Identifying and Analyzing International Marketing Opportunities

“Identifying and analyzing International Marketing Opportunities” International Marketing The performance of business activities that direct the flow of a company’s goods and services to consumers or users in more than one nation for a profit. Marketing is the process of determining the consumer needs, converting them into products or services to satisfy the user needs and earning profit there from. Main Functions in International Marketing • • • • • • •

Choosing the basic route for international marketing Market selection and product selection Selection of distribution channels Developing pricing strategy International marketing communication Organizational adaptations Handling business ethics

The Four Risk Matrix POLITICAL ENVIRONMENT Political forces influence the legislations and government rules and regulations under which the firm operates. Every company faces political constraints in the form of antitrust laws, fair trade decisions, tax programs-, minimum usage legislation, pollution and pricing policies, administrative activities and many other actions, aimed at protecting the consumers and the local environment. These laws, rules and regulations affect a company's profits. However, there are other political actions such as patent laws, government subsidies and product research grants that support business activities. Thus, political forces influence the organization both positively and negatively. Political activity also influences three additional functions, viz. the supplier function, the customer function and the competitor function. SOCIAL ENVIRONMENT The social environment is an important factor as changes in the values, beliefs, attitudes, opinions and lifestyles in society create potential opportunities for an organization. For a company to grow, it is necessary to take advantage of societal changes.

The cultural, demographic, religious, educational and ethnic conditioning of individuals in society affects the social environment ECONOMIC ENVIRONMENT Every market is unique and consumption patterns change along with the wealth of the consumers in various market segments. For strategic planning all the economic trends at national and international levels have to be considered. Prime interest rates, inflation rates and trends in the growth of the Gross National Product (GNP), general availability of credit, the level of disposable income and the propensity of people to spend are the economic trends that have to be analyzed. LEGAL ENVIRONMENT The move toward deregulation, which involves the elimination of many legal restrictions, is a significant trend. Due to this, entry barriers are minimized leading to enormous competition among the firms in an industry. In 1979, the airline industry faced problems due to deregulation. There were fare-wars that lasted for many years. Another legal problem pertains to the depletion of the ozone layer, acid rain and global warming. These problems are caused due to air pollution by chloroflouro carbons and other pollutants that are out in the atmosphere become hazardous to the environment . As a result governments will implement environmental regulations to minimize this pollution. OPERATING ENVIRONMENT The operating environment includes factors in the immediate competitive situation regarding the procurement of resources, profitability for the company from their products and services etc. The operating environment consists of factors like : – Competitive position, – Customer profile, – Reputation among suppliers and creditors, – An accessible labor market. This environment is also called the competitive or task environment.

The Bargaining Power of Suppliers The bargaining power of suppliers determines the company's profitability when the suppliers are able to force the price that the buyer must pay for the product. The Threat of Substitute Products Substitute products can match the needs of the customer in the same way as the original product. Coffee, tea and soft - drinks, all serve the consumer's need for refreshment. Due to the existence of substitutes such as tea and soft drinks, the prices charged by companies in the coffee industry are restricted. If coffee prices are hiked, customers have the option of switching over to tea or soft drinks, which are its substitutes. A close substitute is a potential threat to the company's product. The existence of a substitute limits the price which can be charged for a product and therefore the profitability of the company. Deciding How to Enter the Market – – – – – – – – –

Indirect Exporting Direct Exporting Licensing Joint Ventures Direct investment Acquisitions Production Sharing Management Contracts Turnkey Operations

Indirect Exporting – – – –

Domestic exporter Domestic based exporting agent Export management company Cooperative organization

Direct exporting – – – –

Foreign based distributors or agents Overseas sales branch or subsidiary Traveling Export Sales Representatives Domestic based export department or division

Licensing A license will be given by a licensor to the foreign company to use its production process, trademark, patent, trade secret or other item of value for a fee or royalty. The entry of a manufacturer in the foreign market will be of little risk. Joint ventures Foreign investors and local manufacturers join together to form joint ventures. Technological transfer, market sharing and investment sharing are involved in a joint venture. The ownership and control is shared by the foreign investor and local produce Direct investment This is the ultimate way of going international. The involvement of a company in ownership and control of foreign-based assembly or manufacturing or service facilities is included in direct investment. The foreign company can buy part of the local manufacturing facilities or can buy full interest in the local company, or can build its own facilities on its own. Acquisitions It is better for a foreign company to acquire an already established company in the host country rather than start from scratch. The established company can be purchased by the foreign company in its entirety rather than on a piece meal basis. Production sharing The higher labor skills and technology available in developed countries with the lower cost labor available in developing countries is combined by production sharing. Management contracts A large amount of management talent is available at large MNC’s. Management contracts offer a means through which an MNC may use part profits and personnel to assist a firm in a host country for a specified fee and period of time. Until the local management is trained and developed, the MNC can continue its operations by earning some income from its investment. Turnkey operations For the construction of operating facilities in exchange for a fee, turnkey operations come into the picture. After completion, the facilities are transferred to the host country. Normally, the government department or agency is the customer in many turnkey projects. The foreign company’s supply some of its own equipment for the project.

Attractive opportunities – Breakthrough opportunities are best – Opportunities that help innovators develop hard-to-copy marketing strategies that will be very profitable for a long time. – It’s hard to continue providing superior value to target customers if competitors can easily copy your marketing mix. – Competitive advantage is needed--- At least – A firm has a marketing mix that target market see as better then a competitor’s mix. – There are three basic types of advantage: lower cost, higher quality, and customer focus. Types of Opportunities Four Basic Types of Opportunities

Opportunity Evaluation Developing and applying screening criteria Criteria 1. Qualitative Based on Sales, profit, Return on Investment. 2. Qualitative Some kind of Statement, news.

Industry Attractiveness HIGH Business Strength = Growth Medium Business Strength = Borderline Low Business Strength = No Growth Considering International Opportunities – Smaller World – Competitive Advantage – Better Trends – Early Start Environmental Sensitivity Insensitive: Industrial Products General: Basic Commodity type consumer Products. Sensitive: Consumer Products that are linked to cultural Variables. Evaluate Opportunities BUSINESS STENGTHS – Size – Growth – Share – Position – Profitability – Margins, – Technology position – Image – Pollution – Strength/ weakness INDUSTRY ATTRACTIVENESS – – – – – – –

Size Market growth Price Market diversity Competitive structure Industry profitability Technical role

–

Environment factors

Analyzing Consumer Markets and Buying Behavior – customers is never simple – They change in the last minute – Say one thing; do another – Companies profit from understanding how and why customers buy “Olive Oil”

Cultural Factors – Fundamental determinant of a person’s wants and behaviors. – They are shaped by parents, or family and other close matched institutions. – Set of values and preferences. – Subculture is a more specific form within a culture. Buyer’s characteristics – – – –

Cultural Personal Social Psychological

World Trade Organization Location: Geneva, Switzerland Established: 1 January 1995 Created by: Uruguay Round negotiations (1986-94) Membership: 146 countries (as of 4 April 2003) Budget: 154 million Swiss francs for 2003 Secretariat staff: 550 Head: Supachai Panitchpakdi (director-general) (2003) Functions: • Administering WTO trade agreements • Forum for trade negotiations • Handling trade disputes • Monitoring national trade policies • Technical assistance and training for developing countries • Cooperation with other international organizations – Represents 90% of world trade

– 9 of 10 disputes satisfactorily settled – Tariff reduction from 40% to 5% – Trade volume of manufactured goods has increased 20 times – Policing organization for Services WTO at work  280 disputes brought to WTO between 2000 and 2007

 US is biggest WTO user  Big wins - beef - bananas  Big loss - Kodak

Case Study

Archer Global Company SWOT ANALYSIS

Strengths Wholly owned production facility. – Pioneer of Biodegradable packaging materials. – Competitive prices. – Designers solution to customer for packaging. – Location is South China so we use duty free HK port. – Providing complete packaging solutions under one roof. – Nominations of all big buyers. – Worldwide offices to serve at customer’s door. – Research & development. –

Weakness Limited production facility of 38 forty foot containers. – Factory management doesn’t know English, so they use few numbers of translators. –

Opportunities – We can establish more manufacturing units in different countries. – Many more markets to explore. – Research & Development to bring more ideas for customers

Threats – Local players. – Competition.

Organizational Culture

•

Archer Global Company is Way-emphasizes the speed and flexibility of decisionmaking.

•

Flat-networked organization with a certain amount of bureaucracy.

•

Equality of opportunities and employee participation.

•

Our company Values are Customer Satisfaction, Respect, Achievement, and Renewal.

Mission To provide products, services and solutions of the highest quality and deliver more value to our customers that earns their respect and loyalty.

Products Low and Non-Toxic PVC/PP/PE/EVA/PEVA bags and boxes, PVC soft case bags, Garment bags, Rigid PVC boxes, Paper bags / boxes, Corrugated / Corruplast boxes, Blister, Zipper, PVC Film, Paper Sticker, Clear Sticker, Hangtag / Insert card.

Direct exporting Currently we are exporting directly from China to other countries round the world, recently our factory situated in South China and using HK free port for all the shipments. And soon we are establishing one more unit in West China near Shanghai to increase our production facility and also working on Join venture in Pakistan for a new factory.

Attractive Opportunities

In 1995 our company established office in Georgia to stay in contact with buyers like Walmart, Target directly to add ourselves in their suppliers list and soon we succeed and got the direct nomination and started offering them packaging directly from China to USA warehouses. In 2002 our company entered in Turkey and established first sales office there. 2006 I joined Archer Global Company and established office in Pakistan and started following customer from Pakistan and India, very next year in 2007 India office was established once we got some good response from India market.

Packaging Industry in Pakistan In Pakistan there is no standardized packaging manufacturing company except Packages, but they aren’t dealing in Vinyl materials. So our company decided to avail this opportunity of introducing vinyl packaging solutions to Pakistan industry.

Toxic free packaging Up till now here Toxic free packaging materials are not available in Pakistan which is basic need of current Era, everyone getting conscious about use of packaging that should be Toxic free, Toxics may cause different kind of allergies and diseases to human.

Legal Factors In Pakistan there is duty of total 45% if we import packaging material for internal use, but 0% duty if importing for re-export purpose. Exporters were our target market so that we avoid extra duties on our packaging material imports from China to Pakistan. Textile Industry Textile Industry have big portion in Pakistan’s total Exports, our main Target market is Textile industry and especially Faisalabad is main city of Textiles, on second number here is Karachi city having many Home made ups manufacturers and few other cities like Lahore and Sialkot.

Market Research

We held a research of target market to a get better picture, results were positive in a sense that no Local supplier is offering up to standard material which is basic requirements of buyers from Europe and USA. Customers were also seeking quality in packaging that was our main object to offer them in shape of standard material and quality product along with competitive prices and better services. Prices Prices of local market are high and our prices are competitive even after paying freight from HK port to Pakistan port, so it was another big benefit for us. Competitor There was only one competitor in Pakistan whom had already established their office here and covering big portion of market but offering high prices and we realized that was trading agent instead of manufacturer. Business Growth There are high chances of business growth in this sector, cause ultimate buyer of those products are USA and Europe markets, so they are getting conscious about the quality packaging and innovations. Eco Friendly In Textile sector buyers started asking about the Eco friendly packaging since USA Govt. took some steps after realizing that packaging performing big role in damaging environment, so they want packaging that should be Eco friendly.

Innovative Packaging Solution Archer Global Company is pioneer of Introducing Biodegradable materials to the World known as “PEVA”, these materials do not affect environment and totally toxic free, the main advantage is auto dissolve factor of our material, after using the product packaging reaches to garbage, once it go to water or buried in soil, biodegradation process starts and after 6 months to maximum 5 years material get dissolve in environment without releasing any toxics. Our company appreciated for developing such materials and got huge business from USA and Europe market, and recently introduced another material known as “MPE” which is faster in degradation as compare to previous material, Covering more countries

Now we have established offices in India, Egypt, Brazil and getting huge business from all these markets and planning more to expand in Bangladesh very soon. Manufacturing plants in Pakistan Our company working on Joint Venture with a local company to establish another factory in Pakistan covering business from India and Pakistan and middle east. This new factory establishment require 1 million US Dollars investment and working on feasibility report is already been proceeded. Promotions We are promoting our company by taking part in Exhibitions and business weeks held in USA and round the world.