Chapter 13 - Global Marketing
Sales promotion can be used as a strategy for bypassing restrictions on advertising placed by
some foreign governments.
V. Entry and Growth Strategies for Global Marketing
A major decision facing companies that desire either to enter a foreign market or pursue growth
within a specific market relates to the choice of entry or growth strategy.
A company can decide to:
omake minimal investments of funds and resources by limiting its efforts to exporting
omake large initial investments of resources and management effort to try to establish a
long-term share of global markets, or
otake an incremental approach whereby the company starts with a low-risk mode of entry that
requires the least financial and other resource commitment and gradually increases its
commitment over time.
All three approaches can be profitable.
A company can initially enter a global market and, subsequently, pursue growth in the global
marketplace in six ways:
oExporting—occurs when a company produces the product outside the final destination and
then ships it there for sale. Exporting has two distinct advantages: first, it avoids the cost of
establishing manufacturing operations in the host country, and second, it may help a firm
achieve experience-curve and location economies.
oLicensing—companies can grant patent rights, trademark rights, and the rights to use
technological processes to foreign companies. The major disadvantages are:
The firm does not have tight control over manufacturing, marketing, and strategy that
is required for realizing economies of scale
There is the risk that foreign companies may capitalize on the licensed technology
oFranchising—franchising is similar to licensing but tends to involve longer-term
commitments. In a franchising agreement, the franchisor sells limited rights to use its brand
name in return for a lump sum and a share of the franchisee’s future profit.
oJoint ventures—a company may decide to share management with one or more collaborating
foreign firms. Joint ventures are especially popular in industries that call for large
investments, such as natural gas exploration and automobile manufacturing.
oStrategic alliances—they are considered distinct for two reasons:
First, strategic alliances are normally partnerships that two or more firms enter into to
gain a competitive advantage on a worldwide versus local basis.
Second, strategic alliances are usually of a much longer term nature than are joint
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