Chapter 8

Report
The International Marketing Plan
and Entry Mode Selection
Dana-Nicoleta Lascu
Chapter 8
Copyright Atomic Dog Publishing, 2002
Chapter Objectives
• Develop a general understanding of international
marketing strategies at the different levels of the
international organization and provide insights into the
international marketing planning process of selected
companies
• Offer an understanding of company entry mode
selection and the risks involved at each level
• Describe different types of strategic alliances involving
international companies
Copyright Atomic Dog Publishing, 2002
Developing an International
Marketing Strategy
Developing and maintaining a
strategic fit between international
company objectives,
competencies and resources,
and the challenges presented by
its international markets.
Copyright Atomic Dog Publishing, 2002
Levels of Strategic Planning
Corporate
Division
Business Unit
Product Level
Copyright Atomic Dog Publishing, 2002
Levels of Strategic Planning,
continued
Corporate
• Strategic plan allocates resources and establishes
objectives for the whole enterprise worldwide
• Has long-term focus
• Involves the highest levels of management
• Involves international target market selection
Copyright Atomic Dog Publishing, 2002
Levels of Strategic Planning,
continued
Division
• Strategic plan allocates resources to each business
unit based on division goals and objectives
• Portfolio analysis is used to decide which brands to
harvest, invest in, or divest
• Has longer-term focus
Copyright Atomic Dog Publishing, 2002
Levels of Strategic Planning,
continued
Business Unit
• Planning involves decisions on which consumer
segments to target in each country and how to
target them
Copyright Atomic Dog Publishing, 2002
Levels of Strategic Planning,
continued
Product Level
• A marketing plan is developed at product level,
product line level, or at brand level
• Has shorter-term focus
• Involves the marketing department
Copyright Atomic Dog Publishing, 2002
Developing the International
Marketing Plan
• Develop strategies for the target market




Product mix
Distribution
Promotion mix
Pricing
• Plan international marketing programs
• Manage the international marketing effort:



Organize
Implement
Control
Copyright Atomic Dog Publishing, 2002
Deciding on the International
Entry Mode
• Indirect Exporting



Company uses home country intermediaries, who in turn sell
product overseas
Lowest risk, lowest control
Companies can use cooperative exporting, also known as
piggybacking and mother-henning
- Involves using the distribution system of exporters with
established systems for selling abroad who agree to handle the
export function of a non-competing company on a contractual
basis
• Direct Exporting

Own in-house exporting department handles the exporting
function
Copyright Atomic Dog Publishing, 2002
Selecting the International
Entry Mode, continued
• Licensing

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

Licensor offers know-how, shares technology, and shares
brand name with licensee
Licensee pays royalties
Lower-risk entry mode; limits exposure to economic,
financial, and political instability
Permits the company access to markets that may be closed
or that may have high entry barriers
DOWNSIDE: Can produce competitor in the licensee
Copyright Atomic Dog Publishing, 2002
Selecting the International
Entry Mode, continued
• Franchising

Franchisor gives franchisee right to use brand name,
trademarks and business know-how
Less risk, higher level of control
Very rapid market penetration
DOWNSIDE: Can create future competitors who understand
the operations of the franchise
Copyright Atomic Dog Publishing, 2002
Selecting the International
Entry Mode, continued
• Joint Venture

Preferred entry mode of governments of developing countries
- Help develop local expertise
- If production is exported, helps with country’s balance
of trade



Foreign company and local company establish a jointlyowned new company
Parties share capital, equity, labor
70% of all joint ventures break up within 3.5 years
DOWNSIDE: Joint-venture partners can turn into viable
competitors; and 70% of all joint ventures break up
within 3.5 years.
Copyright Atomic Dog Publishing, 2002
Selecting the International
Entry Mode, continued
• Consortia

Involve three or more companies
Monopoly effect

Allowed

- where expensive R&D is involved
- in underserved markets
- in markets where the government and/or the
marketplace can control its activity
Copyright Atomic Dog Publishing, 2002
Selecting the International
Entry Mode, continued
• Wholly Owned Subsidiaries





Can be developed by the company –
greenfielding – or can be purchased (acquisition
or merger)
Involve long-term market commitment
High cost
High control of operations
Greatest level of risk
Copyright Atomic Dog Publishing, 2002
Selecting the International
Entry Mode, continued
• Branch Offices


Entities are part of the international company, rather
than a new company (as in the case of the subsidiary)
Involves substantial investment
sales office
showroom


Engages in a full spectrum of marketing activity
High level of control
Copyright Atomic Dog Publishing, 2002
International Strategic Alliances
• Typically, the term refers to nonequity alliances;
for example:
• Manufacturing

Contract manufacturing, engineering, technological, and
research and development alliances
• Marketing

One firm handles marketing for another, or some aspect of the
marketing process
• Distribution

One firm handles the distribution for another, or some aspect of
the distribution process
Copyright Atomic Dog Publishing, 2002
Chapter Summary
• Addressed marketing strategies involved at
different levels of the international organization
• Provided insights into the international marketing
planning process
• Offered an understanding of company entry mode
selection decision and the risks and control level
associated with each level
• Described different types of entry modes and the
risks and control level associated with each
Copyright Atomic Dog Publishing, 2002

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