities � Need larger customer base to achieve economies of scale

SUBWAY � While much of its network is based in North America, the chain's focus has shifted to its international operations. � First entered into world market in 1984 in the Middle East nation of Bahrain. � Their approach at that time was : ‘ If you like Subway , you think it’s a good thing and you think it would work in your country, then we’ll teach you the concept and how it works and you go and make it work in your country. ‘ � China is the largest franchise market in the world. The demand for fast food increases with economy, more disposable income. Chinese people don’t like to eat with hands so Subway introduced a subway Salad bread bowl

Subway in India • SUBWAY has come a long way in India since it opened its first restaurant in New Delhi in 2001. • Young Indians have made it one of their favorite places to hang out in. • Subway has developed a unique menu to appeal to the Indian taste.

Deciding which markets to enter: -International Marketing Objectives And Policies � Before going abroad, the company should try to define its International Marketing Objectives And Policies � What Volume of Foreign Sales is Desired? � How Many Countries to Market In? � What Types of Countries to Enter? � Choose Possible Countries and Rank Based on � Market Size � Market Growth � Cost of Doing Business � Competitive Advantage � Risk Level

Market Selection Process � One of the most important decision in IM is market selection � A company which wants to enter many market should do it systematically � Market selection is based on a thorough evaluation of the different markets with reference to certain well defined criteria � It is also necessary to prepare a profile of the selected markets to help the company to formulate the marketing strategy. � Market Selection process steps � Determine international marketing objectives. � Define parameters for market selection � Preliminary screening � Detailed investigation and short listing � Evaluation and selection

Market Selection Criteria 1. Firm related factors 2. General Factors 3. Specific Factors 4. Evaluation Matrix 5. Market Profile-Contents of Market Profile 6. Market Segment Selection

Firm Related Factors � � � The planned business strategy may also influence the market selection. The market selection is also influenced by the international orientation of the company. A firm whose export objective is only to sell a marginal surplus will select a foreign market to suited to serve this purpose

General Factors 1. 2. 3. 4. 5. 6. 7. 8. 9. Economic factors Economic policy Business regulations Currency stability Political factors Ethnic factors Infrastructure Bureaucracy and procedures Market hub

Specific Factors � Trends in domestic production and consumption and estimates for the future of the products concerned. � Trend in imports and exports and estimates for the future. � Nature of competition. � Government policy and regulations pertaining to the industry � Infrastructure relevant to the industry. � Supply conditions of raw materials and other inputs. � Trade practices and customs. � Cultural factors and consumer characteristics

Evaluation Matrix � � � An evaluation matrix is often used for ranking the markets with reference to their attractiveness for the company The evaluation matrix will include the relevant general and specific factor The countries to be evaluated may be listed on the horizontal axis and the factors on the vertical axis Each factor is assigned a raw score and a weightage The weighted score is obtained by multiplying the raw score with respective weightage Markets are ranked by comparing the total weighted scores

Market Profile � The market profile of product is a fairly detailed account of relevant market characteristics. � It provides those information which are needed for the formulation of the marketing strategy. � A market profile will, help in the formulation of appropriate marketing strategy, pricing strategy, distribution strategy and promotion strategy. � Example brands like Coca Cola or Cosmetic Brands.

Contents of Market Profile � Trends in the domestic production demand, imports and exports and the forecasts of the same for the future. � Completive characteristics-the competitive strategies and weakness of the competitors. � Market segment characteristics-the number of segments and their size, the success factors in each segment, determinants in demand in each segment, competitive characteristics of each segment, growth potential of the segments etc. � Customer characteristics includes tastes and preferences, buying habits, usage characteristics, etc. � Channel characteristics including trade practices. � Promotion characteristics. � Factors relevant to pricing, laws related to product, price, promotion, distribution, imports etc.

Market Segment Selection � A firm has to make strategic decision about the segment of the foreign market that it should enter. � The segment that a firm may enter depends on a number of factors like the firm related factors, product related factors, and other market factors. � A firm with an innovative product and marketing strength may choose the most lucrative market segments/segments. � Small and new firms often look for niches for an entry in to the market.

Foreign Market Entry and Operations Strategies Exporting Contractual Agreement • Licensing & Franchising. • Strategic Alliance. Indirect Exporting. • Contract Manufacturing. • Internet • Cross marketing • Direct Sales • Contract manufacturing • Management contracting • Direct Exporting. • Counter Trade Production facility in foreign market. • Assembly Operations. • Wholly owned manufacturing facility. • Joint Ventures. • Consortia Mergers and Acquisitions Third Country Location

Entry Strategies Exporting --Historically Most Popular Exporting accounts for some 10% of global activity. 1. Types a. Direct - firm handles all tasks to sell within host country. In direct exporting the organization may use an agent, distributor, or overseas subsidiary, or act via a Government agency. b. Indirect - firm delegates the tasks to an intermediary. � Contracts - in the operating market or worldwide � Commission sales c. The Internet-Initially, Internet marketing focused on domestic sales, however, a surprisingly large number of companies started receiving orders from customers in other countries, resulting in the concept of international Internet marketing (IIM). d. Direct sales-Particularly for high technology and big ticket industrial products.

Exports Advantages a. Minimizes political risk. b. Useful when market potential is hard to assess. c. Offers channel flexibility. d. Prepares firm for greater involvement. e. Offers ease in market withdrawal. Disadvantages a. Exchange rate fluctuations and governmental intervention can affect earnings. b. Lack of market presence can affect response time. c. Loss of marketing control can affect corporate image.

Contractual Agreement � Contractual agreements are long-term, non-equity association between a company and another in a foreign market. � Franchising � Licensing � Cross marketing � Contract manufacturing � Turnkey Contract � Management contracting � Strategic alliance

Contractual Agreement… � Franchising is a form of licensing in which the franchisor provides foreign franchises with a complete package of material & services, including equipment, products, producer ingredients, trademark, trade name rights, managerial advice & a standard operating system. � Franchise agreements require payment of a fee upfront and then a percentage of revenues. � To be successful, the firm must offer unique products or propositions, and a high degree of standardization. � Mc. Donalds, KFC, Nestle & Coca Cola have used licensing as valuable market entry tool

Contractual Agreement…. � Licensing-Under a licensing agreement, one firm permits another to use its intellectual property for compensation designated as royalty. � The property licensed may include: � Patents � Trademarks � Copyrights � Technology � Technical know-how � Specific business skill � Licensor thus gains entry in to another country at little risk & the licensee in turn gains production experience, or a well known product or brand name. � Factors that lead to such arrangement include excessive transportation, government regulations & home production costs. Disney World for example has licensure agreements with many foreign countries

Contractual Arrangements…. � Cross marketing � The parties agree to carry out activities which are complementary and non-competitive. � Contract manufacturing � An arrangement that allows one part to outsourcing product manufacturing to another party while retaining control over research and development. � Turnkey Contract � A Turnkey contract is a business agreement in which a company is given the responsibility of planning and building a product that can generate cash flow for the client upon completion. � Management contracting � A management contract is an arrangement under which operational control of an enterprise is vested by contract in a separate enterprise that performs the necessary managerial functions in return for a fee.

Strategic International Alliances � A strategic international alliance (SIA) is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective � Firms enter SIAs for several reasons: � Opportunities for rapid expansion into new markets � Access to new technology � More efficient production and innovation � Reduced marketing costs � Strategic competitive moves � Access to additional sources of products and capital � Thus SIAs are sought as a way to reduce weaknesses and increase competitive strengths.

Mergers In merger two firms, agree to move ahead and exist as a single new company. Merger can be merger of equals : both companies are of equal sizes. merger of unequal's : large company merge with smaller one Voluntary process : consent of both companies. Name of new merged entity is usually a combination of both parent companies Mergers are mostly financed by a stock swap. Both companies surrender their stocks and stock of the new company is issued as a replacement. Example-Aventis & Sanofi, Hindalco & Novelis

Types of Merger Horizontal merger : When two merging companies are of the same industry and produce similar products. � Example : Footwear Company Merging with Footwear company Vertical merger : When two companies are producing the same goods, but are at different stages, it is a vertical merger. � Example : Footwear Company Merging with Leather Tannery Concentric merger : when two companies are related to each other in terms of customer functions or customer groups. � Example : Footwear Company Merging with another specialty Footwear Company Conglomerate merger : When two companies operate in different industries. � Example : Footwear Company Merging with Pharmaceutical Firms

Acquisition � Acquisition is a deal when one company takes over another company and buyer becomes sole proprietor. � At times takeover occurs when the target company does not want to be purchased. However with better offering of prices shareholder are attracted by acquirer. � In legal terms, the target company ceases to survive. The buyer swallows the company and the buyer's stock continues to be traded. � Unlike mergers which are friendly, acquisitions can be friendly and unfriendly. � Example Ranbaxy & Sun Pharma, Tata Steel and Corus

Why M & A Occur ? � To reduce competition. � To increase growth rate & capture a greater market share � To improve value of organization’s stock. � To acquire a needed resource quickly. � To take advantage of synergy. � To acquire resources to stabilize operations. � To achieve economies of scale.

Disadvantages of M&A � Reduced competition may even facilitate monopolistic or oligopolistic tendencies among firms. � Increase of prices. � Job losses for employees. � Difficulties in cultural integration of the merging firms. � Interest of minority shareholders is not protected.

Production Facility in Foreign Market • • Assembly Operations. Wholly owned manufacturing facility. Joint Ventures. Consortia

Assembly Operations � Assembling is a compromise between exporting and foreign manufacturing. � The firm produces domestically all or most of the components or ingredients of its product and ships them to foreign markets to be put together as a finished product. � By shipping CKD (completely knocked down), the firm is saving on transportation costs and also on custom tariffs which are generally lower on unassembled equipment than on finished products. � Another benefit is the use of local employment which facilitates the integration of the firm in the foreign market. � Notable examples of foreign assembly are the automobile and farm equipment industries. � In similar fashion, Coca-Cola ships its syrup to foreign markets where local bottle plants add the water and the container.

Wholly Owned Manufacturing Facility. � Companies with long term and substantial interest in the foreign market normally establish wholly owned manufacturing facilities there. � A number of factors like trade barriers, difference in the production and other costs encourage the establishment of production facilities in the foreign markets.

Joint Venture � A joint venture involves the participation of two or more companies in an enterprise in which each party contributes assets, has some equity, and shares risk. � Joint ventures are a special case of consolidation where 2 or more companies form a temporary partnership for a special purpose. � Once the purpose is achieved or the project is completed the joint venture is terminated with all profits distributed or losses recovered from its members. � The 3 reasons for establishing a joint venture are: � Government policy or legislation. � One partner’s needs for another partner’s skills. � One partner’s needs for another partner’s attributes or assets. � The key to a joint venture is the sharing of a common business objective. v Tatas, the Birlas, the Kirloskars , the Goenkas, the Oberois have mainly grown in size during the license permit raj through joint ventures of various kinds in India.

Consortia � Consortia are defined as large interlocking relationship, cross holdings and equity stakes between business of an industry � There can be two forms of Consortia. � Multipartner Consortia: There are Multipartner alliances intended to share an underlying technology. Airbus brings together four European aerospace firms from Britain, France, Germany & Spain. A common consortium arrangement binds each firm to certain stipulations. The goal of 20 Air Bus Industries is to dethrone Boeing from its dominant position in global commercial aircraft market. � Cross-Holding Consortia: Two important features of cross holding Consortia are building long term focus and gaining technological critical mass among affiliated member companies. These include Japanese Keiretsus (Sumitomo, Mitsubishi, Mitsui) and Korean Chaebols (Daewoo, Lucky Gold Star, Hyundai, Samsung) � To combat the high costs and risks of research and development, research consortia have emerged in the United States, Japan, and Europe.

Consortia � Consortia are defined as large interlocking relationship, cross holdings and equity stakes between business of an industry � There can be two forms of Consortia. � Multipartner Consortia: There are Multipartner alliances intended to share an underlying technology. Airbus brings together four European aerospace firms from Britain, France, Germany & Spain. A common consortium arrangement binds each firm to certain stipulations. The goal of 20 Air Bus Industries is to dethrone Boeing from its dominant position in global commercial aircraft market. � Cross-Holding Consortia: Two important features of cross holding Consortia are building long term focus and gaining technological critical mass among affiliated member companies. These include Japanese Keiretsus (Sumitomo, Mitsubishi, Mitsui) and Korean Chaebols (Daewoo, Lucky Gold Star, Hyundai, Samsung) � To combat the high costs and risks of research and development, research consortia have emerged in the United States, Japan, and Europe.

Counter Trade • Largest indirect method of exporting is countertrade. • Competitive intensity means more and more investment in marketing. • In this situation the organization may expand operations by operating in markets where competition is less intense but currency based exchange is not possible. • Also, countries may wish to trade in spite of the degree of competition, but currency again is a problem. • Countertrade can also be used to stimulate home industries or where raw materials are in short supply. • It can, also, give a basis for reciprocal trade. • Estimates vary, but countertrade accounts for about 20 -30% of world trade, involving some 90 nations and between US $100 -150 billion in value.

Countertrade • Advantages: • Its main attraction is that it can give a firm a way to finance export when other means are not available. • • • Disadvantages: Variety is low so marketing is limited Difficult to set prices and service quality Inconsistency of delivery and specification, Difficult to revert to currency trading - so quality may decline further and therefore product is harder to market.

Third Country Location • This is sometimes used as an entry strategy. • When there is no commercial transaction between 2 nations because of political reasons, or when direct transactions between 2 nations are difficult & if one nation wants to enter other nation, then the nation will have to operate from the third country base. • It may be helpful to take advantage of the friendly trade relations between the third party & the foreign market concerned. • Sometimes commercial reasons encourage third country location. • Example: Rank Xerox found it convenient to enter USSR through its Indian joint venture Modi Xerox.

Entry Strategy of Indian Firms � India’s economic integration with the rest of the world was very limited because of the restrictive economic policies followed until 1991. Indian firms confined themselves, by and large, to the home market. Foreign investment by Indian firms was very insignificant. � With the new economic policy ushered in 1991, there has, however, been a change. Globalization has in fact become a buzzword with Indian firms now and many are expanding their overseas business by different strategies. � Indian industry can move towards globalization by different strategies such as developing exports foreign investments including joint ventures and acquisitions, strategic alliance, licensing and franchising etc.

Entry Strategy of Indian Firms � Exporting is, by far, the most important entry route employed by Indian firms. � Several Indian companies have entered foreign markets targeting their exports at the ethnic population. West Asia, with a large expatriate Indian population, naturally is the first target in many of these cases. � The Mumbai based American Dry Fruits (ADF) which began selling a range of packaged foods like chutneys, spices, canned vegetables, ready-to -eat pulses etc under different brand names later moved to other countries with large Indian population. � As foreign firms, generally, have neither the expertise nor interest in the ethnic products, Indian firms do not have to face competition from them, making market entry and growth fairly easy. � A firm which makes the ethnic segment of the market its entry point may, in due course, after gaining experience in doing business and establishing a foothold in the foreign market, take up marketing of nonethnic products and to non-ethnic consumers.

Entry Strategy of Indian Firms � Food products are not only category being targeted at ethnic population. Raymonds and Birla-VXL, for example have a number of showrooms in West Asia top sell their range of textiles items. Shaw Wallace launched a beer brand called Lal Toofan in UK through Shaw Wallace Overseas; the target consumers of this brand sold at the up market Indian restaurants are Indians. � A very disquieting fact is that India’s agricultural exports still are mostly commodity exports, i. e. they are exported mostly in bulk form and the progress achieved in value added exports is not anything significant. � Value added exports assume greater significance particularly in view of the stagnation or fall in the exportable surplus of several commodities like pepper, cardamom, Tea, coffee etc.

Deciding On The Market Program: � Marketing Mix � Pricing � Distribution Channel

Marketing Mix � Standardized Marketing Mix: � Selling largely the same products and using the same marketing approaches worldwide. � Adapted Marketing Mix: � Producer adjusts the marketing mix elements to each target market, bearing more costs but hoping for a larger market share and return.

Marketing Mix Adaptation-Five Global Product and Promotion Strategies

Five Global Product and Promotion Strategies � Straight Product Extension: � Marketing a product in a foreign market without any change. � Product Adaptation: � Adapting a product to meet local conditions or wants in foreign markets. � Product Invention: � Creating new products or services foreign markets.

Five Global Product and Promotion Strategies � Communication Adaptation: � Fully adapting an advertising message for local markets. � Austria and Italy regulate TV advertising to children; Saudi Arabia does not want advertisers to use women in ads � Dual Adaptation: � Can use a standardized theme globally, but may have to make adjustments for language or cultural differences. � E. g. Mc. Donalds

Pricing � Companies face many problems in setting their international prices. � Possible approaches include: � Charge a uniform price all around the world. � Charge what consumers in each country will pay. � Use a standard markup of costs everywhere/Cost based Price. � International prices tend to be higher than domestic prices because of price escalation. � Companies may become guilty of dumping –a foreign subsidiary charges less than its costs or less than it charges in its home market. � Twelve European Union countries have adopted the euro as a common currency, creating “pricing transparency” and forcing companies to harmonize their prices throughout

Distribution Channel � Plays a vital role in the reaching of the product � Channel varies from country to country � When Multi Nationals enter a country they prefer to work with local distributors but often face problems � Distribution Strategies � Differences Within Countries • Numbers and types of intermediaries • Size and character of retail units

International Channel Strategies � The purpose of marketing channels is to create utility for customers � Place � Time � Form � Information � Two forms of channel strategy � Direct involvement � Indirect involvement

Global Trends in Channel Design and Strategy � Global Retailing � Today � Future � Direct marketing � Distribution system, where sales to customers are carried out via telephone, mail or door-to-door � One-on-one approach is effective for products which need demonstration or complex explanation � E-commerce and international distribution strategies � Design of appropriate distribution systems � E-tailing & M-commerce � Describes the increasing trend of retail operations globalising via the internet & Mobile Apps. � Presenting and selling a product range over the internet gains increasing importance

Global Trends in Channel Design and Strategy…. � Birds Eye view

Characteristics Impacting on Channel Design and Strategy �Customer characteristics �Customer number, geographic distribution, income, shopping habits, reactions to different selling methods �Product characteristics �Durable, non-durable, service requirements, unit price �Middleman characteristics �Selection and care of distributors and agents �Distributor and agent performance �Rewards or termination �Environmental characteristics �Political, economical, social & technological dimensions

Channel Design Decisions Designing International Distribution Channels � Channel systems can vary from country to country � Global marketers usually adapt their channel strategies to structures that exist within foreign countries � Key challenges: � Global Procurement, logistics and channel selection. � Bureaucracy and regulations in the country � Infrastructure Development in that country � Four Steps: � Analyzing Consumer Needs � Setting Channel Objectives � Identifying Major Alternatives � Evaluating Major Alternatives

Channel Design Decisions-Steps �Step 1: Analyzing Consumer Needs �Finding out what target customers want from the channel �Step 2: Setting Channel Objectives Targeted levels of customer service � Segments to serve � Best channels to pursue � Minimizing the cost of meeting customer service requirements � �Objectives are influenced by: � Nature of company � Intermediaries � Competitors � Environment

Channel Design Decisions �Step 3: Identifying Major Alternatives �Types of intermediaries- channel members available to carry out channel work � Company sales force; manuf. Agency , industrial distributors(different regions ) �Number of marketing intermediaries � Intensive (Candy and toothpaste) � Selective (Television and home appliance) � Exclusive distribution (Luxury automobiles and prestige clothing) �Responsibilities of channel members-Price policies, conditions of sale, territorial rights, services provided by each party. �Step 4: Evaluating Major Alternatives �Economic criteria- Compares likely sales cost and profit of different channel members. �Control issues- channel members control over the marketing of the product �Adaptive criteria- the ability to remain flexible to adapt to environmental changes

Deciding On The Marketing Organization: � Organisation Types � Options Chosen

Organisation Types � Organize an export department � Create international divisions � Geographical organizations � World product groups � International subsidiaries � Become a global organization

Options Chosen � Because organizations need to reflect a wide range of companyspecific characteristics, devising a standard organizational structure is difficult. � 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 � A matrix organization consisting of either of these arrangements with de -centralized sales and marketing run by a centralized functional staff, or a combination of area operations and global product management. � Matrix Structure is a hybrid organization of overlapping responsibilities – it is used by some firms but has generally fallen into disfavor recently

Options Chosen � Most Multinational firms fit into one of three categories of organization control: � � � Centralized Regionalized Decentralized � No single traditional organizational plan is adequate for today’s global enterprise seeking to combine the economies of scale of a global company with the flexibility and marketing knowledge of a local company.

Quote-2 “"The most serious mistakes are not being made as a result of wrong answers. The truly dangerous thing is not asking the right questions. " Dr Ravindra Pratap Gupta

Questions � Q 1. Fill in the blanks � Waterfall Approach – more time to plan, less risk involved. Apple launches across the world. � Sprinkler Approach – first mover advantage, high competitive intensity, more risks. Sprinkler Approach – Microsoft Products � Tariffs are taxes on certain imported products designed to raise revenue or to protect domestic firms � Nontariff barriers include quotas, embargoes, sanctions, levies and other restrictions and are frequently used by large and developed economies. � Quotas are limits on the amount of foreign imports a country will accept in certain product categories to conserve on foreign exchange and protect domestic industry and employment � Exchange controls are a limit on the amount of foreign exchange and the exchange rate against other currencies � The market profile of product is a fairly detailed account of relevant market characteristics. � Contractual agreements are long-term, non-equity association between a company and another in a foreign market.

Questions � Under a licensing agreement, one firm permits another to use its intellectual property for compensation designated as royalty. � Franchising is a form of licensing in which the franchisor provides foreign franchises with a complete package of material & services, including equipment, products, producer ingredients, trademark, trade name rights, managerial advice & a standard operating system. � A Turnkey contract is a business agreement in which a company is given the responsibility of planning and building a product that can generate cash flow for the client upon completion. � Acquisition is a deal when one company takes over another company and buyer becomes sole proprietor. � In Merger two firms, agree to move ahead and exist as a single new company. � A Joint Venture involves the participation of two or more companies in an enterprise in which each party contributes assets, has some equity, and shares risk. � Consortia are defined as large interlocking relationship, cross holdings and equity stakes between business of an industry

Questions � Q 2. Write notes on � International Business Essential Areas � Internationalization Strategies � International Planning Process � Q 3. Discuss the major International Marketing Decisions? � Q 4. Discuss the entry strategy of Indian firms? � Q 5. In regards to international business dicuss � Marketing Mix � Pricing � Distribution Channel

Questions � Q 6. Write notes on � Market Selection Process � determinants of Market Selection � Market Profiling � Market Segment Selection � Market Entry Strategies � Licensing & Franchising � Exporting � Contract Manufacturing � Turnkey contracts � Fully owned manufacturing facilities � assembly operations � Joint Ventures � Third country location � Mergers & Acquisitions Strategic Alliances Counter Trade?

Thanks