International Marketing
MKT303 International
Marketing
Trade relations
Workshop 7
Copyright Notice
COPYRIGHT
COMMONWEALTH OF AUSTRALIA
Copyright Regulations 1969
WARNING
This material has been reproduced and communicated to you by or on behalf of
Kaplan Higher Education pursuant to Part VB of the Copyright Act 1968 (the Act).
The material in this communication may be subject to copyright under the Act. Any
further reproduction or communication of this material by you may be the subject of
copyright protection under the Act.
Do not remove this notice
What will we be learning?
Week Topic
1 Introduction to International Marketing
2 Political and economic factors impacting international marketing
3 Social and technological factors impacting international marketing
4 Legal and environmental factors impacting international marketing
5 Assignment presentations
6 Study week (Attendance is compulsory).
7 Trade relations
8 Culture and communications
9 Market entry an international marketing approach
10 Getting a product to the customer international context
11 Product management and surviving in an international market
12 Future of international marketing and ethics
Why am I learning this?
Trade relations are integral to realising
market opportunities.
Knowing trade relations lets you identify
potential markets to build international
marketing opportunities.
Workshop Activity
Revision
What did we discuss last week? Identify the
three main points that youve learned during
last weeks class.
Share your thoughts with the rest of the
class.
This Topics Big Idea
Global trade has advantages. For starters, it
allows those of us who live through winter to eat
fresh produce year-round.
David Suzuki
Learning Outcomes
1. Understand the history of trade.
2. Gain context of Australia and how it conducts
trade with international trade partners.
3. Comprehend how international trade works.
4. Understand the role of key trade bodies.
5. Discuss key concepts such as imports, exports
and tariffs.
The History of Trade
Trade has existed since the
foundations of humanity
exchanging a surplus of
products for another
Modern trade arrangements
began after World War II
(1945)
General Agreement on
Tariffs and Trade (1947-
1994)
World Trade Organisation
(1995 onwards)
International trade was a
way to reduce potential for
conflict
Watch: bit.ly/mkt303wto
Source: https://www.wto.org/english/thewto_e/thewto_e.htm
https://bit.ly/mkt303wto
https://www.wto.org/english/thewto_e/thewto_e.htm
Workshop Activity
In groups of three to four discuss:
What are some of the advantages of
encouraging international trade?
What are some of the disadvantages of
international trade?
World Trade
Organisation (WTO)
Global body that deals
with the rule of trade
between countries.
Goal: ensure that trade
flows smoothly,
predicably and as freely
as possible.
160 are members of the
organisation representing
98% of total trade.
Based in the Centre
William Rappard in
Switzerland.
Source: https://www.wto.org/english/thewto_e/thewto_e.htm
https://www.wto.org/english/thewto_e/thewto_e.htm
International
Monetary Fund (IMF)
Maintains the stability of the
worlds monetary system.
Founded in 1945
Goal is to foster global
monetary cooperation.
189 members, some of these
countries provide funding for
loans that are given out by the
organisation.
Undertakes:
Economic surveillance
Lending
Capacity development
Based in Washington DC, USA
World Bank
189 members
Mission: reduce extreme
poverty to 3% by 2030.
Promote share prosperity
by increasing incomes of
the poorest 40% of
people in every country
Provides funding and
knowledge
Currently undertaking
over 12,000 development
projects around the world
Headquartered in
Washington DC, USA
Workshop Activity
In groups of three to four pick one of these
international bodies and discuss how it has
helped in support international trade
What has the international organisation
done?
What more could it do?
Forms of Trade Protection
Tariffs
Taxes on imported
products or services
Raises prices for
international goods making
them more expensive than
domestic
Quotas
Restrictions on the amount
of imported products or
services
Limits the potential for
foreign products or
services to enter a market
Subsidies
Government support to
particular industries
Not necessarily trade
protection but can help
these industries compete
Regulations
Laws or compliance
required to operate in a
market
Not necessarily trade
protection but does place
requirements on
competition
Free Trade vs Protectionism
Free trade is the removal
trade barriers
Protectionism is the
increase of trade barriers
But the reality is less
simple
Varies between
countries
Varies between
industries
Countries trend towards
these two directions
World War I
1914-1918
Limited civilian
economies
Spanish
Flu
1918-1920
Social isolation
Restrictions on
travel
Great
Depression
1930-1939
Trade
protectionism
Mass
unemployment
World War
II
1939-1945
Limited civilian
economies
Cold War
1945-1989
Colonial independence
Capitalism vs
Communism
Creation of trading
blocs
Post-
Cold War
1989-2000
Collapse of USSR
Economic growth in
China
Bilateral trade
agreements
Expansion of EU
Internet
Era
2000-2015
Growth of Internet
access
Use of e-commerce
Reductions in trade
barriers
Reduction of US
influence
Current
2015-onwards
Brexit and US
protectionism
Decline of US
influence
COVID-19
Travel restrictions
Workshop Activity
Since World War II the general trend has been
towards removing trade barriers
Yet the UK is leaving the European Union and
Donald Trump was elected to the US to impose
trade barriers. COVID-19 has also disrupted
global supply chains and trade
In groups of three to four discuss what you
think will be the general trends in global trade
over the next five to ten years.
Australia and Trade
Australia is dependent on global trade to bolster the
economy
Source: https://www.dfat.gov.au/sites/default/files/trade-investment-glance-2020.pdf
https://www.dfat.gov.au/sites/default/files/trade-investment-glance-2020.pdf
Exports out of Australia
Source: https://www.dfat.gov.au/sites/default/files/trade-investment-glance-2020.pdf
https://www.dfat.gov.au/sites/default/files/trade-investment-glance-2020.pdf
Imports to Australia
Source: https://www.dfat.gov.au/sites/default/files/trade-investment-glance-2020.pdf
https://www.dfat.gov.au/sites/default/files/trade-investment-glance-2020.pdf
Workshop Activity
Cars in Australia used to be
manufactured in Australia,
however this is no longer the
case:
Watch: bit.ly/mkt303holden
In groups of three to four
discuss:
How did global trade impact
this decision?
Was this the right approach in
your view?
Source: General Motors
http://bit.ly/mkt303holden
Facilitating Global Trade
Trade needs
agreement between
countries:
Multilateral (many
countries)
Regional (group of
countries)
Bilateral (between two
countries)
While the goal is free
trade some barriers do
remain
Watch:
bit.ly/mkt303brookings
In groups discuss:
What are the advantages
and disadvantages of
trade agreements?
What is your view on this?
https://bit.ly/mkt303brookings
Regional Trading Blocs
Group of countries that
protect themselves from
imports from non-member
countries.
Trading Blocs are a form
of economic integration,
and increasingly shape the
pattern of world trade.
There are 4 major types of
integration.
1. Free Trade Areas
2. Customs Unions
3. Common Markets
4. Monetary Unions
Gillespie, K. and Hennessey, H.D., 2010. Global
marketing. Cengage Learning.
Source: http://marketbusinessnews.com/financial-glossary/single-market/
c
http://marketbusinessnews.com/financial-glossary/single-market/
Economic Integration Types
3.Common
Markets
Same as free
trade areas but
Agreed common
external tariff or
trade barrier to
non member
nations is
exercised.
Capital or labour
cannot be moved
freely between
member nations.
e.g. SACU
2.Customs
Unions
Simplest form of
integration.
* Nations agree
to drop all or
some barriers
among member
nations but can
still trade outside
of the group.
* Capital or
labour cannot be
moved freely
between member
nations.
e.g. NAFTA
e.g. ASEAN
1.Free Trade
Areas
4.Monetary/
Economic
Unions
Same as
common unions
but
Free flow of
resources is
encouraged
amongst member
nations & capital
and labour are
able to move
freely.
e.g.EU
Same as
common
market but
Member
nations no
longer regulate
their own
currencies.
They all
operate under
the one
currency
controlled by a
supranational
central bank.
e.g.EU
Gillespie, K. and Hennessey, H.D.,
2010. Global marketing. Cengage Learning.
European Union (EU)
Promotes economic
growth for countries in
Europe.
Peace within Europe
Goal: stability, a
single currency,
mobility and growth.
27 members.
Headquarters in
Brussels, Belgium.
Source: https://europa.eu/european-union/about-eu/eu-in-brief_en
https://europa.eu/european-union/about-eu/eu-in-brief_en
Recent Trade Blocs
Regional Comprehensive
Economic Partnership (RCEP)
Negotiations from: 2011
Signed: 2020
15 Members
India withdrew
Comprehensive and
Progressive Agreement for
Trans-Pacific Partnership
(CoTPP)
Negotiations from: 2015
Signed: 2018
The US withdrew
Regional trade blocs
complement bilateral
agreements
Australian Free
Trade Agreements
Source: https://www.dfat.gov.au/sites/default/files/trade-investment-glance-2020.pdf
https://www.dfat.gov.au/sites/default/files/trade-investment-glance-2020.pdf
Austrade
The Australian Trade
and Investment
Commission (Austrade)
Helps Australian
businesses expand
internationally through:
Supporting foreign direct
investment
Advice on export
markets
Potential finance for
export development
Austrade | A case study
Published on 17 Sep
2015
Watch:
bit.ly/mkt303austrade
https://bit.ly/mkt303austrade
Workshop Activity
BHP is one of the
largest companies in
Australia
Focus is on global
resources and
worldwide mining
operations
Think Big campaign:
bit.ly/mkt303bhp
In groups discuss what
do you think of BHPs
approach to marketing,
taking a global
approach?
http://bit.ly/mkt303bhp
Next Week
Culture and communications
MKT303 International Marketing
Copyright Notice
What will we be learning?
Why am I learning this?
Workshop Activity
This Topics Big Idea
Learning Outcomes
The History of Trade
Workshop Activity
World Trade Organisation (WTO)
International Monetary Fund (IMF)
World Bank
Workshop Activity
Forms of Trade Protection
Free Trade vs Protectionism
Workshop Activity
Australia and Trade
Exports out of Australia
Imports to Australia
Workshop Activity
Facilitating Global Trade
Regional Trading Blocs
Economic Integration Types
European Union (EU)
Recent Trade Blocs
Australian Free Trade Agreements
Austrade
Workshop Activity
Next Week MKT303 International
Marketing
Culture and communications
Workshop 8
Copyright Notice
COPYRIGHT
COMMONWEALTH OF AUSTRALIA
Copyright Regulations 1969
WARNING
This material has been reproduced and communicated to you by or on behalf of
Kaplan Higher Education pursuant to Part VB of the Copyright Act 1968 (the Act).
The material in this communication may be subject to copyright under the Act. Any
further reproduction or communication of this material by you may be the subject of
copyright protection under the Act.
Do not remove this notice
What will we be learning?
Week Topic
1 Introduction to International Marketing
2 Political and economic factors impacting international marketing
3 Social and technological factors impacting international marketing
4 Legal and environmental factors impacting international marketing
5 Assignment presentations
6 Study week (Attendance is compulsory).
7 Trade relations
8 Culture and communications
9 Market entry an international marketing approach
10 Getting a product to the customer international context
11 Product management and surviving in an international market
12 Future of international marketing and ethics
Learning Outcomes
1. Understand the concept of culture.
2. Explore the components of culture and
how this shapes values and beliefs.
3. Apply a cultural understanding of
communication.
4. Analyse cultural dimensions to appreciate
differences between cultures.
5. Explore how to create culturally relevant
communications.
Why am I learning this?
Marketers need to be aware of cultures to
share marketing communications and
messages
A lack of cultural understanding can lead to
failed outcomes
Workshop Activity
Revision
What did we discuss last week? Identify the
three main points that youve learned during
last weeks class.
Share your thoughts with the rest of the
class.
This Topics Big Idea
Every human is like all other humans, some other
humans, and no other human
Clyde Kluckhon
Culture
A set of:
Values,
Ideas,
Artifacts,
and other meaningful
symbols
Helps individuals
communicate, interpret,
and evaluate as
member of society.
Culture is the
personality of a society
Organisation
Political
Economic
Social
Technological
Legal
Environmental
Workshop Activity
Brainstorming Session
In groups of three to four discuss your own
culture, how did it shape your values and
ideas?
What artefacts or symbols hold meaning to
you?
The Marketing Mix
The toolkit available
to marketers
Ensure consistency
across each element
of the marketing mix
Need to ensure it is
relevant to
international markets
Source: https://www.leadagency.com.au/marketing-mix-best-practice-effective-examples-of-the-seven-ps/
The Components of Culture
Culture represents our:
Ideas
Beliefs
Values
Institutions
Behaviours
Customs
Habits
Dress
Foods
Leisure
Objects
Literature
Art
Music
Artefacts
Ideas
BehavioursObjects
Beliefs
Ideas/concepts that are
held by a culture
Examples include
religion, traditions
A culture can have
many beliefs
Influences:
Our moral views: what is
and wrong
Life aspirations
Shapes other elements
of culture
Source: http://www.medialocate.com/2015/09/3-reasons-why-your-website-may-sink-your-international-profits/
Values
Beliefs set culturally
appropriate behaviours
Often difficult to change
Not tied to specific
objects and situations
Widely accepted by
members of society
Shapes our views on
gender, age, social
status
Spiritual
Values
Use Values
Lifestyle
Values
Place
Values
Ethical
Values
Adapted from: https://www.macfound.org/media/files/CSD_Culture_White_Paper.pdf
https://www.macfound.org/media/files/CSD_Culture_White_Paper.pdf
Customs
Models of behaviour
that are acceptable by
society in specific
situations
Conduct between
family, friends and
strangers
Mannerisms and
behaviours
Examples: Tipping in
the US, bowing your
head entering a
courtroom in Australia Source: https://www.eidi-results.org/what-is-eid/
https://www.eidi-results.org/what-is-eid/
Subculture
Group within a culture
who differ on some
influential dimensions
from the broader culture
In Melbourne, Australia
hipsters became a
subculture that spanned
the inner city suburbs.
Subcultures can also be
formed around music,
sport, fashion and other
interests Source: https://www.smithstreetbooks.com/books/how-to-spot-a-hipster/
https://www.smithstreetbooks.com/books/how-to-spot-a-hipster/
Workshop Activity
Brainstorming Session
Do subcultures occur outside of one
country? Are there differences between how
one country interprets a subculture
compared to another?
Share your thoughts with the rest of the
class.
Communication and Culture
Marketers use the
integrated marketing
communications mix
to provide consistent
messages to
consumers
These messages
need to be aware of
cultures within an
international market
Workshop Activity
Brainstorming Session
In groups of three to four discuss:
Why is it important for brands to be aware of
cultures when exploring international markets?
Do you have examples of where this went right
or wrong for brands?
Christmas in Japan
In Japan KFC is
commonly eaten at
Christmas
Started in the 1970s as
an American Christmas
food and replacement
for turkey
Only 1% of the
population in Japan
identifies as Christian
Ad for KFC Japan:
bit.ly/kt303kfcjapan
Source: https://edition.cnn.com/travel/article/kfc-christmas-tradition-japan/index.html
http://bit.ly/kt303kfcjapan
https://edition.cnn.com/travel/article/kfc-christmas-tradition-japan/index.html
Hofstede’s
Cultural Dimensions
Theory that analysed
cultures based on
1. Power Distance
2. Masculinity vs
Femininity
3. Collectivism vs
Individualism
4. Uncertainty avoidance
5. Long-term orientation
6. Indulgence vs Restraint
Broad criteria that
explores the values of a
culture
Hofstede’s Cultural
Dimensions Video:
Explained With Examples
of Each Dimension:
Watch:
bit.ly/mkt303hofstede
http://bit.ly/mkt303hofstede
Power Distance
Cultural considerations in International
Marketing
American Korean
How would an Australian
react to this?
Masculinity vs Femininity
In Japan and Korea,
females may dominate
the household but in
public, males are typically
the key decision maker
In America & the UK
women often take part in
key family decisions and
are strong leaders within
the family and society
Collectivism vs Individualism
Mexicans are very collectivist
and often live in extended
family situations
Australians are individualistic
so tend to live mainly in
nuclear families
Uncertainty Avoidance
Uncertainty avoidance
Japanese workers like to
ensure they are never late for
work
The Tokyo Rush Hour where
trains pack workers in, even
though trains arrive every few
seconds – workers unwilling
to take the risk to be late for
work
Americans will take a risk on
an idea stimulating
entrepreneurship
Japanese Rush Hour
Long-term Orientation
Long Term
Orientation
Focus on the future
Thrift and effort is
largely encouraged
Values perseverance
in achieving results
Ability to adapt
traditions and change
Short Term Normative
Traditions and norms
are more important
Suspicious of societal
change
Focus on achieving
quick results
Indulgence vs Restraint
Indulgence
Focus on enjoying life
and having fun
Priorities are leisure
and spending money
as they wish
Higher levels of
optimism
Restraint
Limit desires and
gratification
Unnecessary
indulgence is
discouraged
Higher levels of
cynicism and
pessimism
Workshop Activity
Visit the website below:
www.hofstede-insights.com/product/compare-
countries/
Then in groups of 3 or 4 apply Hofstedes
theories to compare any culture with the
Australian culture.
Do you agree with the results?
https://www.hofstede-insights.com/product/compare-countries/
Tanning or Whitening?
Skin whitening in India:
bit.ly/mkt303skin
Source: Loreal
http://bit.ly/mkt303skin
Workshop Activity
Brainstorming Session
Is it ethical for global brands to market skin
whitening and tanning products?
Share your thoughts with the rest of the
class.
Racism in Global Marketing
Guccis made a $800+
balaclava that depicted
blackface.
Received global
criticism given
sensitivity of the African
American population for
these types of
depictions
Made a public apology
blamed Italian culture
for lack of
understanding
Source: Gucci
Workshop Activity
Brainstorming Session
How should a marketer respond if marketing
material they have released is deemed by
the public to be racist?
Share your thoughts with the rest of the
class.
Lost in Translation
When Mercedes Benz
first entered the
Chinese market it
called itself Bensi which
in Chinese translated to
rush to die
When KFC first entered
China in the 1980s their
slogan finger licking
good was translated to
bite your fingers off
Source: KFC
Lack of Context
Pampers created
confusion in Japan when
the advertisement they
put out contained a stalk.
In Western culture stalks
are associated with
delivering babies
however this folklore is
not the case in Japan.
This mistake was only
discovered when market
research was undertaken.
Source: https://thunderbird.asu.edu/knowledge-network/its-peach-not-stork-how-pg-turned-around-its-pampers-fail-japan
https://thunderbird.asu.edu/knowledge-network/its-peach-not-stork-how-pg-turned-around-its-pampers-fail-japan
Workshop Activity
Brainstorming Session
In groups of three to four find an example of
an international campaign that went wrong.
What was the cause?
How could it have been avoided?
What was the result?
Next Week
Market entry
MKT303 International Marketing
Copyright Notice
What will we be learning?
Learning Outcomes
Why am I learning this?
Workshop Activity
This Topics Big Idea
Culture
Workshop Activity
The Marketing Mix
The Components of Culture
Beliefs
Values
Customs
Subculture
Workshop Activity
Communication and Culture
Workshop Activity
Christmas in Japan
Hofstede’s Cultural Dimensions
Power Distance
Masculinity vs Femininity
Collectivism vs Individualism
Uncertainty Avoidance
Long-term Orientation
Indulgence vs Restraint
Workshop Activity
Tanning or Whitening?
Workshop Activity
Racism in Global Marketing
Workshop Activity
Lost in Translation
Lack of Context
Workshop Activity
Next Week MKT303 International
Marketing
Market entry
Workshop 9
Copyright Notice
COPYRIGHT
COMMONWEALTH OF AUSTRALIA
Copyright Regulations 1969
WARNING
This material has been reproduced and communicated to you by or on behalf of
Kaplan Higher Education pursuant to Part VB of the Copyright Act 1968 (the Act).
The material in this communication may be subject to copyright under the Act. Any
further reproduction or communication of this material by you may be the subject of
copyright protection under the Act.
Do not remove this notice
What will we be learning?
Week Topic
1 Introduction to International Marketing
2 Political and economic factors impacting international marketing
3 Social and technological factors impacting international marketing
4 Legal and environmental factors impacting international marketing
5 Assignment presentations
6 Study week (Attendance is compulsory).
7 Trade relations
8 Culture and communications
9 Market entry an international marketing approach
10 Getting a product to the customer international context
11 Product management and surviving in an international market
12 Future of international marketing and ethics
4
Learning Objectives
1. Examine problems faced by firms in international business
when selecting a new international market
2. Assessing a countrys attractiveness in terms of its potential,
its membership of trading blocs, its competitive intensity and
its entry barriers
3. Create a portfolio of the most attractive foreign markets to
enter given the circumstances of the firm and the potential
offered by the market
4. Recognise the different available modes for entering an
international market and the advantages and disadvantages
of each
5. Explain the differences between export-based entry modes,
manufacturing-based entry modes and relationship-based
entry modes
Why am I learning this?
Market entry explores how you enter a new
market.
This is integral knowledge for any marketer
considering international opportunities.
Workshop Activity
Revision
What did we discuss last week? Identify the
three main points that youve learned during
last weeks class.
Share your thoughts with the rest of the
class.
This Topics Big Idea
If your dreams dont scare you,
theyre not big enough.
Ellen Johnson Sirleaf
8
International
Market Selection
Two critical questions:
1. Which market?
Which country and
why?
What are the
advantage and
disadvantages?
2. How to enter?
How do I serve this
market?
What are the costs and
opportunities?
Microenvironment
(the firm)
Macroenvironment
Determine Suitable Markets
Stage 1: Domestic Regulation
and Management Preferences
Which international
markets to exclude
regardless of their
apparent potential?
Need to consider
regulation and policy and
what the organisation can
do in a country.
Outcome: exclude
markets with
unfavourable Australian
regulations.
Examples
Trade restrictions between the
domestic country and international
(eg US and Iran)
Particular views of management
towards countries
Stage 2: Initial Entry
Assessment
Which remaining
overseas markets have
the least attractive
political and social
environments?
Which remaining
overseas markets are
least attractive because
of their nature and
potential size?
Examples
Is there political instability?
Do political processes make it too
difficult to do business?
Is the market size too small?
Stage 3: Competitive
Environment
Consider the amount of
competitors in a country
Eliminate overseas markets
with substantial trade
barriers.
Countries protecting
domestic industry or
favouring other countries to
trade with.
Overseas markets to avoid
when competitors are
saturating the market.
Examples
Are there too many competitors?
Do local subsidies exist?
Are there trade barriers through tariffs
or quotas?
Stage 4: Market
Responsiveness
Which remaining
international markets
prohibit the presence of
your type of company?
Which international
markets are unattractive
because of costs and
problems of reaching
them from the home
market?
Examples
Do laws or cultural values prohibit
operations? (eg alcohol in Saudi
Arabia)
Is it too difficult to get the
product/services to consumers due to
transport or other factors?
Stage 5: Internal
Trade-off Analysis
Unattractive markets
due to commitment of
resources and
accessibility.
Do any of the markets
still under
consideration fail to
meet the companys
objectives or match its
competitive
advantages?
Examples
What costs are required to enter the
market?
Does the company have priorities
elsewhere?
Workshop Activity
In groups of three to four:
Recall the PESTLE
analysis how would this
tool help you with these
five stages?
Share your discussion
with the rest of the class.
Depth of Entry
Answers the questions:
Does the organisation
want to invest a
substantial amount of
resources?
Should multiple
countries be entered at
once?
What risks are the
organisation willing to
take?
Timing?
Source: This Photo by Unknown Author is licensed under CC BY-NC
https://creativecommons.org/licenses/by-nc/3.0/
Incremental Entry
Learn from previous
market and enter
based on these
learnings.
Fewer resources and
risks; provides for
learning experiences;
may preclude
economies of scale.
Source: Disney
Disneyland believes in an incremental
expansion approach learning from each
city they open before stating another.
1954 Anaheim
1965 Orlando
1971 – Florida
1983 Tokyo Disneyland
1995 Disneyland Paris
2005 Hong Kong Disneyland
2016 Shanghai Disneyland
Simultaneous Entry
Open in multiple
countries at the same
time.
Resource intensive,
higher operating risk,
acquire overseas
experience rapidly,
facilitate economies
of scale.
Source: https://investor.uber.com/news-events/news/press-release-details/2020/Uber-Announces-Results-for-Fourth-Quarter-and-Full-Year-2019/
Uber
Between 2013 to 2014 Uber
accelerated its international expansion.
The company now operates in about
400 cities, up from fewer than 100 at
the start of 2014.
Ubers international business made a
loss of $237 million in 2014.
2013 loss was $32 million.
2019 loss was $615 million
https://investor.uber.com/news-events/news/press-release-details/2020/Uber-Announces-Results-for-Fourth-Quarter-and-Full-Year-2019/
Concentrated Approach
Resources
concentrated in
limited number of
markets, reduced
costs, operating risks,
economies of scale.
Coca Cola is an
example of a brand
that uses a
concentrated
approach.
Source: Coca Cola
Diversified Approach
Spreads risk
exposure, broadens
market knowledge,
strategic flexibility,
resources spread
thinly
Virgin is a brand that
uses a diversified
approach
Source: http://marktruelson.com/a-branded-house-masterpiece/
Workshop Activity
Lets watch this video:
bit.ly/mkt303virginbrands
Should Virgin continue the diversification
strategy?
http://bit.ly/mkt303virginbrands
22
Modes of Entering Foreign
Markets: Overview
1. Export-based entry
2. Manufacturing-based
entry
3. Contract
manufacturing,
offshoring and
countertrade
4. The born global
entry mode
23
1. Export-based Entry
In indirect
exporting, a
manufacturer turns
international sales
over to a third party,
while in direct
exporting, a
manufacturer
handles the export
process itself.
Indirect export
Minimum resources
commitment
Third party distributor
Direct exporting
Greater resources/control
Foreign agent
End-user
Establish sales
office in foreign
market
Licensing
Franchising
24
International Franchises
A franchise is a type of license
A party (franchisee) acquires the
license to have access to a
proprietary knowledge,
processes
and trademarks (franchiser)
Allow the party to sell a product
or provide a service under the
business’s name.
Increasing in importance
domestically and internationally
Shifts costs to the franchisee
(average $500,000 in Australia)
Workshop Activity
McDonalds Franchise
THE FOUNDER Official Trailer (2016)
McDonald’s Franchise Movie HD:
bit.ly/mkt303founder
Can you think of any other recently
successful franchise? Share it with the
person sitting next to you.
http://bit.ly/mkt303founder
2. Foreign Direct Investment
Often referred to as foreign direct
investment (FDI)
Can take a number of forms:
Joint venture
Consortia
Acquisition
Greenfield operation
Balance risks and return
Joint Venture
A joint venture (JV) is a
business arrangement in which
two or more parties agree to
pool their resources for a
specific project.
This task can be a new project
or any other business activity.
In a joint venture (JV), each of
the participants is responsible
for profits, losses and costs
associated with it.
The venture is its own entity,
separate and apart from the
participants’ other business
interests.
Examples:
Queens Wharf in Brisbane – Joint
venture between Star
Entertainment Group, Chow Tai
Food and Far East Consortium.
Source: https://queenswharfbrisbane.com.au/news/destination-brisbane-consortium/
Workshop Activity
In groups research examples through of
the following modes of entry and then
share with the class.
Australian export company
Australian-China joint venture company
Australian based franchise company
Consortia & Acquisition
Consortia
A consortium is a group
made up of two or more
individuals, companies or
governments that work
together toward achieving
a chosen objective.
Acquisition
An acquisition is a corporate
action in which a
company buys most, if not
all, of another firm’s
ownership stakes to
assume control of it. An
acquisition occurs when a
buying company obtains
more than 50% ownership
in a target company.
Greenfield Operation
Greenfield Operation
A greenfield investment is a
form of foreign direct
investment where a parent
company builds its operations
in a foreign country from the
ground up.
In addition to the construction
of new production facilities,
these projects can also include
the building of new distribution
hubs, offices and living
quarters.
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3. Contract Manufacturing,
Offshoring and Countertrade
Contract manufacturing
Marketing firm contracts
the manufacturing of the
product to overseas
manufacturers but retains
control of the marketing of
the product
Offshoring
Involves the relocation to
another country of
