Global Marketing

Exporting, licensing, and using trading companies are preferred modes of international market entry for firms with a(n) ____ structure.

Globalization is one of the crucial factors that have impacted the business. Without the proper utilization of the effects of the globalization, it is very difficult for a company to get the competitive advantage. There are many factors that need to be considered before rolling out the product in the global market. The first is to analyze the value chain of the company and to understand and decide on the position where they management wants the company to be into. Then comes the licensing,

A company which is hoping to prosper in the foreign market must pay real close attention to the new countries laws and regulation. They also need to pay more attention the market that they are trying to sell the product to. Thus doing more research and positioning and constant improvement is necessary for the company to strive in order to reach the

A firm 's international marketing program must generally be modified and adapted to foreign markets. This international marketing program uses strategies to accomplish its marketing goals. Within each foreign nation, the firm is likely to find a combination of marketing environment and target markets that are different from those of its own home country and other foreign countries. It is important that in international marketing, product, pricing, distribution and promotional strategies be adapted accordingly. In order for an international firm to function properly, cultural, social, economic, and legal forces within the country must be clearly understood.

Indirect exporting is when a company sells their product to a third party that will then sell that product to customers in foreign countries (2012). Strengths for this type of strategy are there is little financial commitment, the financial risk is reduced by using the third party, and there is a reduced risk that the future of the product or brand will look bad in the new market (2012). A limitation of this entrance strategy are the company has to rely on the third party to get customers and negotiate the sale prices for them (2012). Direct exporting is when the firm that is entering the market enters on its own and handles their own exports (2012). Strengths of this strategy are the company gets to handle their own exports, they have complete control, the company also has a greater amount of potential returns, and they can maintain a greater profit from their sales (2012). Limitations of this are there is a higher risk involved since the company is handling its own foreign markets, and there is a larger investment in not only money but time (2012). Licensing is when there is a relatively low link to risk that permits the company to enter into the market (2012). The strengths associated with licensing are no large capital investment, the company may be able to get around the restrictions and barriers a country can put up, and the company can charge a higher price for their product (2012). Limitations of licensing are

This allows other companies to sell and produce the main goods under the licensee’s name. Under licensing agreements there are two types of licensing, there’s cooperating licensing and franchising. A cooperative license allows companies to license their products which allows other companies to produce the goods. This eliminates the need of having to set up warehouses and production equipment in other countries to expand. This can lead to greater brand recognition because the brand will be introduced to new countries and markets. Another positive of licensing products is that it can allow companies to bypass tax’s and tariffs. As the goods are being produced in the country for the given market there is no need to import. For example, Coca Cola is produced in Australia and sold only to the Australian market. While Coca Cola in America is made by the American licensee and only sold to the American market. The problem with allowing other companies to produce your good is that the quality may differ. Some people believe that coke in America tastes differently to Mexico. This is believed to be from the different sugars present in each recipe. Coca cola hasn’t been able to change the sugar as the products are locally produced. Another negative of using licensing can be that licensees may turn into competitors. This can occur when the license expires and hasn’t been renewed. Workers of the company will have insider knowledge of products and

As a company decides to become a MNE (Multinational Enterprise), it “deploys resources and capabilities in the procurement, production, and distribution of goods and services in at least 2 countries. Rothaermel (2013, p. 271) By licensing patents to foreign competitors, it is believed that it will in turn reducing its own competitive advantage due to decreasing the uniqueness of its product. Allowing a foreign competitor to have permission to utilize its product, consumers will have access to the targeted product from more than one source. As the competitor is foreign and presenting the targeted product within a market outside of the MNE’s market base, complete elimination of the MNE’s competitive advantage would be unlikely as long as there

Alex wanted to capture foreign markets directly but he didn’t have enough resources on its own to do that. After their promising new product was developed, they had a chance to license it to a Scottish manufacturer, McTaggart. McTaggart couldn’t build the market based on shipments from America because it was too expensive. There was a 5% tariff coming in, freight and insurance was another 10% on top of the price and also there was the matter of currency values. He wanted to enter a licensing agreement. McTaggart already had a demand for the product so getting into a license agreement with him would be in Alex’s advantage. For Alex it was a good way to enter the U.K. market swiftly via McTaggart’s sales force. There was no financial risk involved. If Alex agreed on licensing he would have advantages such as low investment costs, reduced financial risk and quick market entry. He agreed on a deal with McTaggart for the U.K market only so he got his chance to exploit its technology there. The license granted to McTaggart will help bring in the cash flow needed so that they can try to expand. However, the profit of the licensor may not be maximized

We found innovation, cost reduction and market conditions as key elements supporting a successful internal strategy and strategic alliance and diversification to be among the most widely applied strategies for a foreign market penetration and development, while fusions and licenses were the least preferred.

The original formula for Red Bull was developed in 1964; however, the Red Bull company was not founded until 1984 after a merger between Dietrich Mateschitz, marketing guru, and Chaleo Yoovidhya, the owner of the Red Bull formula. Categorized as an energy drink, Red Bull was initially designed to “treat jet lag and boost energy for truck drivers” (Hollensen, 2012). In today's era, Red Bull is commonly used as an energy drink; like coffee, and as a mixer in alcoholic drinks, like Red Bull Wings and the Jägerbomb. This aligns with the company's focus on the younger generations of partygoers and post-secondary students.

The food retailing business requires a high level of national differentiation/ local responsiveness. In my opinion, this also explains the use of licensing. A company like 7-Eleven has to take a lot of factors into account in each country. The way the Japanese eat, and like their high levels of service everywhere differs completely from the way that the Europeans do, and also, even within a country habits differ in different regions. Then, there are the extensive distribution channels to consider for each country, in order to get the wide variety of products into the stores. With licensing, the demand on management is low, and therefore the risks as well.

Companies can decide to go global or to enter international markets for various reasons, and these different objectives at the time of entry that enable the business to produce different strategies and the performance goals, and even forms of market participation.

Well known companies like Nike, Microsoft, Sony, Shell Group are just some of the big companies that went global and expanded their trading around the world, they are large businesses that operate internationally in many countries. Development of worldwide integration urges companies to reach out international markets and interact with foreign customers. Businesses focus on fulfilling the demand of the market by its products or services, besides their target is increasing profit, in order achieve these goals they favor to expand their work in a foreign market. Other reasons to internationalize their business may be to become

Licensing differs from contract manufacturing in that more value chain functions have been transferred to the licensee. In outsourcing production and downstream activities a licensor firm can concentrate on its core competences and therefore will remain technologically superior in its product development- for example Apple licenses its brand to manufacturers of accessory products, and the BBC licenses rights to broadcast TV shows around the world. However a lack of control over licensor operations and therefore quality may lead a company to use franchising (a sub variant of licensing) in which the franchisor gives a right to the franchisee against a

First the licensing may result in a firm's giving away its know-how that is giving away his competitive advantage to the competitor in the foreign market. Suppose Ford gives license to AvtoVAZ, one of the large Russian manufacture then it can start its own car manufacturing using Ford's know how. Second disadvantage is providing the license to the company there is no tight control over the subsidiary firm in foreign market. Ford wants to exploits the opportunity that it has in Russia by its own way. Licensee may not follow all instruction of Ford. The last problem with the giving license is that some terms of know-how can not be defined on a page or documented. Like service industry (Hospitality industry) that how to license the subsidiary for "how to well come and how to greet" as a part of the service.(Hill, 2003,p-215).