International Marketing

Strategy development and implementation

Carl Arthur Solberg

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351732895
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Expanding an organisation internationally presents both opportunities and challenges as marketing departments seek to understand different buying behaviours, power relations, preferences, loyalties and norms. International Marketing offers a uniquely adaptable strategy framework for firms of all sizes that are looking to internationalise their business, using Carl Arthur Solberg's tried and tested Nine Strategic Windows model.

Compact and readable, this practical text offers the reader insights into:

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• The globalisation phenomenon

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• Partner relations

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• And Strategic positioning in international markets.

Solberg has also created a brand new companion website for the text, replete with additional materials and instructor resources. This functional study, complete with case studies that demonstrate how the theory translates to practice, is an ideal introduction to international marketing for advanced undergraduates and postgraduates in business and management. It also offers a pragmatic toolkit for managers and marketers that are seeking to expand their business into new territories.

1 Introduction

 

 

 

 

 

Although marketing – in principle – is the same in the domestic market as abroad, a number of differences exist, concerning both substance and practical tasks. Perhaps most conspicuously the external market environment is often dramatically different. Market conditions in the home market are normally fairly well understood by management; abroad everything is new and needs to be learned and comprehended. Distances are normally greater – both geographic and cultural. For most firms in small countries, both markets and market players – competitors, distribution channels and customers – are bigger. And, if they are not bigger than what is encountered in the home market, they are most likely different, concerning buyer behaviour, power relations, preferences, loyalties, norms, etc. For management, this implies greater information requirements and therefore higher risks than at home. For instance, it is normally more difficult to anticipate market demand, price development, competitive action, regulatory changes, etc. Of course, a firm well-entrenched in international markets has (or should have) a market intelligence system that would easily capture these aspects, both at home and abroad. However, not all firms are in that position – a fact that gives them a disadvantage when competing abroad.

These factors in themselves do not justify a text in international marketing. It suffices to describe the market conditions and let the firms involved draw their own conclusions. However, these market conditions have obvious consequences for strategy. The field of international marketing is therefore as much a study of strategy in international business environments as a study of this environment itself. Furthermore, some of the strategies carried out in international markets are often less relevant at home, even though they could theoretically be applied there. This is, for instance, true for entry modes such as licensing, management contracts and joint ventures that are more often used in an international setting than in the domestic market.

Such strategies are developed in the intersection between, on one hand, opportunities and threats in the international market place and, on the other hand, the resources and competencies inside the firm. The present text therefore gives an overview of the international business environment in view of the firm’s international market involvement, before discussing how internal resources and competencies give management room for manoeuvre.

Since the late 1970s we have witnessed a gradually increasing trend towards a more interconnected world, where market demands in many sectors slowly converge and trade and transport barriers decrease. This led Levitt (1983) to claim that only those firms that take advantage of the subsequent increased market volumes by effectively exploiting economies of scale through standardisation will be the market winners. Markets will – according to Levitt – eventually be dominated by large, global firms that outcompete smaller ones; market players’ actions will not only affect local market conditions but also indeed have ramifications beyond their own key markets (Hamel and Prahalad 1985). However, not all industries or all markets are equally affected by this development and, even though the main trend has been towards a more integrated business world, the development may also go in the other direction; de-globalisation is indeed a possible scenario in certain industries. Firms – small and large – therefore need to analyse potential consequences for their own development.

For this purpose, a great part of this book is structured around what we may term an international SWOT¹ analysis as shown in Figure 1.1. This figure shows a model where internal and external factors individually and in interaction impact on the development of the firm’s international marketing strategy. The model is a 3×3 matrix, called the “Nine Strategic Windows” (Solberg 1997), because each cell in the matrix indicates a main strategic avenue for the firm in its pursuit of opportunities in international markets. The external (horizontal) axis is named “Industry globality” which denotes the extent to which firms in the industry operate on a global scale, or are more concentrated in their home markets. The internal (vertical) axis is called “Preparedness for internationalisation” and classifies the firm according to its resources and competencies.

One may say that on the left-hand side of the model, there are few signs of globalisation having any impact on the competition or the industry structure. On the right-hand side, globalisation drivers are strongly felt and constitute both threats and opportunities. In many ways, the model implies some kind of preparation for a more globalised industry, often with global market players that dominate the industry, the smaller firms adapting their strategies to their resources and competencies and usually occupying specialised segments in the market. As will be shown later, different industries are unevenly affected by this trend. The strategic response of firms that are less affected should therefore be quite different from that of those highly affected. The terms used to describe the individual “windows” indicate a main direction for the firm’s strategic development. This will be further discussed in Chapter 4.

The model also suggests that firms should take into account their position in the matrix when developing and implementing strategies at the lower level – such as marketing strategies – and accordingly adapt their organisation. When treating the different elements of the international marketing strategy, such as market selection, market portfolio and marketing mix (Part II of the book), and strategy implementation (Part III), we therefore bring up the model again – in a simplified version (2×2) – in order to discuss in somewhat more detail how the firm’s position affects its strategic choices.

Figure 1.1 The Nine Strategic Windows.

Source: Solberg (1997)

The book is divided into three parts, where Part I, Developing strategic thrust in a globalising world (Chapters 2–4), discusses the factors driving the development towards a more integrated and globalised business environment, and those that counteract this (Chapter 2). Chapter 3 explores the firm’s internal resources and capabilities by way of describing the internationalisation process of firms – including that of Born Globals – and by way of analysing what distinguishes successful players in international markets from those that are less successful. Chapter 4 combines these two elements (the external business environment and internal resources and competencies) in the “Nine Strategic Windows” model to discuss strategic consequences for the firm.

Part II of the book (Chapters 5–12), Decisions in international marketing, starts with a discussion of the need for information and how to get hold of the necessary level of information to make the decisions (Chapter 5). Chapter 6 delves more substantially into the market selection/portfolio in international markets. The issues of entry modes are discussed in Chapter 7, whereas those of choosing and relating to business partners in different cultures are considered in Chapter 8. One of the main issues in international marketing is that of standardisation of the marketing mix. Chapter 9 is devoted to this discussion, before a look at each of the marketing mix elements – product, promotion and pricing (Chapters 10–12). The fourth marketing mix component, distribution, is indirectly treated in Chapter 7, Operation modes.

Part III is devoted to planning and controlling (Chapter 13) and organisation (Chapter 14) of the international marketing effort. Figure 1.2 portrays the structure of the book.

Figure 1.2 The plan of the book.

Note

1SWOT – Strengths, Weaknesses, Opportunities and Threats – is ascribed to Albert Humphrey at Stanford Research Institute in the 1960s. The objective of this analysis is to identify strategic avenues and actions for the firm, given its strengths and weaknesses. SWOT analysis is described in most textbooks on strategy and marketing.

Part I
Developing strategic thrust in a globalising world

Globalisation has been the buzzword in the business community over the past 40 years. At the end of a volatile period in the 1970s – with the demise of the dollar exchange standard, the end of the Vietnam war, the dialogue between the US and China, the fall of President Richard Nixon, the first oil crisis with ensuing stagflation¹ across the world, labour unrest in Europe, and the Iranian revolution – the world was looking for new solutions. And indeed they came. Late in the 1970s and on into the 1980s, the British Prime Minister, Margaret Thatcher, had won the elections, and set out to liberalise the UK economy. President Ronald Reagan in the US had much the same agenda, and – in addition – initiated negotiations with the Soviet Union to downsize and control the devastating nuclear arsenal in both countries. The glasnost and perestroika initiated by the General Secretary of the communist party in the USSR, Mikhail Gorbachev, augured a new era in the relationship between the East and West. In China, Deng Xiaoping started what we may term the communist liberal capitalism that spurred the dormant giant to become the world’s leading economy. Japan became the wonder-boy of manufacturing and logistics and its large keiretsus conquered the world automobile and electronics markets. The Uruguay round of trade liberalisation under the auspices of the General Agreements on Tariffs and Trade (GATT) was initiated and, concurrently, the European Economic Community (EEC) became the European Union (EU) with new members and resulted in the Single Market in 1992/1993. In South East Asia the new “economic tigers” (Singapore, Taiwan, Malaysia, South Korea) became the darlings of multinationals in quest of new economic opportunities.

Optimism was in the air, and large and small firms joined the bandwagon of a forceful internationalisation process that has yet to come to an end. After a euphoric 20 years – not without bumps and shocks – the dot.com bubble burst in 2002, and later – in 2008 – the financial crisis, with the downfall of Lehman Brothers, became a fact. Yet, multinational companies have thrived during all these decades, partly because of a fostering political framework and partly because of technolog...