BBE2313 • FUNDAMENTAL OF ENTREPRENUERSHIP
CHAPTER 7
Global Marketing Strategies
Objectives
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At the end of lecture students should be able to:
– Explain why "going global" has become an integral
part of many small companies’ strategies.
– Describe the eight principal strategies small
businesses can use to go global.
– Explain how to build a successful export program.
– Discuss the major barriers to international trade and
their impact on the global economy.
– Describe the trade agreements that will have the
greatest influence on foreign trade.
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Topics Covered
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Why going global?
Strategies for going global
International trade
Barrier in international trade
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Why “Go Global?”
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Offset sales declines in the domestic market
Increase sales and profits
Extend products’ life cycles
Lower manufacturing costs
Improve competitive position
Raise quality levels
Become more customer-oriented
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Questions to Consider
Before Going Global
1. Is there a profitable market in which our
company has the potential to be successful
over the long run? (see Table 12.1)
2. Do we have and are we willing to commit
adequate resources of time, people, and capital
to a global campaign?
3. Are domestic pressures forcing our company to
consider global opportunities?
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Questions to Consider
Before Going Global
4. Do we understand the cultural differences,
history, economics, values, opportunities, and
risks of conducting business in the country we
are considering?
5. Is there a viable exit strategy for our company
if conditions change or the new venture does
not succeed?
6. Can we afford not to go global?
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Eight Strategies for Pursuing Global
Markets
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Strategies For "Going
Global"
• Launching a World Wide Web site
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Internet Users Worldwide by Region
Number of Internet Users
250,000,000
200,000,000
150,000,000
100,000,000
50,000,000
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Strategies For "Going
Global"
• Launching a World Wide Web site
 Relying on trade intermediaries
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Trade Intermediaries
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Export Management Companies (EMCs)
Export Trading Companies (ETCs)
Manufacturer’s Export Agents (MEAs)
Export merchants
Resident buying offices
Foreign distributors
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Strategies For "Going
Global"
Launching a World Wide Web site
 Relying on trade intermediaries
• Joint ventures
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Joint Ventures
• Domestic joint venture – two or more U.S.
companies form an alliance for the purpose
of exporting their goods and services
abroad.
• Foreign joint venture – a domestic firm
forms an alliance with a company in the
target nation.
– Most important ingredient: Choosing the right
partner.
– Another key to success: Establishing common
objectives.
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Strategies For "Going
Global"
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Launching a World Wide Web site
Relying on trade intermediaries
Joint ventures
Foreign licensing
International franchising
Countertrading and bartering
Exporting
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Exporting
• Small companies account for 97% of all
companies involved in exporting, but…
• They generate just one-third of the U.S.
export sales.
• Only 1% of all small and medium-sized
businesses export; twice as many are
capable of exporting but are not doing so.
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Number of Countries to Which Small Businesses Export
10 or more countries
5.6%
5 to 9 countries
7.7%
2 to 4 countries
23.7%
1 country
63.0%
Source: Exporter Data Base, U.S. Dept of Commerce, Office of Trade and
Economic Analysis, Trade Development/International Trade Agency.
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Steps to Successful Exporting
1. Recognize that even the tiniest companies and least
experienced entrepreneurs have the potential to
export.
2. Analyze your product or service.
3. Analyze your commitment to developing export
markets.
4. Research potential markets and pick your target.
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Steps to Successful
Exporting
5. Develop a distribution strategy.
6. Find your customer.
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U.S. Department of Commerce
International Trade Administration
7. Find financing for export sales.
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SBA, EX-IM Bank, OPIC, and others
8. Ship your goods.
9. Collect your money.
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How a Letter of Credit Works.
Seller
Buyer
Foreign buyer agrees to buy products;
seller agrees to ship goods if buyer
arranges a letter of credit.
Seller’s Bank
$
Seller ships goods to buyer
according to letter of credit’s
terms and submits shipping
documents to bank issuing
letter of credit.
Buyer's Bank
Letter
of Credit
$
Buyer requests that his bank grant a
letter of credit, which assures exporter
payment if she presents documents
proving goods were actually shipped.
Bank makes out letter of credit to seller
and sends it to seller’s bank (called the
confirming bank).
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Buyer’s bank makes
payment to seller’s
(confirming) bank.
Confirming bank then pays
seller amount specified in
letter of credit.
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Strategies For "Going
Global"
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Launching a World Wide Web site
Relying on trade intermediaries
Joint ventures
Foreign licensing
International franchising
Countertrading and bartering
Exporting
• Establishing international locations
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Barriers To International
Trade
Domestic Barriers:
• Attitude - "My company is too small
to export."
• Lack of information about how to
get started.
• Lack of export financing.
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Barriers To International
Trade
International Barriers:
• Tariffs - Taxes a government
imposes on goods and services
imported into that country.
• Quotas - Limits on the amount of a
product imported into a country.
• Embargoes - Total bans on imports
of certain products.
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Barriers To International
Trade
International Barriers:
• Dumping - Selling large quantities of a
product in a foreign country below cost
to gain market share.
• Political barriers - rules, regulations and
risks.
• Business barriers – business practices
and laws.
• Cultural barriers - Differing languages,
philosophies, traditions, and accepted
business practices.
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International Trade
Agreements
• General Agreement on Tariffs and
Trade (GATT) and the World Trade
Organization (WTO)
• North American Free Trade Agreement
(NAFTA)
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Guidelines For Success In
International Markets
• Make yourself at home in all three of the
world's key markets - North America, Europe,
and Asia.
• Appeal to the similarities within the various
regions in which you operate but recognize
the differences in their particular cultures.
• Be willing to commit the necessary resources
to make your global efforts successful.
• Develop new products for the world market.
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Guidelines For Success In
International Markets
• Use the many resources available to
research potential markets and to determine
the ideal target for your products.
• Familiarize yourself with foreign customs
and languages.
• Learn to understand your customers from
the perspective of their culture, not your
own.
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Guidelines For Success In
International Markets
• "Glocalize" - Make global decisions about
products, markets, and management,
but allow local employees to make
tactical decisions about packaging,
advertising, and service.
• Make positive and preferably visible
contributions to the local community.
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Guidelines For Success In
International Markets
• Train employees to think globally,
send them on international trips, and
equip them with state-of-the-art
communication technology.
• Hire local managers to staff foreign
offices and branches.
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Guidelines For Success In
International Markets
• Do whatever seems best wherever it
seems best, even if people at home
lose jobs or responsibilities.
• Consider using partners and joint
ventures to break into foreign markets
you cannot penetrate on your own.
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