International Marketing is an ‘umbrella’ subject. By this, I mean that international marketing is capable of touching upon a wide variety of topics in business. Not all of these topics can be examined in-depth, as we are forced to make choices, and focus only on those areas of research which have the most immediate practical applicability.
We’d like to structure the content in this section of our blog as if it was a consulting service provided to an entrepreneur or to the owner of an established business in order to assist him\her in understanding the ‘untapped value’ residing within the international expansion.
For as much as definitions matter, Globalisation is defined as ‘the growing interdependence of national economies’ – involving primarily customers, producers, suppliers and governments in different markets.
As discussed by John Naisbit (1994) in the book ‘The Global Paradox’, the more and more open the world economy becomes, the more small and mid-sized companies will dominate. We have moved from the concept of ‘economy of scale’ towards a completely different perspective whereby ‘bigger’ is often synonymous with inefficient. The success of the internationalization process will depend entirely on the success of the international marketing strategy, designed by SMEs and LSEs and will need to compensate for the incredibly expensive effort of time, money, and HR-focus which the implementation of an international strategy requires.
Our content, therefore, reflects the essential importance of the marketing plan formation, by addressing the five stages or decisional points which a company needs to address in order to maximize, the chances of success.
In this post, we are going to address the following topics:
When it comes to international marketing, it is possible to compare and contrast the differences between LSEs and SMEs when it comes to 7 different items.
What we can take home from this comparison is that:
In general, we can see that there despite a company’s best efforts to devise a highly focused, precise and coherent strategy, the development of international marketing plans needs to always account for factors of unpredictability. In the case of LSEs, the ‘planned’ strategies and the ‘incremental change’ approach will be based on a series of steps of goal setting, analysis, evaluation, selection and planning of implementation, to obtain long-term gains. This, however, can lead to a strategic ‘drift’ when the changes made to adapt to a shifting environment, are unable to follow the long-term direction initially conceived by the company.
In an SME instead, the strategic result is much more based on chance, as the end, the strategic result will be a mixture between the intended strategy and the emergent strategy.
However, SMEs have an ‘ace up their sleeve’ due to the fact that entrepreneurial decision-making can provide opportunities for more drastic changes. Decision making, therefore reflects an entrepreneur’s aptitude for change, resulting in a much wider ‘cone’ of possible outcomes.
LSEs will also be able to draw advantage from Economies of Scale, whereby accumulated volume in production will result in ‘experience curve effects’ increasing efficiency in production, marketing, etc. This will practically result in:
Economies of Scope instead relate to a company’s ability to reuse a resource from one business\country in additional businesses\countries. The challenge lies in a firm’s responsiveness to managing the tension between centralized coordination and local autonomy.
So far we’ve looked towards ‘internal factors’ that should be assessed in order to understand the company’s viewpoint towards internationalization. However, it’s important to consider that external factors are just as important. This is why we look at two elements:
The overlap between these 2 factors creates ‘Nine Strategic Windows’ for decision-making.
Let’s focus for a minute on this element of cultural preparedness. The importance of personal characteristics in this context cannot be understated. A businesses’ outlook on international opportunities is highly dependant on a person’s ideas and vision. This is described by the ERPG Framework.
These approaches, therefore, emphasize the distance between adaptation and standardization. This distance and contrast is at the heart of the definition of global marketing. ‘Global Marketing is defined as the firm’s commitment to coordinate its marketing activities across national boundaries in order to find and satisfy global customer needs better than the competition.’
A company, therefore, needs to:
Glocalisation, therefore as presented in Figure 1.7 is the perfect ‘ideal balance’ between two opposing tensions where we have 6 distinct benefits:
One of the key ingredients in creating a successful international marketing strategy is knowledge management. This is defined as the continuous learning from experiences, whereby what is learned in one county is immediately implemented in all locations. Think about this as a company that is able to constantly go through software updates, always perfecting processes, strategies and grounding its decision-making process on higher-quality information. A graph of this process is illustrated in 1.8.
To see how practically a company addresses the constant tension between standardization and adaptation, we can look at Persil, who kept the product the same but changed the communication strategy.
Now we can better understand the claim presented at the beginning of this lesson. How is it that both LSEs and SMEs are drawn closer to each other when designing their international strategy? As shown in Figure 1.9 LSEs are reacting to a strong increase in the demands of the global consumer, asking for a much higher degree of market responsiveness. At the same time, SMEs have to react against the presence of many distinct forces of global integration that may lead them out of business unless they are able to stand up to the challenge of competing with the “giants”.
SMEs, therefore, address many more challenges due to new forces of ‘global coordination’ such as:
LSEs on their end face forces of ‘market responsiveness’
These forces, therefore, create a byproduct which is deglobalization, the idea of moving away from globalization forces and considering each market unique with its own set of economy, culture, and religion.
As discussed in this post, both SMEs and MNEs need to approach international marketing strategy fully aware of the challenges that international competition presents. Both types of companies need to be aware of the benefits and limitations that each company size, structure, and goals bring to the full picture.
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