Example Of Responding Appropriately To Shifts In Power Relationships. Research Paper
International and global marketing
Today’s global and international marketers are faced with many challenges and opportunities presented by the current global marketing environment, which require careful consideration and planning. Critically evaluate a specific contemporary marketing issue of your choice, discussing how today’s global & international marketers address the associated marketing related opportunities and challenges it presents. Apply your answer to relevant examples from the international/global marketing environment.
The world market is becoming more dynamic as years pass by; it is evident that powerful forces are changing methods of doing business and drastically transforming the global market. The ever rising movements of goods, business people and organizations across the boarders have caused the emergence of world market segments, and the global growth of integrated businesses (Bettis et al, 1995). The technological advancement in information and communication systems have incredibly reduced distances across the world, and greatly linked markets by way of flow of ideas and information across the world markets. The developments have ensured facilitation of accelerated demand to respond appropriately to the dynamic competition and management of the business operations on the world scale. Organizations and firms have been forced to redesign and adapt to strategies for responding to the world forces so that they can keep strong momentum into their future accelerated growth, and cope appropriately with competitor and market dynamics. Major entry modes are found in the product industry. These include exporting, licensing/franchising, full ownership and joint ventures. The mode of exporting entails a company selling its physical products which are usually manufactured outside the intended country to a foreign country (Tallman, & Shenkar, 2004). On the other hand, licensing and franchising entails an arrangement where technology or some information systems are transferred to the host party (Shane, 2004). Joint venture is an arrangement where the firm is required to share the equity and control with the host. There is another alternative to this, called full ownership where the parent company takes 100 percent equity stake in the operation in the foreign country. It can take two forms: one is acquiring the existing business and secondly is bringing in new facilities to the company. In evaluating the entry mode that a firm should take, there are options that should be considered. One is the level of control that the firm will have in the overall operation. Control is the ability to influence systems, methods and decisions.
In-depth researches that have been conducted with respect to the global markets show that there are dramatic changes in the market and are opening up new challenges and opportunities. In addition, the market changes as causing new methods of operating markets , and thus have great impact on the way organizational and firm managers, and leadership approach marketing strategic developments. Indeed, the current world market dynamic changes invite adoption of radical new perspectives on strategic development, highly competitive and technologically advanced marketing techniques. Hence, organizations and firms have to first establish appropriately the country markets they plan to involve themselves before they venture, and also adjust suitably to the tactics of the local markets. Joint venture is an arrangement where the firm is required to share the equity and control with the host. There is another alternative to this, called full ownership where the parent company takes 100 percent equity stake in the operation in the foreign country. It can take two forms: one is acquiring the existing business and secondly is bringing in new facilities to the company. In evaluating the entry mode that a firm should take, there are options that should be considered. One is the level of control that the firm will have in the overall operation. Control is the ability to influence systems, methods and decisions (Anderson, & Gatigno, 2006). In a general note, when a firm moves from licensing/franchising to joint venture to full ownership, the level of control increase. The most important areas in which marketing managers must focus in order to meet the emerging challenges in the world markets are;
Creating a policy for global branding.
Focusing beyond countries during strategic planning.
Determining effective transfer of experiences and capabilities.
Focusing afar from marketing strategy.
Responding appropriately to shifts in power relationships
Organizations are faced with difficulty of the changing channels of distribution during the development of world brands and formulation of marketing strategy. It is notable that the main change is the shift in power balance from the manufactures to the retailers. Across the industries, from pharmaceuticals to consumer packed goods, there is significant increase of the levels of retails which implies that there is substantial loss of power by the manufacturer. Furthermore, it lucid that, retailers are increasing accessing the international market, hence the manufacturers of goods are challenged to identify suitable ways of outwitting the retailers in marketing strategies. However, countering retailers as they expand their activities and business operations across the borders of the nations, it becomes complicated and manufacturers would only have to build viable relationships to retain their market control. Technology has been the main tool building linkages with the spread customers; hence distance is no longer a barrier to resellers, because they incorporate technology in their calculated strategies. Thus, manufactures have to inevitably build productive networks with the resellers for better market performance.
Creating a policy for global branding
Organizations that are first venturing into the global market require crafting global marketing strategy based on the international brand architecture and their administrative heritage, and organizational structure. Organizations will require maintaining consistency for a strong brand positioning so that they can evade dilution of their brands. In fact, the issue of world branding and how the organizations and firms respond to branding is a lynchpin of the marketing strategy. Therefore, world organizations such as Nestle’ have established formidable global branding tree which consist of four levels for better penetration of global markets (Parsons, 1996).
Focusing beyond countries during strategic planning
Businesses require organizing and planning operations with the view of adopting wider perspective of the ways that do not put a country as an appropriate unit for planning strategy, but transcends beyond countries as a planning strategic units.
Determining effective transfer of experiences and capabilities
Market integration is important just as the extent to which an organization leverages capabilities, skills or experiences developed for a specific market into other markets in ensuring that, a business gains strong entry into the global markets. For instance, McDonald utilized knowledge and expertise developed in Brazil for managing pricing within an inflationary business environment to improve sourcing strategies and pricing for its business operations in Moscow.
Focusing afar from marketing strategy
Organizations and firms need to widen their scope pertaining marketing strategy. This is because international marketing strategy consists of outward appearance of the marketing mix and factors embedded in the organization, and in its environment.
It is correct to imply that in the current dynamic world market organizations are facing inevitable challenges of highly competitive and technologically sophisticated environment. The challenges are becoming increasingly daunting in the turbulent nature of the world market. Hence, as it can be practically observed in the current world market, rapid technological progress is the main factor changing the structure of the industry activities in world. Principally, technological advancement has come with opportunities and challenges. It can be seen that organizations that have high utilization of research and development are growing and establishing themselves solidly in the world market. Thus, technological rigorous industrial activities are offering more advantages to organizations that have adopted more advanced technological mechanisms of responding to changes in the markets. For example, in the year 2000, organizations from the most developed countries were rated to be the leading exporters based on the resource-based manufactures according to the article “New Dynamics of World Markets.”
Technological advancement has really revolutionized industries, and it is notable that industrial competitiveness has become rapid. Hence, technological change falling transport and communication costs, changing patterns of demand and liberalization of policy which are associated with advanced technology are changing the structure of trade and production.
Identify and critically appraise two different market entry strategies, critically analyzing the factors which influenced the choice of each method. You must use relevant practical examples of organizations to support your answer.
When firms and organizations decide to venture into global market, normally they explore a number of options. The options may vary with the magnitude, risk and cost of control that can be used on them. The entry strategy normally considered to be the simplest form is the exporting by either direct or indirect method e.g. using gents in the case of direct exporting or countertrade in the case of indirect exporting. Often, very complex forms may require global operations that are involved export processing zones or joint ventures (Douglas, 1986). When a firm or organization has made a decision over a certain form of entry strategy, the next thing is to ensure that decisions are made on the specific channels.
The main entry methods I will be discussing are the franchising and licensing. Always remarkable investments in business are required in addition to ensuring detailed marketing strategy.
This is an entry method into the global market which has mainly been utilized in developed markets in Western Europe and North America, especially by consumer service companies and fast food chains. McDonald’s is one example of enterprises that has greatly applied franchising across different markets of countries. This type of entry mode is normally affected by the local service personal in a particular country, and hence its big disadvantage is that it may be tasking to adopt franchised brand to local markets.
This entry method has been quite synonymous with companies that have legally and distinctive protected assets that are important elements of differentiation in marketing. Disney is one notable company that has capitalized on licensing, and has ensured licensing of its characters to marketers and manufacturers in specific categories such as toys. The most profound effect of licensing is that it runs a great risk of creating local competitors in future.
Both licensing and franchising entry modes are the most adopted across the globe, however, they are less common since they involve complex and organizational contracts processes of managerial. Rugman and Verbeke (2003) attribute the role of MNC as an “international intelligence systems for the gaining of knowledge that are relevant to R&D and for the exploitation of knowledge that is available for use in from R&D”. It is also worth noting that these researchers stress the need for R&D to be decentralized and located as close as possible to sources of new information, especially research institutions and also debugging of new products. They also stress the point that it should adapt to the new market conditions which require proximate contacts with markers and production people.
Dunning (1988) notes that there are three main types of international production are market seeking, resource seeking and efficiency seeking. Market seeking can be made use of in the host country so that one can gain access to some specific market whereas resource seeking motivation for FDI will take into consideration the size of the market. Efficiency seeking on the other hand will consider the economies of scale, risk reduction through product diversification and taxation. There is also one addition by Dunning (1988) which is strategic asset seeking. This is a motivation for sequential FDI. The main aim of strategic asset seeking is for the investing organization to gain resources which will enhance the capabilities of the investor thus giving it advantages.
Although the OLI model has gained international adoption, there are critiques which have been raised concerning the model. Itaki (1991) argues that it is baseless to stress ownership advantages as this is taken care of by the theory of internationalization.
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