Session 8 - Business Marketing Strategies for Global Markets.pdf

b2b marketing ch8

1. Business Marketing
Strategies for Global
Markets

2. Forces That Shape Global Advantage for the Firm
The BCG Global Advantage Diamond
The BCG Global Advantage Diamond framework identifies four key forces that enable companies to compete effectively in
international markets: market access, resource access, local adaptation, and network coordination.

3. Market Access Strategies
Expand Geographic Reach
Increase the number of countries
served to capture new customer
segments
Deepen Market
Penetration
Target new customer segments and
product categories in existing
markets
Implement Reverse
Innovation
Develop products for emerging
markets that can later be adapted for
developed markets
Case Study: GE's Reverse Innovation
General Electric successfully implemented reverse innovation by creating affordable healthcare devices in emerging
markets, later adapting these innovations for developed markets, substantially lowering costs while maintaining
quality.

4. Resource Access: Strategic Production Decisions
Re-shoring
The process of returning production and manufacturing operations
back to the company's original country.
Near-shoring
Moving operations to a nearby country from one of greater distance
to balance cost advantages with supply chain resilience.
Companies are increasingly reconsidering global production
networks in light of supply chain vulnerabilities exposed by recent
global disruptions.

5. Resource Access: Following
Customers to RDEs
Rapidly Developing Economies (RDEs)
Customer-Following Strategy
Small and mid-sized companies often follow their major customers as they
expand into rapidly developing economies.
Twofold Approach
As major industrial sectors relocate manufacturing to RDEs, B2B suppliers
must:
1.Establish operations in these markets to maintain key customer
relationships
2.Develop strategies to serve new local customers in these emerging
markets

6. The Outsourcing Decision Framework
Relocating manufacturing, R&D, or customer service to rapidly developing economies involves complex strategic
considerations:
Economic Factors
•Labor costs and availability
•Tax incentives and regulations
•Infrastructure quality
•Total cost of ownership
Competitive Factors
•Proximity to key customers
•Access to emerging markets
•Innovation capabilities
•Talent acquisition
Environmental Factors
•Carbon footprint
•Regulatory compliance
•Sustainability goals
•Supply chain resilience

7. What Should Be Outsourced ? What Should Not Be Outsourced?
Intellectual Property Protection
Products or services requiring stringent IP safeguards should remain in regions
with strong legal protections
Complex Logistics
Items with extreme logistical requirements that would be compromised by long
supply chains
High Technology Content
Products with very high technology content or performance requirements
requiring specialized expertise
Origin Sensitivity
Products for which customers are highly sensitive to the location of production
Labor-Intensive Processes
Tasks requiring high manpower (e.g., data entry, basic customer service)
where cost savings are significant
Standardized Components
Items with well-defined specifications and minimal variation, like nuts, bolts,
or packaging.
Non-Core Activities
Products or parts manufactured at scale to benefit from economies of scale
overseas
Logistics Requirements
Transportation, warehousing, and distribution handled by third-party logistics
providers (3PLs)

8. Local Adaptation: The Local Growth Team Model
Senior Executive Support
Direct reporting link to senior management with clear executive sponsorship
Customized Metrics
Tailored objectives, targets, and performance measures for the RDE environment
Ground-Up Team Building
Building local growth teams like forming new companies with appropriate autonomy
Market-Specific Offerings
Developing new offerings specifically designed for local market needs
Power Shift to Growth Markets
Relocating decision-making authority to regions with highest growth
potential

9. Network Coordination
Leveraging Global Networks
Even while adapting to local conditions, well-managed global firms coordinate their international operations to create competitive advantages through:
•Sharing best practices across regions
•Transferring knowledge and technology
•Standardizing core systems and processes
•Rapid information sharing across borders
•Economies of scale and scope
•Process standardization efficiencies
•Technology leverage across markets
•Reduced duplication of efforts

10. Global Market Entry Options
Spectrum of Involvement in Global Marketing
The spectrum illustrates increasing levels of commitment, control, risk, and potential reward as companies move
from indirect exporting toward establishing wholly owned subsidiaries in foreign markets.

11. Exporting as an Entry Strategy
Key Characteristics
•Typically a firm's first international market engagement
•Requires minimal investment and commitment
•Limits exposure to political and economic risks
•Allows gradual learning about foreign markets
When to Consider
•Limited resources for significant market commitments
•Unfamiliarity with market requirements
•Testing potential before deeper investment

12. Contracting: Licensing and Management Contracts
Licensing Agreements
One firm permits another to use its intellectual property
in exchange for royalties:
•Trademarks and patents
•Proprietary technology
•Technical know-how
•Company name and branding
Essentially "exporting intangible assets"
Management Contracts
Assembling a package of skills to provide integrated
services to clients:
•Operational expertise
•Systems implementation
•Training and development
•Quality control procedures
Includes contract manufacturing arrangements

13. Strategic Global Alliances (SGA)
Definition
A business relationship established by two or more companies to:
•Cooperate out of mutual need
•Share risk in achieving common objectives
•Leverage complementary strengths
•Access new markets or technologies
Building Alliance Capabilities
Elite companies develop dedicated alliance functions that:
•Establish clear governance mechanisms
•Coordinate collaboration across organizations
•Facilitate knowledge transfer
• Measure and track alliance performance

14. Joint Ventures in International Markets
1Formation
Creation of a new jointly-owned entity to produce and/or
market goods in a foreign market
2 Advantages
Opens market opportunities neither partner could pursue
alone, improves local relationships, and shares financial
risk3Challenges
Cultural differences, strategic misalignment, operational
conflicts, and governance disputes can arise
4 Results
Research suggests more than 50% of joint ventures are
disbanded or fall short of expectations
Joint ventures require careful partner selection, clear governance structures, and ongoing relationship management to succeed.

15. Choosing a Mode of Entry
When making initial moves into global markets, companies should evaluate
the full spectrum of entry options based on:
Internal Factors
•Available
resources and
capabilities
•International
experience
•Strategic
objectives
•Risk tolerance
External
Factors
•Market size and
growth potential
•Competitive
landscape
•Legal and
regulatory
environment
•Cultural proximity
Product/Service
Factors
•Technological
complexity
•Intellectual
property concerns
•Customization
requirements
•Service intensity

16. Multidomestic vs. Global
Strategies
Multidomestic
Strategies
Allow individual subsidiaries to
compete independently in their
home-country markets with:
•Highly localized product
offerings
•Decentralized decision-making
•Adaptation to local consumer
preferences
•Minimal coordination across
countries
Global Strategies
Seek competitive advantage with
strategic choices that are highly
integrated across countries
through:
•Standardized core products
•Centralized strategic planning
•Coordinated competitive moves
•Optimized global value chain

17. Industry Types: Multidomestic vs. Global
Multidomestic Industries
Competition in each country is
essentially independent of
competition in other countries:
•Food and beverage
•Retail banking
•Insurance
•Media and entertainment
Global Industries
A firm's competitive position in one
country significantly influences its
position in other countries:
•Commercial aircraft
•Semiconductors
•Heavy machinery
•Pharmaceuticals

18. Multidomestic Strategic Framework: The
CAGE Model
Cultural Differences
Variations in language, traditions, social norms,
religious beliefs, and consumer preferences that
affect market acceptance
Administrative/Political
Government regulations, legal systems, institutional
frameworks, historical ties, and political relationships
between countries
Geographic
Physical distance, time zones, climate, topography,
and transportation infrastructure that impact supply
chains
Economic
Differences in consumer income, cost structures,
financial systems, and economic development that
affect purchasing power

19. Configuration and Coordination in Global Strategy
Centers on where activities are performed:
• Geographic location of value chain activities
• Number of sites for each activity
• Scale and specialization of facilities
• Optimization of location advantages
How similar activities in different countries are coupled:
• Information sharing between locations
• Standardization of processes
• Alignment of strategic decisions
• Resource allocation across markets
•Coordination and Configuration: Further insights into international strategy can be gained by examining two dimensions of
competition in the global market: configuration and coordination.
➢ Configuration centers on where each activity is performed, including the number of locations.
➢Coordination refers to how similar activities performed in various countries are coordinated or coupled with each other.

20. Types of International Strategy
Porter's framework identifies four distinct international strategies based on the degree of coordination of activities
across countries and the configuration (concentration vs. dispersion) of the value chain:
1.Export-based strategy: Concentrated configuration with low
coordination. Ex. Bajaj
2.Country-centered strategy: Dispersed configuration with low
coordination. Ex. Nestle
3.High foreign investment with extensive coordination: Concentrated
configuration with high coordination. Ex. Apple
4.Complex global strategy: Dispersed configuration with high
coordination. Ex. Unilever

21. Building a Unique Competitive Position Globally
Start with Core Strengths
A business marketing firm should globalize first in those business and
product lines where it has unique advantages:
•Distinctive technical capabilities
•Superior product performance
•Proprietary manufacturing processes
•Strong brand reputation
Competitive Advantage Options
To achieve international success, firms must excel in either:
Cost Leadership
Performing activities at lower cost than rivals through scale, efficiency, or
location advantages
Differentiation
Performing activities in unique ways that create superior customer value
and support premium pricing

22. Establishing a Clear Home Base
1
Define the Home Base
The location where strategy is set, core technology is created, and critical
production and service activities reside
2
Evaluate Resource Access
Choose locations with favorable access to required inputs and supporting industries
3
Consider Innovation Ecosystems
Position near relevant knowledge clusters, research institutions, and talent pools
4
Balance Stakeholder Needs
Account for proximity to key customers, suppliers, and regulatory environments

23. Dispersing Activities to Extend Advantages
Optimize Purchasing
Source inputs from the most cost-effective global
locations while maintaining quality standards
Improve Market Access
Locate selected activities near key markets to
demonstrate commitment, respond to regulations, and
tailor offerings to local preferences
Tap Innovation Centers
Strategically place R&D activities in global centers of
excellence to access specialized knowledge and
technologies
Leverage Regional Advantages
Position manufacturing and service operations to
capitalize on regional strengths in infrastructure, labor
skills, and cost structures

24. Coordinating and Integrating Global Operations
Successful global businesses implement four key coordination mechanisms:
1. Clear Global Strategy
Develop and communicate a coherent global vision that is
understood by organizational members across all countries.
2. Consistent Information Systems
Implement standardized information and accounting
systems worldwide to facilitate operational coordination
and performance management.
3. Cross-Border Relationships
Encourage personal connections and
knowledge transfer among subsidiary
managers through rotation programs, global
teams, and communities of practice.
4. Aligned Incentives
Design compensation systems that balance local
performance metrics with contributions to
enterprise-wide objectives and collaboration.