2. intl. mkt. environment
TRANSCRIPT
Global Global Marketing Marketing
EnvironmentEnvironment
Jan Surya Jan Surya SharmaSharma
INTERNATIONAL MARKETING ENVIRONMENT
MACRO – MICRO & INTERNAL MACRO – MICRO & INTERNAL ENVIRONMENTENVIRONMENT
THE MACRO-ENVIRONMENT includes all factors influencing organization & out of its direct control. Laws competition and rivalry in a market new entrants ever changing needs changes in culture, politics, economics &technology
THE MICRO-ENVIRONMENTinfluences the organization directly.
includes suppliers, consumers & customers, and other local stakeholders.
THE INTERNAL ENVIRONMENTinternal factors or the 'internal environment‘
include ‘5 Ms'
Men, Money, Machinery, Materials & Markets.
INTERNATIONAL MARKETING ENVIRONMENT
Environmental ScanningProcess of collecting information about the marketing environment in order to identify and interpret potential trends.
Three Questions of Determining a Competitive Strategy:
-Should we compete?-If so, in what markets?-How should we compete?
MARKETING ENVIRONMENT MARKETING ENVIRONMENT & &
COMPETITOR ANALYSISCOMPETITOR ANALYSIS
SWOT analysisPEST analysisFive forces analysis
SWOT analysisSWOT analysis
Strengths Weaknesses OpportunitiesThreats
Internal
External
SWOT ANALYSIS - Strengths & Weaknesses - Internal Factors
Strength:- Your competencies & expertise - New, innovative product or service- Location of your business - Quality processes and procedures- Other aspect that adds value
Technical Skills – Competent HR - Production process – Inputs & RM
Weakness:- Lack of mkting expertise- Undifferentiated products/services- Location of your business- Poor quality goods or services- Damaged Image/ Reputation
No Prior Experience – Financial
Contraints
SWOT ANALYSIS contd…Opportunities & Threats - External factors
Opportunities:- Developing market/High Growth Mkts.- Mergers, Jt. Vent. or str. Alliances- New profitable market segments - A new international market- Mkt vacated by ineffective competitor.
Threats:ew competitor in home market
- Price wars with competitors- Entry of new innovative product/service- Superior access to channels of distribution - New Trade barriers Tarrifs non-tariffs
PEST Analysis
Political factorsEconomic factorsSocio-cultural factorsTechnological factors
Political/legal - EST
Monopolies legislation Environmental protection laws Taxation policy Employment laws Government policy Legislation Others?
Political/legal Laws, rules, and standards The political environment
Ideology Nationalism Stability International relations The legal environment
International law Terms of access: Tariff systems & Non-tariff barriers Monetary controls & Exchange rate policies
Restrictive administrative and technical regulations Other Issues:
1."Institutional environment" - made up of political, social & legal ground rules.
2. Property rights - patents, trademarks. 3. Taxation & taxation schemes abroad? 4. Recourse - possibility & length of action for image damaging & arbitration. 5. Movement of equity & expropriation threatsThe three basic principles are: i) nondiscrimination ii) open markets iii) fair trade prohibiting subsidies etc.
P Economic Factors - ST
Inflation Employment Disposable income Business cycles Energy availability and cost Others?
Economic FactorsMajor Changes in Global Economy Capital movements than Trade is driving force:
World Trade - US$ 3 trillion; London Eurodollar market - US$ 75 tr.paFOREX Transactions - US$ 35 trillion p.a.
Production become "uncoupled" from employment:Mfring share at 20-25% of GNP while employment is on decline
Primary products "uncoupled" from industrial economy:Finished products prices gone down while basic is up or vice-versa
World economy is in control - individual nations are not, - Developing countries export primary products & at the mercy of world supply and demand movements- Rapid globalization let to global competition pushing up quality. Developed worlds on industrial & service products of high value addition while opportunities is left for developing countries to produce and export low value added items of basic necessity.
Economic Factors World trade
Composition of world trade Patterns of trade Comparative costs - comparative advantage Balance of payments Government policy World Institutions Regionalism The international financial system Individual economies a) Population b) Income c)The nature of economy d)The nature of economic
activity e) Infrastructure f) Urbanisation g) Size of market Stages of market development
i) Preindustrial countries - incomes > US$ 400 GNP per capita ii) Less developed countries - between US$ 401 and US$ 1,635 iii) Developing countries - between US$ 1,636 and US $ 5,500 iv) Industrialised countries - US$ 5,501 and US$ 10,000 v) Advanced countries - + US$ 10,000 per capita income
CONTD…
Economic FactorsWorld Bank classification GNP per capita. Low income economies: US$ 675 or less. 41 nations – China, India, Tanzania,
Kenya etc. Middle income: US$ 676 - US$ 2,695. 40 nations - Zimbabwe, Mexico, Thailand
etc. Upper middle: US$ 2,676 - US$ 8,355. 17 nations - Brazil, Portugal, Greece etc. High income economies: US$ 8,356 or more 24 nations – USA, Germany,
Japan, UK, France, and other OECD members Other economies - communist bloc.
Rostow (1971) five stage model of economic takeoff: Stage 1- Traditional society, little increase in productivity, no modern science
application systematically, low level of literacy Stage 2 - Preconditions of takeoff, modern techniques in agriculture and
production, developments in infrastructure and social institutions Stage 3 - Takeoff, normal growth patterns, rapid agricultural and industrial
modernisation, good social environment. Stage 4 - Drive to maturity, modern technology applied to all fronts,
international involvement, can produce anything Stage 5 - Age of high mass consumption, production of durable goods and
services, large amounts of
PEPE S Socio-cultural ocio-cultural Factors Factors TT
Demographics Distribution of income Social mobility Lifestyle changes Consumerism Levels of education Others?
SSocio-Cultural factorsocio-Cultural factors Maslow approach The self reference criterion (SRC) Diffusion theory High and low context cultures
The elements of culture : material culture language aestheticseducation religion attitudes & values social organization.
Hofstede's contribution Cultural Variables "Power distance" - endorsement and its inverse for inequality. "Individualism" "Masculinity" - assertive or competitive orientation, sex role distribution and
caring attitude towards others "Uncertainty Avoidance" "Confucian Dynamism" - legitimacy of hierarchy & valuing of perseverance and
thrift. "Integration" - Degree of tolerance, harmony & friendship at the expense of
competitiveness "Human Heartedness" - Open-hearted patience, courtesy & kindness. "Moral Discipline" - Rigid distancing from affairs of the world.
PES Technological
New discoveries and innovationsSpeed of technology transferRates of obsolescenceInternetInformation technologyOthers?
Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980, p. 4.
Threat ofThreat ofsubstitutessubstitutes
POTENTIAL entrants
Threat ofThreat ofentrantsentrants
SUPPLIERS BargainingBargaining
powerpower
SUBSTITUTES
BUYERS
BargainingBargaining powerpower
COMPETITIVE RIVALRY
FIVE FORCES ANALYSIS
Five Forces Analysis: Key Questions and
Implications What are the key forces at work in the competitive
environment? Are there underlying forces driving competitive
forces? Will competitive forces change? What are the strengths and weaknesses of
competitors in relation to the competitive forces? Can competitive strategy influence competitive
forces (e.g. by building barriers to entry or reducing competitive rivalry)?
ANALYZING COMPETITION
Porter’s 5force Model
SUPPLIER POWER SUPPLIER POWER Supplier concentration Importance of volume to supplier Differentiation of inputs Impact of inputs on cost or differentiation Switching costs of firms in the industry Presence of substitute inputs Threat of forward integration Cost relative to total purchases in industry
BARRIERS TO ENTRYBARRIERS TO ENTRY
Absolute cost advantages Proprietary learning curve
Access to inputs Government policy Economies of scale Capital requirements
Brand identity Switching costs
Access to distribution Expected retaliation Proprietary products
THREAT OF THREAT OF SUBSTITUTESSUBSTITUTES -Switching costs
-Buyer inclination to substitute
-Price-performance trade-off of substitutes
BUYER POWER BUYER POWER Bargaining leverage
Buyer volume Buyer information
Brand identity Price sensitivity
Threat of backward integration Product differentiation
Buyer concentration vs. industry Substitutes available
Buyers' incentives
DEGREE OF RIVALRYDEGREE OF RIVALRY
-Exit barriers -Industry concentration
-Fixed costs/Value added -Industry growth
-Intermittent overcapacity -Product differences
-Switching costs -Brand identity
-Diversity of rivals -Corporate stakes
RIVALRY
POTENTIAL ENTRANTSBARRIERS TO ENTRY Absolute cost advantages Proprietary learning curve Access to inputs Government policy Economies of scale Capital requirements Brand identity Switching costs Access to distribution Expected retaliation Proprietary products
SUBSTITUTES
THREAT OF SUBSTITUTES Switching costs Buyer inclination to substitute Price-performance Trade-off of substitutes
SUPPLIERS POWER
SUPPLIER BARGAINING POWER Supplier concentration Importance of volume to supplier Differentiation of inputs Impact of inputs on cost or
differentiation Switching costs of firms in the industry Presence of substitute inputs Threat of forward integration Cost relative to total purchases in
industry
BUYERS POWERBUYER POWER Bargaining leverage Buyer volume Buyer information Brand identity Price sensitivity Threat of backward integration Product differentiation Buyer concentration vs. industry Substitutes available Buyers' incentives
COMPETITIVE RIVALRY
DEGREE OF RIVALRY -Exit barriers -Industry concentration -Fixed costs/Value added -Industry growth -Intermittent overcapacity -Product differences -Switching costs -Brand identity -Diversity of rivals -Corporate stakes
Porter’s Diamond of National Advantage: As Applied to India
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