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Fifth Edition

GLOBAL MARKETING

A DECISION-ORIENTED APPROACH Svend Hollensen

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CONTENTS

Preface Guided tour Acknowledgements Publisher's acknowledgements Abbreviations About the author

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PARTI

THE DECISION WHETHER TO INTERNATIONALIZE 1 Global marketing in the firm

Learning objectives 1.1 Introduction to globalization 1.2 The process of developing the global marketing plan 1.3 Comparison of the global marketing and management style of SMEs and LSEs 1.4 Should the company'stay at home'or'go abroad'? 1.5 Development of the global marketing concept 1.6 Forces for global integration and market responsiveness 1.7 The value chain as a framework for identifying international competitive advantage 1.8 Value shop and the service value chain 1.9 Information business and the virtual value chain 1.10 Summary Case studies 1.1 Build-A-Bear Workshop (BBW): how to manage the global comeback? 1.2 Arcor: a Latin American confectionery player is globalizing its business 1.3 Video case study: Nivea Questions for discussion References

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Initiation of internationalization

Learning objectives 2.1 Introduction 2.2 Internationalization motives 2.3 Triggers of export initiation (change agents) 2.4 Internationalization barriers/risks 2.5 Summary . Case studies 2.1 LifeStraw: Vestergaard-Frandsen transforms dirty water into clean drinking water 2.2 Elvis Presley Enterprises Inc. (EPE): internationalization of a cult icon 2.3 Video case study: TOMS Shoes Questions for discussion References

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Internationalization theories

Learning objectives 3.1 Introduction 3.2 The Uppsala internationalization model 3.3 The transaction cost analysis model 3.4 The network model 3.5 Internationalization of SMEs 3.6 Born globals 3.7 Internationalization of services 3.8 Summary Case studies 3.1 Cryos: they keep the stork busy around the world 3.2 Classic Media: internationalization of Postman Pat 3.3 Video case study: Reebok Questions for discussion References .

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Development of the firm's international competitiveness

Learning objectives 4.1 Introduction 4.2 Analysis of national competitiveness (the Porter diamond) 4.3 Competition analysis in an industry 4.4 Value chain analysis 4.5 The sustainable global value chain - CSR 4.6 CSR and international competitiveness 4.7 The value net 4.8 Blue ocean strategy and value innovation 4.9 Summary Case studies

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4.1 Nintendo Wii: Nintendo's Wii takes first place on the world market - can it last? 132 4.2 Senseo: creating competitiveness through an international alliance 137 4.3 Video case study: Nike .143 Questions for discussion 143 References 143

Parti Case studies

1.1 1.2 1.3 1.4 Zara: a Spanish retailer goes to the top of world fashion Manchester United: still trying to establish a global brand Bridgestone Tyres: European marketing strategy Cereal Partners Worldwide (CPW): the number 2 world player is challenging the number 1 - Kellogg 146 152 155

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PART II

DECIDING WHICH MARKETS TO ENTER

Global marketing research

Learning objectives 5.1 Introduction 5.2 The changing role of the international researcher 5.3 Linking global marketing research to the decision-making process 5.4 Secondary research 5.5 Primary research

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5.6 Other types of marketing research 5.7 Setting up an international MIS 5.8 Summary Case studies 5.1 TeepackJSpezialmaschinen GmbH: organizing a global survey of customer satisfaction 5.2 Tchibo: expanding the coffee shops' business system in Eastern Europe 5.3 Video case study: Ziba Questions for discussion References

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The political and economic environment

Learning objectives 6.1 Introduction 6.2 The political/legal environment 6.3 The economic environment 6.4 The European economic and monetary union and the euro 6.5 Poverty as a market opportunity 6.6 Summary Case studies G-20 and the economic and financial crises: what on earth is globalization about? Massive protests during a meeting in London 2009 6.2 Sauer-Danfoss: which political/economic factor would affect a manufacturer of hydraulic components? 6.3 Video case study: debate on globalization Questions for discussion References 6.1

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The sociocultural environment

Learning objectives 7.1 Introduction 7.2 7.3 7.4 7.5 7.6 7.7 ·

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Layers of culture High- and low-context cultures Elements of culture Hofstede's original work on national cultures (the '4 + 1' dimensions model) The strengths and weaknesses of Hofstede's model Managing cultural differences

7.8 Convergence or divergence of the world's cultures 7.9 The effects of cultural dimensions on ethical decision-making 7.10 Social marketing 7.11 Summary Case studies 7.1 Lifan: a Chinese sub-supplier and brand manufacturer of motorcycles is aiming at the global market

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7.2 IKEA catalogue: are there any cultural differences? 7.3 Video case study: communicating in the global world Questions for discussion References

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The international market selection process

Learning objectives 8.1 Introduction 8.2 International market selection: SMEs versus LSEs

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8.3 Building a model for international market selection 8.4 Market expansion strategies 8.5 The global product/market portfolio 8.6 Summary Case studies 8.1 Tata Nano: international market selection with the world's cheapest car 8.2 Philips Lighting: screening markets in the Middle East 8.3 Video case study: Hasbro Questions for discussion References

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Part II Case studies

11.1 11.2 11.3 11.4 Bajaj Auto: the Indian motorcycle manufacturer internationalizes its business The Female Health Company (FHC): the female condom is seeking a foothold in the world market for contraceptive products Tipperary Mineral Water Company: market selection inside/outside Europe Skagen Designs: becoming an international player in designed watches 296 300 304 309

PART HI

MARKET ENTRY STRATEGIES 9 Some approaches to the choice of entry mode

Learning objectives 9.1 Introduction 9.2 The transaction cost approach 9.3 Factors influencing the choice of entry mode 9.4 Summary Case studies 9.1 Jarlsberg: the king of Norwegian cheeses is deciding about entry modes in new markets 9.2 Ansell condoms: is acquisition the right way to gain market shares in the European condom market? 9.3 Video case study: understanding entry modes into the Chinese market Questions for discussion References

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10 Export modes

Learning objectives 10.1 Introduction 10.2 Indirect export modes 10.3 Direct export modes 10.4 Cooperative export modes/export marketing groups 10.5 Summary Case studies 10.1 Lysholm Linie Aquavit: international marketing of the Norwegian Aquavit brand 10.2 Parle Products: an Indian biscuit manufacturer is seeking agents and cooperation partners in new export markets 10.3 Video case study: Honest Tea Questions for discussion References

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11 Intermediate entry modes

Learning objectives 11.1 Introduction 11.2 Contract manufacturing 11.3 JJcensing 11.4 Franchising 11.5 Joint ventures/strategic alliances 11.6 Other intermediate entry modes 11.7 Summary Case studies 11.1 Hello Kitty: can the cartoon cat survive the buzz across the world? 11.2 Ka-Boo-Ki: licensing in the LEGO brand 11.3 Video case study: Marriott Questions for discussion References

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12 Hierarchical modes

Learning objectives 12.1 Introduction 12.2 Domestic-based sales representatives 12.3 Resident sales representatives/foreign sales branch/foreign sales subsidiary 12.4 Sales and production subsidiary 12.5 Subsidiary growth strategies 12.6 Region centres (regional headquarters) 12.7 Transnational organization 12.8 Establishing wholly owned subsidiaries: acquisition or greenfield 12.9 Location/relocation of HQ 12.10 Foreign divestment: withdrawing from a foreign market 12.11 Summary Case studies Polo Ralph Lauren: Polo moves distribution for South East Asia in-house Durex condoms: SSL will sell Durex condoms in the Japanese market through its own organization 12.3 Video case study: Starbucks Questions for discussion References 12.1 12.2

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13 International sourcing decisions and the role of the sub-supplier

Learning objectives 13.1 Introduction 13.2 Reasons for international sourcing 13.3 A typology of subcontracting 13.4 13.5 13.6 13.7 Buyer-seller interaction Development of a relationship Reverse marketing: from seller to buyer initiative Internationalization of subcontractors

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13.8 Project export (turnkey contracts) 13.9 Summary Case studies 13.1 Syngenta AG: a world market leader in crop protection is defending its position 13.2 LM Glasfiber A/S: following its customers' international expansion in the wind turbine industry

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13.3 Video case study: Eaton Corporation Questions for discussion References

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Part III Case studies

Raleigh bicycles: does the iconic bicycle brand still have a chance on the world market? 111.2 IKEA: expanding through franchising to the South American market? 111.3 Autoliv airbags: transforming Autoliv into a global company 111.4 IMAX Corporation: globalization of the film business 111.1 429 435 442 447

PART IV DESIGNING THE GLOBAL MARKETING PROGRAMME

14 Product decisions

Learning objectives 14.1 Introduction 14.2 14.3 14.4 14.5 14.6 14.7 14.8 14.9 14.10 14.11 The dimensions of the international product offer Developing international service strategies The product life cycle ' New products for the international market Product positioning Brand equity Branding decisions Sensory branding Celebrity branding Implications of the Internet for the collaboration with customers on product decisions

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14.12 'Long tail'strategies 14.13 Green marketing strategies , · 14.14 Brand piracy and anti-counterfeiting strategies 14.15 Summary Case studies 14.1 Danish Klassic: launch of a cream cheese in Saudi Arabia 14.2 Zippo Manufacturing Company: has product diversification beyond the lighter gone too far? 14.3 Video case study: Swiss Army Questions for discussion References

15 Pricing decisions and terms of doing business

Learning objectives 15.1 Introduction 15.2 International pricing strategies compared with domestic pricing strategies 15.3 Factors influencing international pricing decisions 15.4 International pricing strategies 15.5 Implications of the Internet for pricing across borders 15.6 Terms of sale and delivery 15.7 Terms of payment 15.8 Export financing 15.9 Summary

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Case studies 15.1 Harley-Davidson: does the image justify the price level? 15.2 Gillette Co.: is price standardization possible for razor blades? 15.3 Video case study: Vaseline pricing strategy Questions[oj,discussion References'

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16 Distribution decisions

Learning objectives 16.1 Introduction 16.2 External determinants of channel decisions 16.3 The structure of the channel 16.4 Managing and controlling distribution channels 16.5 Managing logistics 16.6 Implications of the Internet for distribution decisions 16.7 Special issue 1: international retailing 16.8 Special issue 2: grey marketing (parallel importing) 16.9 Summary Case studies 16.1 De Beers: forward integration into the diamond industry value chain 16.2 Nokia: what is wrong in the US market for mobile phones - can Nokia recapture the number 1 position from Motorola? 16.3 Video case study: DHL Questions for discussion References

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17 Communication decisions (promotion strategies)

Learning objectives 17.1 Introduction 17.2 The communication process , 17.3 Communication tools 17.4 International advertising strategies in practice 17.5 Online communication decisions: viral marketing and social networking 17.6 Summary Case studies 17.1 HellyHansen: sponsoring fashion clothes in the US market 17.2 Morgan Motor Company: can the British retro sports car brand still be successful after 100 years? 17.3 Video case study: BMW Motorcycles Questions for discussion References

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Part IV Case studies

IV. 1 Absolut Vodka: defending and attacking for a better position in the global vodka market IV.2 Guinness: how can the iconic Irish beer brand compensate for declining sales IV.3 IV.4 in the home market? Dyson Vacuum Cleaner: shifting from domestic to international marketing with the famous bagless vacuum cleaner Triumph Motorcycles Ltd: rising from the ashes in the international motorcycle business

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PARTV

IMPLEMENTING A N D COORDINATING THE G L O B A L MARKETING P R O G R A M M E

18 Cross-cultural sales negotiations

Learning objectives 18.1 Introduction 18.2 Cross-cultural negotiations 18.3 Intercultural preparation 18.4 Coping with expatriates 18.5 Knowledge management and learning across borders 18.6 Transnational bribery in cross-cultural negotiations 18.7 Summary Case studies

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18.1 Mecca Cola: marketing of a 'Muslim' cola to the European market 18.2 TOTO: the Japanese toilet manufacturer seeks export opportunities for its high-tech brands in the United States 18.3 Video case study: Dunkin' Donuts Questions for discussion References ,

19 Organization and control of the global marketing programme

Learning objectives 19.1 Introduction 19.2 Organization of global marketing activities 19.3 The global account management organization 19.4 Controlling the global marketing programme 19.5 The global marketing budget 19.6 The process of developing the global marketing plan 19.7 Summary Case studies 19.1 Mars Inc.: merger of the European food, pet care and confectionery divisions 19.2 Henkel: should Henkel shift to a more customer-centric organization? 19.3 Video case study: McDonald's Questions for discussion References

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PartV Case studies

V.1 V.2 V.3 V.4 Sony Music Entertainment: new worldwide organizational structure and the marketing, planning and budgeting of Pink's new album OneCafe: a'born global'penetrates the coffee industry Philips Shavers: maintaining shaving leadership in the world market Vipp AS: an SME uses global branding to break into the international waste bin business Index

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