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GLOBALIZATION

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The term globalization means International Integration.

It is a process through which the diverse world is unified

into a single society.

Opening up of world trade, development of advanced

means of communication, internationalisation of

financial markets, growing importance of MNC's,

population migrations and more generally increased

mobility of persons, goods, capital, data and ideas

WHAT IS GLOBALISATION ?

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Reasons for Globalization

Unique Competencies

Location Advantages

Experience Curve

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5 Cs Driving Globalization

Customers

Competition

Costs Currency

Country

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Stages in Globalization

Domestic Company

International Company

Multinational Company Global Company

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Global Expansion Strategy

Standardize Products instead of Customized

products

2. Go multilingual 3. Focus narrow and deep

4. Source globally

5. Follow the customer

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Analysis for International Strategy

Internal Analysis

(Availability of resources, Adequate

manpower & expertise, Products applicabilityetc)

Market /Competitive analysis

(Global size, Market growth rate, Number ofcompetitors, Nature of competition, SPELT,

Infrastructure, Economic stability )

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Global Strategy Formulation

The Country Market Choice

Choice of Competitive Strategy

(Porters Generic Model-Cost Leadership,Differentiation & Focus)

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Segmentation

1. Environmental Basis

(A) Geographic

(B) Political

(C) Economic

(D) Cultural

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Cont

2. Market Mix Bases:-

4Ps

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Market Entry Strategies

Exporting

Licensing

Joint Venture

Franchising

Direct Investment

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Exporting

Direct Exporting

firm shipping goods directly to a foreign

market Indirect Exporting

utilise a channel/intermediary

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Key Players in Exporting

Exporter

Importer

Transport provider

Government

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Advantages of Exporting

Less investment

Less risk

manufacturing is home based

Gaining knowledge of overseas marketsbefore investing

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Disadvantages of Exporting

Dependent on overseas agents

Less control

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Licensing

Licensing essentially permits a company in the

target country to use the property of the

licensor.

trademarks, patents, and production

techniques (Intangible property)

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Advantages of Licensing

Large ROI

Good way to start in foreign operations and open

the door to low risk manufacturing relationships

Linkage of parent and receiving partner interests

means both get most out of marketing effort

Capital not tied up in foreign operation

Options to buy into partner exist or provision to

take royalties in stock.

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Disadvantages of Licensing

Limited form of participation - to length ofagreement, specific product, process ortrademark

Potential returns from marketing andmanufacturing may be lost

Partner develops know-how and so license isshort

Licensees become competitors - overcome byhaving cross technology transfer deals

Requires considerable fact finding, planning,investigation and interpretation.

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Joint Venture

An enterprise in which two or more investors

share ownership and control over property

rights and operation".

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Objective of Joint Venture

Market entry

Risk/reward sharing

Technology sharing and joint productdevelopment

Conforming to government regulations

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Advantages of Joint Venture

Sharing of risk and ability

Joint financial strength

May be only means of entry

May be the source of supply for a thirdcountry

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Disadvantages of Joint Venture

Partners do not have full control of

management

May be impossible to recover capital if needbe

Disagreement on third party markets to serve

Partners may have different views onexpected benefits

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Franchising

Franchising offers complete brand conceptand operating system

McDonalds

KFC

Coca Cola

Pepsi

Kidzee

Amul

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Direct Investment

Direct ownership of facilities in the target

country

Transfer of resources including capital,

technology, and personnel

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Thank YouThank You

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