Chapter 1: Global marketing in the firm I. Introduction to globalization
Globalization: reflects the trend of firms buying, developing producing and selling products and service in most countries and regions of the world.
Benefits for the firm which do an international expansion: * New and potentially more profitable markets * Increase the firm’s competitiveness * Facilitates access to new product ideas, manufacturing innovations and the latest technology

Internalization: doing business in many country of the world, but often limited to a certain region (ex: Europe).

A. Industry globalism
The strategic behaviour of firms depends on the international competitive structure within in industry.
In the case of high degree of industry globalism, there are many interdependencies between markets, customers and suppliers, and the industry is dominated by a few large powerful players (global).
Example of global industries: PCs, IT, records, movies and aircrafts.
The other land (local) represents a multidomestic market environment, where markets exist independently from one other.
Example of local industries: hairdressing, foods and dairies. B. Preparedness for internationalization
The degree of preparedness is dependent on the firm’s ability to carry out strategies in the international marketplace and the actual skills in international business operations.
The well-prepared company has a good basis for dominating the international markets and consequently it would gain higher market shares. | | Industry globalism | | | Local | Potentially global | Global | Preparedness for internationalization | Mature | Enter new business | Prepare for globalization | Strengthen your global position | | Adolescent | Consolidate your export markets | Consider expansion in international market | Seek global alliances | | Immature | Stay at home | Seek niches in international markets | Prepare for a buyout |

II. Development of the “global marketing” concept
Global marketing consists of finding and satisfying global customer needs better than the competition, and of coordinating marketing activities within the constraints of the global environment. This implies that the firm is able to: * Develop a global marketing strategy, based on similarities and differences between markets * Exploit the knowledge of the headquarters (home organization) through worldwide diffusion (learning) and adaptations * Transfer knowledge and “best practices” from any of its markets and use them in other international markets

EPRG framework (Perlmutter): * Ethnocentric: the home country is superior and the needs of the home country are most pertinent. * Polycentric (multidomestic): each country is unique and should be targeted in a different way. * Regiocentric: the world consists of regions (ex: Europe, Asia). The firm tries to integrate and coordinate its marketing programme within regions, but not across them. * Geocentric (global): the firm may offer global product concepts but with local adaptation (“think global, act local”).
Glocalization: the development and selling of products or services intended for the global market, but adapted to suit local, culture and behaviour. (Think globally, act locally).

III. Forces for “global integration” and “market responsiveness”
Global integration: recognizing the similarities between international markets and integrating them into the overall global strategy.
Market responsiveness: responding to each market’s needs and wants.

A. Forces for “global integration” * Removal of trade barriers (deregulation): both tariff (import taxes) and non-tariff (safety regulations) have constituted barriers to trade across national boundaries.
Deregulation has an impact on globalization, it reduces the time, costs and complexity involved in trading across boundaries. * Global accounts/customers: customers become global and rationalize their procurement activities, that’s why thy demand suppliers provide them with global services to meet their unique global needs.
So, this consist of global delivery of products, assured supply and service systems, uniform characteristics and global pricing. * Relationship management/network organization: need to rely on a network of relationships with external organizations.
Business alliances and network relationships help to reduce market uncertainties. However, networked organizations need more coordination and communication. * Standardized worldwide technology * Worldwide markets * “Global village”: refers to the phenomenon in which the world’s population shares commonly recognized cultural symbols.
The business consequence of this is that similar products and similar services can be sold to similar groups of customers in almost any country in the world. * Worldwide communication: new internet-based “low-cost” communication methods (e-mailing, e-commerce) ease communication and trade across different parts of the world.
Customers within national markets are able to buy similar products and similar services across parts of the world. * Global cost drivers: economies of scale and economies of scope.

B. Forces for “market responsiveness” * Cultural differences: these cultural differences reflect differences in personal values and in the assumptions people make about how business is organized. * Regionalism/protectionism: regionalism is the grouping of countries into regional clusters based on geographic proximity. * Deglobalization: moving away from the globalization trends and regarding each market as special, with its own economy, culture and religion.

IV. The value chain as a framework for identifying international competitive advantage A. The concept of value chain
Value chain: a categorization of the firm’s activities providing value for customers and profit for the company.

Value activities can be divided into two broad types: primary activities and support activities. a. Primary activities
Primary activities are the activities involved in the physical creation of the product, its sale and transfer to the buyer, as well as after-sales assistance.
The primary activities of the organization are grouped into five main areas: * Inbound logistics: the activities concerned with receiving, storing and distributing the contributions to the product/service.
These include materials, handling, stock control, transport. * Operations: transformation of these various contributions into the final product or service: machining, packaging, assembly, testing, etc. * Outbound logistics: the collection, storage and distribution of the product to customers.
For tangible product: warehousing, material handling, transport.
For service: fixed location (sport event) * Marketing and sales: the means whereby consumers are made aware of the product/Service and are able to purchase it.
This include sales administration, advertising, selling. * Services: these are all the activities that enhance or maintain the value of a product/service.
This include after-sales service (installation, warranties).

b. Support activities
These can be divided into four areas: * Procurement: process of acquiring the various resource contributions to the primary activities. * Technology development: the key technologies may be concerned directly with the product (R&D, product design), with process (process development) or with a particular resource (raw material improvements). * Human resource management: recruiting, training, developing and rewarding people within the organization. * Infrastructure: systems of planning, finance, control.

c. Internal linkages
Internal linkage between activities within the same value chain, but perhaps on different planning levels within the firm. d. External linkages
External linkages between different value chain “owned” by the different actors in the total value system. B. Internationalizing the value chain
The distinctive issues of international strategies can be summarized in two key dimensions of how a firm competes internationally.
The first is called the configuration of a firm’s worldwide activities, or the location in the world where each activity in the value chain is performed.
The second is called coordination, which refers to how identical or linked activities performed in different countries are coordinated with each other.

V. Value shop and the “service value chain”
Two new models of value creation: * Value shops: a model for solving problems in a service environment. Similar to workshops. Value is created by mobilizing resources and deploying them to solve a specific customer problem. Traditional value chain model | Value shop model | Value creation through transformation of inputs (raw material and components) to products. | Value creation through customer problem solving.Value is created by mobilizing resources and activities to resolve a particular and unique customer problem. Customer value is not related to the solution itself but to the value of solving the problem. | | | The traditional value chain consists of primary and support activities:Primary activities are directly involved in creating and bringing value to customers: upstream (product development and production) and downstream (marketing and sales and service).Support activities that enable and improve the performance of the primary activities are procurement, technology development, human resource management and firm infrastructure. | The primary activities of a value shop are: 1. Problem finding: activities associated with the recording, reviewing and formulating of the problem to be solved and choosing the overall approach to solving the problem. 2. Problem solving: activities associated with generating and evaluating alternative solutions. 3. Choice: activities associated with choosing among alternative problem solutions. 4. Execution: activities associated with communicating, organizing, and implementing the chosen solutions. 5. Control and evaluation: activities associated with measuring and evaluating to what extent implementation has solved the initial statement. |

* Value network: the formation of several firms’ value chains into a network where each company contributes a small part to the total value chain. It mediating exchange between customers.

A. Combining the “product value chain” and the “service value chain”
Distinction between hard and soft services: * Hard: production and consumption can be decoupled.
Example: software services can be transferred into a CD. * Soft: production and consumption occur simultaneously.

VI. Information business and the virtual value chain
Virtual value chain: an extension of the conventional value chain, where the information processing itself can create value for customers.
There are four ways of using information to create business value: * Managing risks: the evolution of risk management stimulated the growth of functions and professions such as finance, accounting, etc. These information-intensive functions tend to be major consumers of IT resources and people’s time. * Reducing costs: using information as efficiently as possible to achieve the outputs required from business processes and transactions. * Offering products and services: sharing information with partners and suppliers to enhance customer satisfaction. * Inventing new product: companies can use information to innovate, invent new product, provide different services and use emerging technologies.