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Global Marketing & Global Value Chain

Syed Ferhat Anwar


Professor, IBA
University of Dhaka
International marketing defined
• International marketing is defined as the marketing
carried out across international borders. International
marketing is a strategy that uses extension from the
home country of a firm.
• American Marketing Association defines it as the
international process of planning and executing
concepts to create exchanges that satisfy an
organizational and individual needs

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Global Marketing defined
• Global marketing is “marketing on a
worldwide scale reconciling or taking
commercial advantage of global operational
differences, similarities and opportunities in
order to meet global objectives".
• The Digital World has made global
marketing a lot easier

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International marketing is…
• Country image centric (has resulted in
present perception)
• Country competitive advantage centric
• Nation leading the brand

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Global marketing is…
• Category image centric (Only RMG image of
Bangladesh – Minimum Cost)
• Global availability centric
• Brand leading the nation

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However…
• Both are image dependent
• Both can be success routes for countries
• Probably we can even mix the two

BUT
WE MUST WORK ON IMAGE NOT BLANK

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Global Competitive Index

I N N O VAT I O N D R I V E N

EFFICIENCY
DRIVEN

FA C T O R D R I V E N
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Countries that..

Compete based on FACTOR ENDOWMENTS


Sell Basic Products
PRICE competition
Low productivity, low wages
Room for MASSIVE Growth

FA C T O R D R I V E N

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..focus shifts to QUALITY
of Products

Rising income levels


EFFICIENCY DRIVEN
Yo un g w o r k in g p o p ula t io n

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I N N O VAT I O N D R I V E N
Finally..

Compete based on N O V E LT Y

HIGH Standard of Living

High R&D and Innovation

Ageing Population

Little Growth Potential

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FA C T O R D R I V E N E C O N O M I E S : O V E R V I E W

GDP Per Capita 504 USD •



Bangladesh
India
Pakistan
GDP Growth Rate 5.46% •
• Vietnam
• Cameroon
Population Growth 2% • Ethiopia
• Ghana
Median Age 21 years • Kenya
• Nigeria
Av g . S c h o o l i n g 6 . 5 y e a r s • Tanzania
• Uganda
Govt. Spending 24 . 6 %

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FA C T O R D R I V E N E C O N O M I E S a r e . .

• High Factor Endowment


• Very low GDP/Capita
• Unskilled labor pool
• Poor Infrastructure Homogenous Factors
• High Growth Rates
• VERY LOW Network Readiness
score(1 to 3)

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EFFICIENCY DRIVEN ECONOMIES: OVERVIEW

G D P P e r C a p i t a 24 2 0 U S D •

China
Indonesia
Thailand
GDP Growth Rate 4.61% •
• Egypt
• South Africa
Population Growth 0.2% • Bulgaria
• Romania
Median Age 35 years • Ukraine
• Serbia
Av g . S c h o o l i n g 9 years • Columbia
• Peru
Govt. Spending 35%

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EFFICIENCY DRIVEN ECONOMIES are..

• Low-to-Medium GDP/capita
• Moderate Growth Rates Homogenous Factors
• Younger Demographics
• Relatively Skilled Labor Force
• Goods Market Efficiency and Buyer Sophistication

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I N N O VAT I O N D R I V E N E C O N O M I E S : O V E R V I E W
• USA
• Switzerland
GDP Per Capita 26500 USD •

Singapore
Germany
Italy
GDP Growth Rate 1.86% •
• France
• South Korea
Population Growth 0.16% • Japan
• Norway
Median Age 41 y e a r s • Sweden
• UK
Av g . S c h o o l i n g 11 years Ireland
• Denmark
Govt. Spending 45% •

Australia
New Zealand

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I N N O VAT I O N D R I V E N E C O N O M I E S a r e . .

• High GDP per capita


• Ageing population Homogenous Factors
• Stagnant population growth
• Sluggish economic growth
• Leaders in terms of competitiveness
• Technologically advanced
• High in business sophistication

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Additional Dimension
From 3 to 5 segments

Factor Efficiency Innovation


Driven Driven Driven

Factor Efficiency Innovation


Driven Driven Driven

Factor >> Efficiency to


Efficiency Innovation
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FA C T O R T O E F F I C I E N C Y S TA G E : O V E R V I E W

G D P P e r C a p i t a 1 67 0 U S D
• Azerbaijan
GDP Growth Rate 4.98% • Bhutan
• Philippines
Population Growth 1.5% •

Sri Lanka
Iran
Median Age 27 years •

Algeria
Angola
Morocco
Av g . S c h o o l i n g 8 y e a r s •

Govt. Spending 32%

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FA C T O R T O E F F I C I E N C Y S TA G E H A S . .

• High to moderate growth


Homogenous Factors
• High population growth
• Relatively young demographics
• Improved education levels
• Improvement in infrastructure

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E F F I C I E N C Y T O I N N O VAT I O N S TA G E : O V E R V I E W

GDP Per Capita 6000 USD • Brazil


• Argentina
GDP Growth Rate 3.72% • Chile
• Poland
Population Growth 0.2% •

Russia
Malaysia
Median Age 35 years •

Kazakhstan
Mexico
Croatia
Av g . S c h o o l i n g 1 0 y e a r s •
• Turkey

Govt. Spending 36%

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FA C T O R T O E F F I C I E N C Y S TA G E H A S . .

• Rising income level Homogenous Factors


• Skilled workforce
• Falling population growth rate
• Ageing population
• Impressive infrastructural development
• Technological advances

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The additional politico-economic paradigm
OIL BASED ECONOMIES: OVERVIEW

GDP Per Capita 17000 USD


GDP Growth Rate 3% • Qatar
• Saudi
Population Growth 1% Arabia
• Libya
Median Age 30 years • U.A.E
• Venezuela
Av g . S c h o o l i n g 8 . 5 y e a r s
Govt. Spending 36%

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OIL-BASED ECONOMY HAS..

• High income per capita Homogenous Factors


• High level of primary education
• Increasing population size
• Needs to focus on Innovation and business
sophistication

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Traditional value chain

Firm Infrastructure
HRM
Firm Technology
Procurement
Outbound Marketing
Inbound Logistics Operations Service
Logistics & Sales

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 What are global value chains?
– A global value chain involves all the activities that firms
engage in, at home or abroad, to bring a product to the
market, from conception to final use.

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Definition of Value
 V: Voice of customer want
 A: Association within stake holders
 L: Leverage role in value chain
 U: Use resulting in sustainability
 E: Economy must benefit

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Made From Traditional
to
in Global
WORLD Value Chain

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Show AV1: Made in the World

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GDP Contribution Enhanced productive
from Value Added capacity
Trade

30%
In Developing
Long-term
Countries
industrial
18%
In Developed Countries
Stronger GDP per
capita growth!
upgrading

Employment,
income and Global
development Integration
SFA
opportunities
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 Basic Characteristics of GVCs
– The growing interconnectedness of economies

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Objectives of Global Marketing 1 of 2

• To bring countries closer for trading purpose


• To encourage large scale free trade among the
countries of the world.
• To reduce trade barriers.
• To bring integration of economies of different
countries.
• To strengthen relations among nations for
maintaining world peace.
• To ensure optimum utilization of resources (including
surplus production) at global level.
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Objectives of Global Marketing 2 of 2

 To offer the benefits of comparative cost advantage to all


countries.
 To facilitates and encourage social and cultural
exchange.
 To provide better life and welfare to people.
 To provide assistance to countries facing natural
calamities and other emergencies situations.
 To provide assistance to developing countries in their
economic and industrial growth.
 To remove gap between the developed and
developing countries.
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Strategic option for Globalization

Go Global Create the ideal multimedia Status Quo


environment to attract world-class
companies to use markets as a hub

Enhance domestic Leapfrog into


productivity success in the
Information Age Create value from
Information Age
businesses

Catalyze a highly competitive cluster of


Lead Bangladesh IT companies that become world-
Focus
class over time
Regional Domestic
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Global Marketing Outlook 1 of 2
Mistaken assumptions about LDC
1. The poor have no money.
2. The poor will not “waste” money on non-essential
goods.
3. Entering developing markets is fruitless because
goods there are too cheap to make a profit.
4. People in BOP (bottom of the pyramid) countries
cannot use technology.
5. Global companies doing business in BOP countries
will be seen as exploiting the poor.

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Global marketing Outlook 2 of 2
Theory of International Product Life Cycle (IPLC)
(0) – Local innovation, (1) – Overseas innovation, (2) – Maturity,
(3) – Worldwide imitation, (4) - Reversal

Exporting Other advanced nations


LDCs

0 1 2 3 4

USA (initiating country)


Importing
Source: Sak Onkvist and John J, Shaw, “An Examination of the International Product Life Cycle and
Its Application within Marketing”, Columbia Journal of World Business 18 (Fall, 1983)
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Show AV2 Value Chain Vs Supply Chain

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Global Integration Forces 1 of 2
Driving Forces
 Technology
 Culture
 Market Needs
 Costs
 Free Markets
 Economic Integration
 Peace
 Strategic Intent
 Management Vision, Strategy and Action

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Global Integration Forces 2 of 2
Restraining Forces
 Culture
 Market Differences
 Costs
 National Controls
 Nationalism
 Peace vs. War/ Stability
 Management Myopia
 Organization History
 Domestic Focus
 Political Strength

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Major Decisions
 Deciding to go abroad
 Deciding which markets
 Deciding how to enter markets
 Deciding on marketing programs
 Deciding on marketing organization

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Political Window 1 of 3
 World economic development and well being are linked
to freedom and democracy.
This correlation is the key that explains our world society:

Freedom => Knowledge => Technical progress =


Economic development

This trilogy is the basic equation for development.


Global leaders have to repeat again and again this golden rule.

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Political Window 2 of 3
We have 10 criteria by which to measure knowledge:
 Education rate,
 Number of scientists,
 Illiteracy rate,
 Number of internet users,
 Proportion of exports,
 Population parameters,
 Health status,
 Purchasing and spending powers,
 Geopolitical maturity,
 International relations.

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Political Window 3 of 3

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Foreign Market-Entry Strategies

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Global Entry Modes

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Timing of Entry Strategy 1 of 3
Firms tend to enter markets earlier
 The higher the level of international experience
 The larger the firm/industry size
 The broader the scope of product or service
 When competitors have already entered the market
 The more favorable the risk (political, business, etc) conditions
 When non-equity modes of entry (exporting, licensing, etc) are
chosen
 The near market knowledge is an important factor
 Cultural similarity with the home market is not related to foreign
market entry timing
 Economic factors are more crucial than cultural factors

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Timing of Entry Strategy 2 of 3

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Timing of Entry Strategy 3 of 3

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Exit Strategies 1 of 3
Decisions to exist or divest from foreign market is
neither uncommon nor is it taken lightly. Following
are the major factors contributing to exit.
 Sustained losses
 Difficulty in cracking the market
 Volatility
 Premature entry
 Ethical reasons
 Intense competition
 Resource allocation
 Political difference

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Exit Strategies 2 of 3
Similar to entry barriers there are exit barriers.
These may delay or complicate divestment
decisions. Some of the major factors are
 Fixed costs of exit
 Damage to corporate image
 Disposition of assets
 Signal to other markets
 Negative dilemma in consumers mind
 Long term lost opportunities
 Impact on people associated with the business
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Exit Strategies 3 of 3
Since exit decisions can cause serious setbacks; here
are some guidelines to tackle exit strategies
 Contemplate and assess all options to salvage the
foreign business
 Incremental exit
 Migrate orphaned customers and people in general
 Milking cash cow
 Mergers & acquisitions
 Going public

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Ownership
Exporting Strategies
• Indirect • Joint Ventures
• Direct • Alliances
• Acquisitions

Exit Strategy
Entry Strategy Alternatives

Entry
Strategy
Foreign Production Decision Reentry Strategy
• Licensing
• Franchising
Entry Analysis
• Contract
• Sales
Manufacturing
• Costs
• Assembly
• Assets
• Fully Integrated
• Profitability
Production
• Risk Factors

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Bangladesh under Globalization 1 of 2

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Bangladesh under Globalization 2 of 2
 Pharmaceuticals  Human Capital – Education
– Skill Based
– Generic including Bio Similar – Knowledge Based
– Integrated by Value Chain – Innovation & Research
Demographic Shift
 ICT  Banking
– Clustering strategy  SME based
– Integrated business  Service vs manufacturing
 Light engineering
 Garments  Plastics
– Cross Border  Furniture
 Clustering
 Development  Transit
– Largest contributors in peace – Distribution & Shipping
keeping  Agriculture
 Processing
– IT based development agenda  Jute
– Showcase in SDG
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THANK YOU
QUESTIONS PLEASE
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