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CHAPTER 8
Global Market Participation
CHAPTER OUTLINE
LII. Internationalizing Marketing Operations
A. Opportunistic Expansion
B. Pursuing Potential and Diversifying Risk
C. Exploiting Different Market Growth Rates
LIV. Geographic Market Choices
A. Targeting Developed Economies
B. Targeting Developing Markets and Emerging Markets
C. Targeting BRIC and Beyond
LV. Country Selection
A. The Screening Process
B. Criteria for Selecting Target Countries
LVI. Re-entry
LVIIIII. Conclusion
CHAPTER OBJECTIVES
At the end of this chapter, students should be able to do the following:
List and describe five reasons why firms internationalize.
Differentiate between born-global firms and other companies.
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Explain the difference between a standalone attractive market and a globally strategic
one.
Explain why market exitand possibly reentrystrategies might be necessary.
QUESTIONS FOR DISCUSSION
1. Why might a firm in packaged goods choose to enter a globally strategic market rather
than a market that is more standalone attractive? In what way would your answer
differ for a firm manufacturing and marketing medical diagnostic equipment?
Packaged-foods firms may be attracted to must-win markets that show potential for major
2. What advantages might a Korean-based company such as Hyundai have entering
markets in developing countries?
Hyundai is based in a newly industrialized country that could be classified as a developing
country a short time ago. Corporate management may understand doing business in less
similarities. Collectivism is also more prevalent in developing countries.
3. Discuss the pros and cons of targeting Eastern Europe and Russia by packaged-goods
manufacturers.
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Pros:
New markets;
Long-term potential;
4. What could be the advantages and disadvantages of being a born-global firm?
5. Unlike firms early in their internationalization, MNCs do not appear to favor entering
new markets that are similar to their home markets over entering those that are
dissimilar. Why do you think that is?
Suggestions might include:
MNCs eventually run out of new markets that are similar to their home markets.
6. If a company exits a market and then wishes to return 10 years later, what peculiar
challenges might it face?
If reentering via a license, franchise, or joint venture, licensees, franchisees, or joint venture
partners may question the investors commitment to the market. They may strive to acquire
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CASE 8.1: INDIAN FOOD GOES GLOBAL
A foods company in South India is discussing going abroad for the first time. Where should it go
first? What global strategy should it adopt?
DISCUSSION QUESTIONS
1. What are SIFL’s motivations for expanding abroad?
Good follow-up questions could be: Why do you think SIFL is considering foreign markets
when it currently markets only in South India? Why isn’t it considering further expansion
within India? The likely answer to this is that North Indian cuisine could be very different
2. What are the advantages of targeting Indian populations residing in foreign countries?
What problems might arise?
Advantages:
As we saw in Chapter 6, an extension strategy (moving abroad to markets with similar
tastes) can be successful for a firm from an emerging market when they are in an
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3. What are the pros and cons of entering the United States first? The United Kingdom?
Neighboring Asian markets?
U.S. market
This is a large market with a large Indian population. Locals like the product also. But
the market is geographically far away, and the Indian population may be dispersed.
4. Is there any advantage or disadvantage to this product being “Made in India”?
Many products would face a stigma being made in a developing country. However, this
product is likely an exception to the rule, similar to Persian carpets. Because it is especially
associated with its region, being Made in India augments its authenticity. This then begs the
question as to mode of entry into overseas markets (a preview to Chapter 9.) You could ask at
this point: But Dinakar thinks that producing the product in the U.K. or the U.S. would be
a better choice than exporting to these markets. What would be the advantages and
disadvantages of producing in these markets? Suggestions might include:
Advantages:
Disadvantages:
5. SIFL will face competitors such as Kraft in the United States. What overall posture
should SIFL adopt in relation to these strong competitors—attack, avoid, or cooperate?
How might U.S. competitors respond to SIFL’s entry into the market?
SIFLs product is unlikely to require an attack on U.S. competition in this niche market. In
any case, SIFL already shies away from attacking even local competition in South India.
primary market to grow. If SIFL is well established, it could ride the wave.
6. To investigate the competitive environment for these products in your country, visit a
local grocery store or supermarket. What Indian foods or food products are sold there?
Do they appear to be targeted at ethnic communities or at a wider segment? What firms
make these products? What insights could your visit give SIFL?
This could be an interesting out-of-class exercise. (I have seen Indian frozen foods come and
CASE 8.2: TARGETING EMERGING MARKETS
This case sets the stage for a discussion of the pros and cons of targeting emerging markets.
DISCUSSION QUESTIONS
1. Why do companies such as P&G target emerging markets? Do you agree with this
strategy?
By ignoring emerging markets, companies are dismissing over five out of six potential
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2. What are the dangers to Gillette of targeting emerging markets?
These markets can be volatile economies.
Currencies are more likely to devalue significantly (e.g., Russia).
3. What advice would you give P&G for engaging competitor Unilever? What advice
would you give Unilever?
Both firms appear to be very serious about emerging markets. As global competitors
they should carefully monitor each other.
To sum up:
Companies need global balance. This means a presence in developed economies but
increasingly in important emerging markets as well. In the 1980s most global firms
CASE 8.3: THE GLOBAL BABY BUST
When I was in college, the world feared overpopulation. What a change in one generation: Now we
are going to run out of people! And as we do, populations are aging across the world. This is not
just a problem for developed countries. It is a major threat to the future well-being of developing
countries as well. This case allows students to ponder how this mega-trend will affect global
marketing in their lifetimes.
DISCUSSION QUESTIONS
1. What are the implications of the global baby bust for marketers of consumer goods?
Students may simply say that marketers of products aimed at the young are in a bad way and
those with products aimed at the elderly are in good shape. But press them to go further:
Ask students what suggestions they would have for Japanese auto makers Honda and Toyota?
In fact, here are ways those two companies have addressed Japan’s baby bust:
Honda has developed an Accord for dog owners. Pet ownership has soared in
2. What are the implications of the global baby bust for marketers who sell to
governments?
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Aging populations will put a strain on government coffers and force governments to cut back
3. Why do you think entrepreneurship in a nation declines as its population ages? How
could this impact global marketing?
Older people are less likely to take risks both career-wise and financially. Other things being
4. How does the global baby bust affect the relative attractiveness of different national
markets?
Students should be encouraged to look at Table 1 to help answer this question. Many
industries depend on population growth for at least some of their sales growth. In this respect,