Planning involves systematically anticipating and managing the impact of external factors on a company’s strengths, weaknesses, objectives, and goals to achieve desired outcomes. There are various types of planning, such as corporate planning, strategic planning, and tactical planning. Corporate planning focuses on long-term goals and objectives for the entire enterprise whereas strategic planning is conducted by top-level management to address both short-term and long-term goals considering product requirements, capital, and research.
Market planning involves determining the necessary actions and resources to accomplish the goals outlined in strategic planning. Evaluating a company’s objectives and resources at each planning stage is essential. Clearly defining objectives establishes a cohesive direction for both domestic and international divisions, guaranteeing consistent policies. Objectives may need modification, adjustments to international plans’ scope may be necessary, or they might even need to be abandoned if needed.
One market may have the potential for immediate profit but may not have a good long-term outlook, while another market may offer the opposite situation. The reconciliation of such differences can only occur when corporate objectives are clearly defined. The commitment of management towards internationalization plays a significant role in determining the planning approach of an international firm. This commitment also influences the international strategies and decisions made by the firm.
The initial stage in the international planning process involves determining the specific country market for investment. It is crucial to assess a company’s strengths, weaknesses, products, philosophies, and objectives in relation to a country’s limiting factors and market potential. This phase involves analyzing and screening countries to exclude those that lack adequate potential for future consideration.
The next step in the process involves the establishment of screening criteria to assess potential countries. These criteria take into account factors such as the company’s strengths and weaknesses, products, philosophies, objectives, and international commitment. An illustrative example of evaluation criteria can be:
- Minimum market potential,
- Minimum profit,
- Return on investment,
- Acceptable competitive levels,
- Standards of political stability,
- Acceptable legal requirements,
- Other measures suitable for company’s products.
The most common approach used by companies taking their first international step is indirect exporting, which helps minimize the risks of financial loss. Indirect exporting involves selling to a buyer (importer or distributor) in the home country, who then exports the product. Customers who purchase through indirect exporting include large retailers like Wal-Mart or Sears, wholesale supply houses, trading companies, and others that supply goods to customers abroad. The primary motives for exporting are often to take advantage of market opportunities or gain business to cover expenses.
The Internet is becoming more important as a method for entering foreign markets. In the beginning, Internet marketing was mainly focused on domestic sales. However, many companies started receiving orders from customers in other countries, leading to the creation of international Internet Marketing (IIM). For high technology and expensive international products, it may be necessary to have a direct sales force in a foreign country. This could involve establishing an office with local and/or expatriate managers and staff, depending on the market size and potential sales.
Communications
Communication challenges in Saudi Arabia involve various aspects such as public relations, advertising, marketing, and product positioning. One example is Fuji Photo’s difficulties in implementing their marketing strategies because of the cultural norm that prohibits capturing images of unveiled women. Similarly, Gillette faced a disparity in shaving habits between Indonesia, Hong Kong, and the United States. In Indonesia, approximately 80% of men shaved an average of five times per month while men in Hong Kong shaved 12 times monthly. On the other hand, men in the U.S. averaged 26 shaves per month.
Additionally, the growth rate of Asian beards was slower compared to that of Caucasian or Latino individuals. There are numerous instances of companies making significant mistakes when entering foreign markets. For instance, American Airlines aimed to promote its brand-new leather first class seats in Mexico. However, the company directly translated its “Fly in leather” campaign, which inadvertently meant “Fly naked” (vuela en cuero) in Spanish. Similarly, when Gerber launched its baby food line in Africa, they used the same packaging as in the United States, featuring a joyful baby image on the label.
Later, it was discovered that in Africa, companies commonly include pictures on labels to indicate the contents, as many people are unable to read. The key considerations in Sales and Marketing are universal, whether companies are selling a product or service. The first step is to identify the target market and then customize the marketing strategies for that particular local market. In 1991, Mastercard aimed to expand its brand globally and decided to sponsor prominent soccer events. They ensured that their local partners were involved in the events through media purchases that directed individuals to attend.
They reached a worldwide television audience of 31.2 billion. There is no superior marketing or advertising campaign compared to others. Companies need to merge different platforms to ensure their products are widely seen as many times as possible. Sergio Zyman, the former CEO of Coca-Cola, withdrew Coke’s acclaimed “Mean Joe Greene” advertisements because they did not boost sales. A company with a limited budget can distribute ads over time to create the illusion of omnipresence.
For instance, if there are four periodicals in a certain industry, the company decided to advertise three times in each of the periodicals during the course of a year. This means that they have an advertisement once every month for a year. There are certain companies that have established well-known brands and can take advantage of this by licensing their products. Examples of licensing opportunities include Disney, Warner Brothers, celebrities, and sports figures. These entities can license their products to manufacturers or distributors in a specific country. Negotiations for licensing agreements are personalized based on the specific agreement since licensing involves intellectual property.
In order to successfully expand and effectively control the flow of products and information in other countries, technology is essential. Companies that have efficient systems can reduce both internal and external costs. Nowadays, the cost of accessing technology is quite low, and without being online, a company will face challenges in its expansion efforts due to the speed and connectivity of the Internet. In the US and certain other regions, retailers require suppliers to be connected to them through Electronic Data Interchange (EDI), which is a standardized method for placing orders, receiving advanced delivery notices, and receiving invoices. This technological advancement, combined with the use of bar code reading technology, has significantly decreased the time and money required for order processing, receipt of goods, and inventory record-keeping.
Logistics and Distribution: While it may be simple to produce goods domestically, transporting them to another country poses a challenge for companies. The regulations governing sales in a particular country also have an impact on logistics. In Germany, for instance, it is mandatory to disclose the total cost to the consumer, encompassing duties, freight, and taxes. As a result, advanced real-time technology capable of managing global pricing becomes essential.
Building strong and lasting relationships with suppliers and business partners is a key focus for successful companies. Ikea, a prime example, not only offers financial and technical assistance to their suppliers but even takes the initiative to design their factories. This approach plays a vital role in ensuring Ikea’s triumph as it heavily relies on having products readily accessible for purchase. Similarly, modern retailers like Home Depot and Wal-Mart also prioritize selecting vendors based on their capacity to meet product demand rather than solely considering price or product range. For manufacturers looking to expand into new markets, it is essential to have a comprehensive understanding of distribution methods in those countries.
Different methods can be used for the distribution of products, with options ranging from independent distributors that are low-cost and have low-control to representative offices, licensed manufacturing, joint ventures, investments, and/or acquisitions which are high-cost and high-control.
Legal and Financial: Many countries impose ownership restrictions on businesses, often mandating local ownership. Consequently, multinational corporations must partner with local entities to conduct business operations. An prevalent strategy is the formation of joint ventures (JVs) with domestic companies, facilitating market expansion within a particular country.
JVs can be successful if there is clarity about roles, accountability, profit distribution, and performance monitoring. Various concerns must be tackled, such as safeguarding trade secrets, determining ownership of production methods, resource management, and financial oversight. The structuring of JVs requires meticulous attention and legal support from the host country. Typically, local entities receive preferential treatment in case of disputes. Additionally, companies must navigate moral, ethical, and religious considerations prevailing in foreign markets.
