GLOBAL MARKETING Leaning By Dr.Samai Hemman

GLOBAL MARKETING Leaning By Dr.Samai Hemman

Global

Marketing

By Dr.Samai Hemman

MARKETING IS THE PROCES OF PLANNING AND EXECUTING THE CONCEPTION, PRICING, PROMOTION, AND DISTRIBUTION OF IDEAS, GOODS, AND SERVICES TO CREATE EXCHANGES THAT SATISFY INDIVIDUAL AND ORGANIZATIONAL OBJECTIVES.<SATISFACTION AND EXCHANGE ARE AT THE CORE OF MARKETING. FOR AN EXCHANGE TO OCCUR, TWO OR MORE PARTIES HAVE TO COME TOGETHER, COMMUNICATE, AND DELIVER THINGS OF PERCEIVED VALUE. CUSTOMERS EVALUATE MARKETERS’ OFFERINGS IN TERMS OF THEIR OWN NEEDS. MARKETERS RECOGNIZE EVER-CHANGING CUSTOMER NEEDS AND WANTS. < THE MARKETING MANAGER PLANS AND EXECUTES PROGRAMS TO ENSURE A COMPANY’S LONG-THRM COMPETITIVE ADVANTAGE. DETERMINATION OF TARGET MARKETS IS COVERED IN CHAPTERS 10 AND 11, AND MARKETING MANAGEMENT IS DISCUSSED IN CHAPTERS 12 AND 13. THESE BASICS ARE THE TECHNICAL UNIVERSALS OF MARKETING.

DBA. in Global Management.  By Dr.Samai Hemman

Strategic Planning and

Business Research

LEARNING OBJECTIVE

·       To outline the process of strategic planning.

·       To gain an understanding of the need for research.

·       To explore the differences between domestic and international research.

·       To learn where to find sources of secondary information.

·       To gain insight into the gathering of primary data.

By Dr.Samai Hemman DBA in Global Management

This chapter provides an overview of two critical areas involved in the decision to pursue global expansion. They are the development of a strategic plan and, following or coincident with the development of the plan, the conducting of global business research.

THE STRATEGIC PLANNING PROCESS

Given the opportunities and challenges provided by the realities of the marketplace, decision makers have to engage in strategic planning to math markets with products and other corporate resources more effectively and efficiently in order to strengthen the company’s long-term competitive advantage. The process may be summarized as a sequence of steps, as outlined in Figure 10.1 Many of the stages are parallel. Feedback, as a result of evaluation and control, may restart the process at any stage.

                The planning process has to start with a clear definition of the business for which the strategy is to be developed. In practice, it represents groupings based on productmarket similarities, such as (1) needs or wants to be met, (2) end-user customers to be targeted, or (3) the good or service used to meet the needs of specific customers. This effort calls for commitment by the company itself both in calling on the best talent to participate in the planning effort and later in implementing their proposals. Typically, the effort focused on two basic areas : the later in implementing their proposals. Typically, the effort focuses on two basic areas : the analysis of markets and competition and organizational factors.

Analysis of Markets and Competition

The usual approach in analyzing markets and competition is first to start with regions and then to further split the analysis by country. Many managers use multiple levels of regional groupings to follow the organizational structure of the company; for example, splitting Europe into northern, central, and southern regions that data may be in demographic and behavioral traits. An important consideration is that data may be more readily available if existing consideration in the analysis of markets and competition include market size, market growth potential, the number and type of competitors, government regulations, and economic and political stability.

DBA. in Global Management.  By Dr.Samai Hemman

FIGURE 10.1

Strategic Planning Process

Organizational Factors

A key consideration when entering the global marketing arena is the quality and strength of organizational resources. Global expansion requires experienced and culturally wise managers, which may be in short supply and place a strain on the global expansion plans. In a similar manner, expansion into foreign markets may require a prolonged period of financial investment before financial returns can be realized.

                At this stage it is imperative that the company assess its own readiness for the necessary moves. This means a rigorous assessment of organizational commitment to global or regional expansion, as well as an assessment of the available products and their readiness to face the competitive environment. In many cases, this has meant painful decisions to focus on certain industries and leave others. Nokia, the world’s second largest manufacturer of cellular phones, started its rise in the industry when a decision was made at the company in 1992 to focus on digital cellular phones and to sell off dozens of other product lines. By focusing its efforts on this line, the company was able to bring new products to market quickly, build economies of scale into its manufacturing operations, and concentrate on its customers, thereby communication a commitment to their needs.

DBA. in Global Management.  By Dr.Samai Hemman

Country Market Choice

The first step in the formulation of global strategy is the of markets to be enters or to be penetrated  further. In the case of each market, decisions need to be made on the extent of entry and the competitive strategy that should be used. The choice of country markets may involve decisions beyond those relating to market attractiveness and company position. A market expansion policy will determine the allocation of resources among various markets. The basic alternatives are concentration on a small number of markets and diversification, which is characterized by growth in a relatively large number of markets.

               

Segmentation

Effective segmentation recognizes that groups within markets differ sufficiently to warrant individual approaches. It allows global companies to take advantage of the benefits of standardization (such as economies of scale and consistency in position) while addressing the unique needs and expectations of any specific target group. This approach means looking at markets on a global or regional basis, thereby ignoring the political boundaries that define markets into many groups. The identification and cultivation of such intermarket segments are necessary for any standardization of programs to work.

                A more comprehensive discussion of country market choice and segmentation is in cluded in the latter half of this chapter.

Choice of Competitive Strategy

In dealing with the global markets, the manager has three general choices of strategies : (1) cost leadership ; (2) differentiation ; and (3) focus. A focus strategy is defined by its emphasis on a single industry segment within which the orientation may be either toward low cost or differentiation. Any one of these strategies can be pursued on a global or regional basis, or the manager may decide to mix and match strategies as a function of market or product dimensions.

                In pursuing cost leadership, the company offers an identical product or service at a lower cost than competition. This often means investment in scale economies and strict control of costs, such as overheads, such as overheads, research and development, and logistics, Differentiation, whether it is industry-wide or focused on a single segment, takes advantage of the manager’s real or perceived uniqueness on elements such as design or after-sales service.

                Most global companies combine high differentiation with cost containment to enter markets and to expand their market shares. Flexible manufacturing system using mostly standard components and total quality management reducing the occurrence of defects are allowing companies to customize an increasing amount of their production, while at the same time saving on costs. Global activities will in themselves permit the exploitation of scales economies not only in production but in marketing activities, such as advertising, as well.

                After the basic process in developing a strategic plan has been reviewed, the focus of activity turns to a detailed analysis of potential target markets, including identifying the segments that offer the greatest potential for success in the global expansion effort.

                The single most important cause for failure in global business is insufficient preparation and information. The failure of managers to comprehend cultural disparities, the failure to remember that customers differ from country to country, and the lack of investigation into whether or not a market exists prior to market entry has made global business a high-risk activity. Global business research is therefore instrumental to global business success. As noted in Global Learning Experience 10.1, research does not always have to consist of packing one’s bags and traveling to foreign countries at great cost in time and money. A library nearby or simply access to good databases can be very useful in starting up the research process.

                This section of the chapter discusses data collection and provides a comprehensive overview of how to obtain general screening information on global market, to evaluate business potential, and to assess current or potential opportunities and problems. Data sources that are low cost and that take little time to accumulate-in short, secondary data-are considered first. The balance of the chapter is devoted to more sophisticated forms of global research, including primary data collection and the development of an information system.

GLOBAL LEARNING EXPERIENCE 10.1

Electronic information Sources on the EU

With the expanding economic and political union occurring within Europe, official information resources are becoming more centralized. A short sampling of government sources of information helpful to international managers targeting the EU is reviewed below.

EUROPA

Located at http://europa.eu.int, Europa is the main server that provides access to bibliographic, legal. And statistical data bases offered by the European Commission. Many databases are available on Europa including RAPID, SPID, SCAD, EUROCRON, and ECLAS. RAPID provides full text of press releases issued daily by the European Commission, Council of Ministers, Court of Justice, Court of Auditors, Economic and Social Committee, and the Committee of the Regions. In addition to the texts, a list of items released each day may be downloaded. SCAD is a bibliographic database with references to official legislative documents and publications, as well as secondary periodical literature on the EU. EUROCRON provides a menu guided presentation of general macroeconomic statistics and farm data. ECLAS is an on-line catalog of the Central Library of the Commission.

EUROSTAT

The Statistical Office of the European Communities (EUROSTAT), which is located at http://europa.eu.int/en/comm/diskettes, tapes, and CD-ROMs. This site offers a wide selection of electronic information as well as software for graphics using COMEXT along with map and graphic capabilities.

EPOQUE

EPOQUE is the documentary database of the European Parliament. Its files cover the status of legislation in progress; citations for sessions documents, debates, resolutions, and opinions; bibliographic references to studies done by Parliament; and a catalog of the Parliament’s library. Please note, this is a restricted database, but http://www.europarl.eu.int offers free and timely information regarding the European Parliament.

RECOGNIZING THE NEED FOR GLOBAL RESEARCH

Many firms do little research before they enter a foreign market. Often, decisions concerning entry and expansion in overseas markets and selection and appointment of distributors are made after                a cursory, subjective assessment of the situation. The research done is less rigorous, less formal, and less quantitative than that for domestic activities. Furthermore, once a firm has entered a foreign market, it is likely to discontinue researching that market. Many business executives appear to view foreign research as relatively unimportant.

A major reason why managers are reluctant to engage in global research is their lack of sensitivity to differences in culture, consumer tastes, and market demands. A second reason is limited appreciation for the different environments abroad. Often, firms are not prepared to accept that labor rules, distribution systems, the availability of media, or advertising regulations may be entirely different from those in the home market. Because of the pressure to satisfy short-term financial goals, managers are unwilling to spend money to find out about the differences.

                A third reason is lack of familiarity with national and global data sources and in ability to use global data once they are obtained. As a result, the cost of conducting global research is seen as prohibitively high and therefore not a worthwhile investment relative to the benefits to be gained.

                Finally, firms often build up their international business activities gradually, frequently based on unsolicited orders. Over time, actual business experience in a country or with a specific firm may then be used as a substitute for organized research.

                Despite the reservations firms have, research is as important globally as it is domestically. Firms must learn where the opportunities are, what customers want, why they want it, and how they satisfy their needs and wants so that the firm can serve them efficiently. Firms must obtain information about the local infrastructure, labor market, and tax rules before making a plant location decision. Doing business abroad without the benefit of research places firms, their assets, and their entire global future at risk.

                Research allows management to identify and develop global strategies. This task includes the identification, evaluation, and comparison of potential foreign business opportunities and the subsequent target-market selection. In addition, research is necessary for the development of a business plan that identifies all the requirements necessary for market entry, market penetration, and expansion. On a continuing basis, research provides the feedback needed to fine-tune various business activities. Finally, research Can provide management with the intelligence to help anticipate events, take appropriate action, and adequately prepare for global changes.

Why is it easy for a stranger to get lost in Tokyo?                                                                      QUESTION

ANSWER            It’s easy to get lost in Tokyo because it is one of the biggest, most populous cities in the world. It has grown with virtually no zoning, so that factories stand next to houses, next to schools, next to bars, next to ancient Shinto Temples, and there are almost no street names, numbers, or signs. The best way to tell a stranger how to find you is to memorize the locations of coffee shops in various parts of the city, rehearse giving directions to them, and then describe their location to your visitors. Then you can go and meet them there.

TARGET-MARKET SELECTION

The process of target-market selection involves narrowing down potential country markets to a feasible number of countries and market segments within them. Rather than try to appeal to everyone, firms best use their resources by (1) identifying potential markets for entry and (2) expanding selectively over time to those deemed attractive.

Identification and Screening

A four-stage process for screening and analyzing foreign markets is presented in Figure 10.2 It begins with very general criteria and ends with product-specific market analyses. The data and the methods needed for decision making change from seconding process for choosing target markets, the process is also applicable to change of entry mode or even divestment.

                If markets were similar in their characteristics, the global marketer could enter any one of the potential markets. However, differences between markets exist in three dimensions : physical, psychic, and economic. Physical distance is the geographic distance between home and target countries; its impact has decreased as a result of recent technologic developments. Psychic, or cultural, distance refers to differences in language, tradition, and customs between the two countries. Economic distance is created by differences in the economic environments of the host country and the target market. differences in the economic environments of the host country and the target market. Generally, the greater the overall distance-or difference-between the two countries, the less knowledge the marketer has about the target market. The amount of information that is available varies dramatically. For example, although the marketer can easily learn about the economic environment from secondary sources, invaluable interpretive information may not be available until the firm actually operates in the market.

                The four stages in the screening process are: preliminary screening, estimation of market potential, estimation of sales potential, and identification of segments. Each stage should be given careful attention. The first stage, for example, should not merely reduce the number of alternatives to a manageable few for the sake of reduction, even though the expense of analyzing markets in depth is great. Unless care is taken, attractive alternatives may be eliminated.

Preliminary Screening The preliminary screening process must rely chiefly on secondary data for country-specific factors as well as product- and industry-specific factors. Country-specific factors

SOURCE : Reprinted by permission of Lexington Books, an imprint of Macmillan Publishing Company from Entry Strategies for International Markets, by Franklin R. Root, p.34                               Copy right^Ó1987 by Lexington Books

typically include those that would indicate the market’s  overall buying power ; for example, population, gross national product in total and per capita, total exports and imports, and production of cement, electricity, and steel. Product-specific factors narrow the analysis to the automotive aftermarket, is interested in the number of passenger cars, trucks, and buses in use. These statistical analyses must be accompanied by qualitative assessments of the impact of cultural elements and the overall climate for foreign firms and products. A market that satisfies the levels set becomes a prospective firms and products. A market that satisfies the levels set becomes a prospective target country. Global trade databases are an important method of scanning secondary data to identify potential markets. See Global Learning Experience 10.2.

GLOBAL LEARNING EXPERIENCE 10.2

Building Export Markets

Companies that export are more profitable and innovative, on average, than companies that do not. Yet, the majority of U.S. manufacturers do not export, and the most common reason is they simply do not know where to start. Lack of knowledge about foreign markets is one of the major barriers that conspires to anchor far too many companies to the U.S. market. However, potential exporters can save considerable timer and money by using international trade data to answer one of the most essential questions: Where should I sell my products ? Specifically, potential exporters need to know:

·       Which are the largest and fastest growing markets for their product over the past three to five years? Has market growth been consistent or subject to fluctuations? Continuous growth in demand in a large market indicates the market would be receptive to the company’s products, but also indicates a highly competitive import market.

·       What smaller markets are fast emerging? High rates of import growth suggest the market is opening up for a product. While this also suggests a competitive market, the likelihood that competition will be entrenched is less.

Let’s take an example. Assume you are a manufacturer of compressors for refrigeration equipment wanting to export. Using The World Trade Atlas^â, a highly useful CD-ROM data base on U.S. foreign trade, one learns that the top ten nations account for 74 percent of U.S. exports of compressors and two of these markets-Canada and Mexico-have registered strong multi-year growth. Decline in the Asian Markets-Korea,Hong Kong, China, Japan and Thailand reflect the economic crises in that region. Saudi Arabia offers declining near term potential. Using this data, the manufacturer can quickly determine which are the largest markets for its product and which nations among these evidence increased future demand.

The World Trade Atlas

841430 COMPRESSOR REFR EQP-U.S. Exports

January-December
Millions of U.S. Dollars
Rank	County	1993	1994	1995	1996	1997	1998
	World	659.836	725.365	840.700	955.164	1130.100	978.393
1 2 3 4 5 6 7 8 9 10	Canada Mexico Saudi Arabia Thailand Hong Kong S. Korea China Japan United Kingdom France	132.246 57.888 55.876 39.896 49.946 33.788 21.405 14.343	137.669 67.735 88.593 62.907 26.995 52.224 13.475 16.535	162.459 43.525 68.919 63.191 67.950 73.442 26.038 25.181	168.686 70.236 49.718 69.379 82.815 117.556 36.748 33.051 27.528 18.299	257.803 82.702 69.809 69.875 90.554 128.126 44.659 38.440 33.862 20.819	273.676 94.819 66.985 63.581 59.003 42.785 40.460 31.191 27.217 23.814

                There is an additional $267 million going to other nations that may offer less competition and a better chance for the company to penetrate the market. The company further identifies several other countries as potential export candidates. These nations may have been overlooked by other exporters and are growing fast enough to potentially absorb new market entrants.

                From a universe of over 200 countries, the company has narrowed the field for further investigation to12 demonstrating high demand for refrigeration compressors. Because new exporters need tot concentrate on one to two markets initially, this field must be narrowed further through market research on individual national markets. The next steps require examining:

·       Factors affection demand in each country including the importance of imports to total product consumption, the market share held by other exporting nations, the size and sophistication of domestic producers, and economic and demographic factors affecting the long-term market for compressors.

·       Analyzing how compressors are marketed in each country, including the channels of distribution, and which channel affords the most cost effective access to most buyers. Analysis should also address understanding common business practices and idiosyncrasies.

·       What tariff regulatory barriers currently exist or are Answers to these questions will probably not provide a neat, clear picture of the top export candidate, but some markets will appear more attractive than others because of size, growth, competition, and accessibility. From the above nations, there is probably not a wrong choice, and the selection will also reflect the level of resources the firm is willing to commit to its initial export effort, the comfort level and perceived learning curve associated with that market, and the sophistication of the firm’s export plan and strategy. Most new to export companies are advised to focus on one to two countries initially. However, the choice of country may also reflect regional growth. From the above examples, it would be logical for the exporter to explore the Chinese and Thai markets if Hong Kong emerged as the top initial choice.

Once chosen, the company needs to further understand how this market operates through attending trade shows in-country; meeting with exporter of similar, but noncompeting products and with end users and different marketing channel intermediaries to better understand how the market operates; and product adaptation and marketing support requirements. Once accomplished, the company is finally in a position to determine how it will approach the market, with what products, and how it will sell into the market. This is far from making a quick export sale, but reflects an approach that should position the company to be come a long-term player in its chosen market and provides a basis for subsequent expansion into additional export markets.

Estimation Market Potential Total market potential is the sales, in physical or monetary units, that might be available to all firms in an industry during a given period under a given level in industry marketing effort and given environmental conditions. The global marketer needs to assess the size of existing markets and forecast the size of future markets.

                Because of the lack of resources, and frequently the lack of data, market potentials are often estimated using secondary data-based analytic techniques. These techniques focus on or use demand patterns, income elasticity measurements, multiple-factor indexes, and estimation by analogy.

                Demand pattern analysis indicates typical patterns of growth and decline in manufacturing. At early stages of growth, for example, manufacturing is concentrated in food, beverage, and textile industries, and some light industry. An awareness of trends in manufacturing will enable the marketer to estimate potential markets for input, such as raw materials or machinery. Income elasticity of demand describes the relationship between demand and economic progress as indicated by growth in income. The share of income spent on necessities will provide both an estimate of the market’s level of development and an approximation of how much money is left for other purchases.

                Multiple-factor indexes measure market potential indirectly by using proxy variables that have been shown (either through research or intuition) to correlate closely with the demand for the particular product. An index for consumer goods might involve population, disposable personal income, and retail sales in the market or area concerned. Estimation by analogy is used when data for a particular market do not exits. The market size for a product in country A is estimated by comparing a ratio for an available indicator (such as disposable income) for country A and country B, and using this ratio in conjunction with detailed market data available for country B.

                Despite the valuable insight generated through these techniques, caution should be bused in interpreting the results. All of these quantitative techniques are based on historical data that may be obsolete or inapplicable because of differences in cultural and geographic traits of the markets. Further, with today’s technological developments, lags between markets are no longer at a level that would make all the measurements valid. Moreover, the measurements look at a market as an aggregate; that is, no regional differences are taken into account. In an industrialized country like Sweden, the richest 10 percent of the population receives 20 percent of the income, while the respective income figures for the richest 10 percent in the middle-income countries such asBrazil (46 percent) and low-income countries such as Sri Lanka (43 percent) are much higher. Therefore even in the developing countries with low GNP figures, segments exist with buying power rivaled only in the richest developed countries.

                In addition to these quantitative techniques that rely on secondary data, international marketers can use various survey techniques. They are especially useful when marketing new technologies. A survey of end-user interest and responses may provide a relatively clear picture of the possibilities in a new market.

Estimating Sales Potential Even when the global marketer has gained and understanding of markets with the greatest overall promise, the firm’s own possibilities in those markets are still not known. Sales potential is the share of the market potential that the firm can reasonably expect to get over the longer term. To arrive at an estimate, the marketer needs to collect product-and market-specific data. These will have to do with:

1.             Competition-strength, likely reaction to entry.

2.             Market-strength of barriers.

3.             Consumers-ability and willingness to buy.

4.             Product-degree of relative advantage, compatibility, complexity, trialability, and communicability.

5.             Channel structure-access to retail level.

The marketer’s questions can never be fully answered until the firm has made a commitment to enter the market and is operational. The mode of entry has special significance in determining the firm’s sales potential.

Identifying Segments Within the markets selected, individuals and organizations will vary in their wants, resources, geographical locations, buying attitudes, and buying practices. Initially, the firm may cater to one or only a few segments and later expand to others, especially if the product is innovative. Market segmentation is indicated when segment are indeed different enough to warrant individualized attention, are large enough for potential, and can be reached through the methods that the international marketer wants to use.

DBA. in Global Management.  By Dr.Samai Hemman

Tyson Foods customizes more than 5,000 products to satisfy local taste preferences in 57 countries. Targeted research helps Tyson identify opportunities globally.

SOURCE: Courtesy of Tyson Foods.

               

The greatest challenge for the global company is choosing an appropriate base for the segmentation effort. The objective is to create groups that are substantial enough to merit the segmentation effort. The possible bases for segmentation are summarized in Figure 10.3.

                Managers have traditionally used environmental bases for segmentation. However, using geographic proximity, political system characteristics, economic standing, or cultural traits as stand-alone bases may not provide the relevant data for decision making. Using a combination of them, however, may produce more meaningful results. Whether bases related to product, promotion, pricing, or distribution are used, their influence should be related to environmental variables. Product- related bases include the degree to which products are culture-based, which stage of  the life cycle they occupy, consumption patterns, attitudes toward product attributes (such as country of origin), as well

Figure 10.3 Bases for Global Market Segmentation

as consumption infrastructure (for example, telephone lines for modems). The growth of microwave sales has been surprising in the low-income countries; however microwave have become status symbols and buying them is more of an emotional issue. Many consumers in these markets also want to make sure that they get the same products that are available in developed markets, which eliminates the need in many cases for the company to develop different products for different markets.

                With promotional variables, the consumer’s preferences and expectations may require the use of local solutions rather than regional approaches due to the availability or lack of, media vehicles or governments regulations affecting promotional campaigns. On the pricing side, a customer’s price sensitivity may lead the manager to go after segments that insist on high quality despite high price in markets where overall purchasing may be low, to ensure global or regional uniformity in the marketing approach. Affordability is a major issue for customers; offering only one product option may exclude potential customers who are not yet part of the targeted segment. Companies like Proctor & Gamble and Gillette offer an array of products at different price points to attract the consumers and to keep them as they move up the income scale.

                As the distribution system increases, with the increase of global chains, markets can also be segmented by the type of retail outlets that reach specifically defined groups. Toy manufacturers may look at markets not only in terms of numbers of children but how effectively and efficiently they can be reached by global toy chains such as Toys R Us, as opposed to smaller retail outlets.

Concentration versus Diversification

Choosing a market expansion policy involves the allocation of effort among various markets. The major alternatives are concentration on a small number of markets or diversification, which is characterized by growth in a relatively large number of markets in the early stages of global market expansion.

Expansion Alternatives Either concentration or diversification is applicable to markets segments or to make. One potion is a dual-concentration strategy, in which efforts are focused on a few segments in a limited number of countries. Another is a dual-diversification strategy, in which entry is to most segments in most available markets. The first is a likely strategy for small firms that market specialized products to clearly definable markets, for example, ocean-capable sailing boats. The second is typical for large consumer-oriented companies that have sufficient resources for broad coverage. Market concentration/segment diversification opts for a limited number of markets but for wide coverage within them, putting emphasis on company acceptance. Market diversification/segment concentration usually involves the identification of a segment, possibly worldwide, to which the company can market without major changes in its marketing mix.

Factors Affecting Expansion        Expansion strategy is determined by the market-, mix-, and company-related factors listed in Table 10.14 In most cases, the factors are interrelated.

                Market-Related Factors These factors are the ones that were influential in determining the attractiveness of the market in the first place. In the choice of expansion strategy, demand for the firm’s products is a critical factor. Whit high and stable growth rates n certain markets, the firm will most likely opt for a concentration strategy. If the demand is strong worldwide, diversification may be attractive.

Factor	Diversification	Concentration
Market growth	Low	High
Sales stability	Low	High
Sales response function	Concave	S Curve
Competitive lead time	Short	Long
Spillover effects	High	Low
Need for product adaptation	Low	High
Need for communication adaptation	Low	High
Economies of scale in distribution	Low	High
Extent of constraints	Low	High
Program control requirements	Low	High

SOURCE: lgal Ayal and Jehiel Zif, “Marketing Expansion Strategies in Multinational Marketing.” Journal of Marketing 43 (Spring 1979):89.

DBA. in Global Management.  By Dr.Samai Hemman

                The uniqueness of the firm’s offering with respect to competition is also a factor in the expansion strategy. If lead time over competition is considerable, the decision to diversify may not seem urgent. Complacency can be a mistake in today’s competitive environment, however; competitors can rush new products into the market in a matter of days.

                In many product categories, marketers will be, knowingly or unknowingly, affected by spillover effects. Consider, for example, the impact that satellite channels have had on advertising in Europe, where ads for a product now reach most of the Western European market. Where geographic (and psychic) distances are short, spillover is likely, and marketers are most likely to diversify. Governmental constraints-or the threat of them-can be a powerful motivator in a firm’s expansion. For example, a firm may feel compelled to enter a foreign market through direct foreign investment, if there are fears that the government of that market is likely to impose import restrictions.

                Mix-Related Factors These factors relate to the degree to which marketing mix elements-primarily product, promotion, and distribution-can be standardized. Overall savings through economies of scale can then be used in marketing efforts.

                Depending on the product, each market will have its own challenges. Whether constraints are apparent (such as tariffs)or hidden (such as tests or standards), they will complicate all of the other factors. Nevertheless, regional integration has allowed many marketers to diversify their efforts.

                Company-Related Factors These include the objectives set by the company for its global operations and the policies it adopts in those markets. As an example, the firm may require-either by stated policy or because of its products-extensive interaction with intermediaries and clients. When this is the case, the firm’s efforts will likely be concentrated because of resource constraints.

CONDUCTING RESEARCH

Identifying Sources of Data

Typically, the information requirements of firms will cover both information countries and trade, as well as information that, according to a survey of U.S. executives, are most crucial for international business.

                Before discussing international business research any further, it is appropriate to distinguish between data and information and to outline the various sources of data. Data are the accumulation of raw facts and figures. Because this type of data is original, not having been done before, developing primary data can be a costly and time-consuming effort. The basic methods used to collect primary data include: experimentation, observation, and survey techniques (personal interview, telephone, mail, and focus groups).

TABLE 10.2

Most Critical International Information for U.S. Firms

Country and Trade Data	Business Activity Data
·       Tariff information ·       U.S. export/import data ·       Nontariff measures ·       Foreign export/import data ·       Data on government trade policy	·       Local laws and regulations ·       Size of market ·       Local standards and specifications ·       Distribution system ·       Competitive activity

Source : Michael R. Czinkota, “ International Information Needs for U.S. Competitiveness,” Horizons 34, 6 (November-December 1991): Table 1k, p.83.1991 by the Foundation for the School of Business at IndianaUniversity. Used with permission.

                Secondary data are data that have been collected by others. Secondary data are usually less expensive and easier to collect. For these reasons, most international business researchers usually attempt to gather secondary data first, before expending time and money collection primary data. A at the end of this chapter presents an array of important sources that should be considered as a starting point in the accumulation of secondary data. Basic sources should include:

                Governments (United States, Foreign, and state and local)

                United Nations

                Other international organizations

                Trade publications, directories, and newsletters

                Service organizations

                Nonprofit research organizations

                Commercial databases

                Other firms

DBA. in Global Management.  By Dr.Samai Hemman

U.S. Government The U.S. government has a great variety of data available. Most of them are collected by the Department of Commerce, the Department of Agriculture, the Department of State, the Department of the Treasury, and by U.S. embassies abroad.

                Typically, the information provided by the U.S. government addressed either macro or micro issues or offers specific data services. Macro information includes data on population trends, general trade flows between countries, and world agricultural production. Micro information in turn includes materials on specific industries in a country their growth prospects, and their foreign trade activities. Specific data services might provide custom-tailored information responding to the detailed needs of a firm. Alternatively, some data services may concentrate on a specific geographic region. More information on selected U.S. government publications and research services is presented in Appendix B to this chapter. Global Learning Experience 10.3 indicates some of the information services available in Latin America.

Other Governments Most countries have a wide array of national and international trade data available. Unfortunately, the data are often published only in their home countries and in their native languages. These publications mainly present numerical data, however, and so the translation task is relatively easy. In addition, these information sources are often available at embassies and consulates, whose missions include

GLOBAL LEARNING EXPERIENCE 10.3

The Latin Web of Information

For investors in Latin America, the growth of the Internet has provided a wealth of business research tools at their fingertips. Although the rapid expansion of global web sites has received much publicity, now there are also many lesser-known region-specific databases and timely information sources on the web. Companies, financial institutions, and governments like have discovered that the web is a valuable yet inexpensive way to provide updated information to a wide and geographically diverse audience.

                A Mexican government program provides one example of the timeliness of the web as an information provider for investors in Latin America. When Mexico announced a new program for financing development, it was able to give instant access to an extensive report on the program at the same time that the announcement appeared in media reports. Businesses had immediate access to primary-source information that otherwise would have been difficult and time-consuming to acquire.

                However, the swift growth and dynamic nature of Internet-based information sources have magnified the fundamental problem facing researchers using the web: the Internet has little structure to organize its abundance of information, and it has no filter to determine the quality of information. As a result, business researchers often need explicit knowledge of the information they are seeking, the sources for that information, and their web addresses before beginning research. Language skills also are a plus; as with many region specific web sites that are printed in the local language, Latin American web sites often bury a lot of the English-language material under pages of Spanish. Nevertheless, the following sites give an indication of the quality and timeliness of information available to researchers on Latin American investment opportunities:

·       Stock Exchanges. All major Latin American exchanges are now online, providing same-day closing prices of traded shares. Many provide daily bulletins with company announcements. Peru’s Bolsa de Valores de Lima even has quotes available throughout the day with only a three-minute delay and financial statements for every listed company on the exchange. The Bolsa ElectrÓnica de Chile provides real-time share prices and a historical database of transactions.

·       Official Economic Statistical Agencies. A potential in American economies quickly over the web. Inflation, unemployment, industrial production, and other figures are often available on the Web even before they are published in the press. Argentina’s Instituto Nacional de Getadística y Censos (INDEC) and Brazill’s Instituto de Ge ografia e Estatística (IBGE) offer extensive historical demographic and economic data.

·       Central Banks and Regulatory Agencies. These sites provide recent data on interest rates, foreign exchange movements, and financial sector performance. Most central banks or main banking regulatory agency sites offer downloadable material and economic and statistical analyses. The Bank for International Settlements serves as the Latin American “central bank’s banker” and it has a site that publishes international financial data relating to Latin America.

·       Company Web Sites. One study concluded that 30 percent of the major Latin American companies now have web sites. Although they vary in depth and quality, many contain production, export, and services information as well as press releases.

Selected sites :

Chile : Bolsa  ElectrÓnica de Chile-www.bolchile.cl/

Peru : Bolsa de Valores de Lima-www.bvl.com/pe/homepage.html

Argentina : Instituto Nacional de Estadística y Censos

(INDEC)-www.indec.mecon.ar/

International : Bank for International Settlements (BIS)-www.bis.org/

The enhancement of trade activities. The commercial counselor or commercial attaché can provide the information available from these sources. The user should be cautioned, however, that the information is often dated and that the industry categories used abroad may not be compatible with industry categories used at home.

International Organizations Some international organizations provide useful data for the researcher. The Statistical Yearbook produced by the United National (UN) contains international trade data on products and provides information on exports sand imports by country. However, because of the time needed for worldwide data collection, the information is often quite dated. Additional information is compiled and made available by specialized substructures of the United Nations. Some of these are the United Nations Conference on Trade and Development (UNCTAD), which concentrates primarily on global issues surrounding developing nations, such as debt and market access, and the United Nations Center on Transnational Corporations. The World Atlas published figures. The Organization for Economic Cooperation and Development (OECD) also publishes quarterly and annual trade data on its member countries. Finally, organizations such as the International Monetary Fund (IMF) and the World Bank publish summary economic data and occasional staff papers that evaluate region or country-specific issues in depth.

Trade Associations          Associations such as world trade clubs and domestic and international chambers of commerce (such as the American Chamber of Commerce abroad) can provide good information on local markets. Often, files are maintained on international trade flows and trends affecting global managers. Valuable information can also be obtained from industry associations. These groups, formed to represent entire industry segments, often collect from their members a wide variety of data that are then published in an aggregate form. Because most of these associations represent the view points of their member firms to the federal government, they usually have one or more public listed representatives in Washington. The information provided is often quite general, however, because of the wide variety of clientele served.

Trade Publications, Directories, and Newsletters A large number of industry trade publications and directories are available on local, national, and international levels. These publications primarily serve to identify firms and to provide very general background information, such as the name of the chief executive officer, the level of capitalization of the firm, the location, the address and telephone number, and some description of firm’s products. a host of newsletters has sprung up discussing specific global business issues, such as global trade finance, legislative activities, counertrade, international payment flows, and customs news. Usually, these newsletters cater to narrow audiences but can provide important information to the firm interested in a specific area.

Service Organizations A wide variety of service organizations that provide information include banks, accounting firms, freight forwarders, airlines, global trade consultants, foreign research firms, and publishing houses located abroad. Frequently, they are able to provide information on business practices, legislative or regulatory requirements, and political stability, as well as basic trade and financial data. Although this information is available without charge, its basic intent is to serve as an appetizer. Much of the initial information is quite general in nature, as Figure 10.4 suggests. More detailed and up-to-date answers are also available from these sources, but they will require payment of an appropriate fee.

Databases Increasingly, electronic databases also provide international business information. For example, information can be found on financial markets, the latest information services are provided through various media, including on-line interactive delivery, compact disc read-only memory, magnetic tape, floppy disk, interactive voice/audiotext, and on-lone broadcast. Figure 10.5 provides an example of a database particularly useful to the international marketer.

                Online databases and, in particular, the Internet link computer users worldwide. Rapidly growing information and communication media allow firms to find out about new developments in their fields of interest and also permit them to gather information or software programs to comb through thousands of newsgroups for mention out what customers are saying. In a further step, some firms, such as Digital Equipment Corporation, Silicon Graphics, and Sun Microsystems, systematically use the Internet to get closer to their customers by developing and interaction with discussion groups about their production can also save large amounts of money by reducing customer service calls.

Other Firms Often, home-country competitors can provide useful information for global business purposes. Firms appear to be more open about their international than about their domestic business activities. On some occasions, valuable information can also be obtained from foreign firms and distributors.

Selection of Secondary Data

Just because secondary information has been found to exist does not mean that it has to be used. Even though one key advantage of secondary data over primary data over primary research is that they are available relatively quickly and inexpensively, the researcher should still assess the effort and benefit of using them. Secondary data should be evaluated regarding the quality of their source, their recency, and their relevance to the task at hand. Clearly, since the information was collected without the current research requirements in mind, there may well be difficulties in coverage, categorization, and comparability. An engineer in one country may differ substantially in terms of training and responsibilities from a person in another country holding the same title. It is therefore important to use such data carefully when getting ready to analyze and interpret them.

Analysis and Interpretation of Secondary Data

Once secondary data have been obtained, the researcher must creatively convert them into information. Secondary data were originally collected to serve another purpose than the one in which the researcher is currently interested. Therefore, they can often be used only as proxy information to arrive at conclusions that address the research

Figure 10.4 Advertisement offering Global Services

DBA. in Global Management.  By Dr.Samai Hemman

Figure 10.5 Information Service on CD-ROM

Databases, such as the Annual Summary of the World Trade Atlas^Ò pictured, provide businesses with valuable information on the global market. The screens shown here are from a database on CD-ROM that contains global merchandise trade data from 1989 forward. Users can sort the data by country or product and view tables and charts.

SOURCE : Courtesy of Global Trade Information Services, Inc., Columbia, SC.

If a person in South America is referred to by the following terms,                              QUESTION

where is he or she from? 

A. Carioca           B.Limeo               C. Porteno           D.Paceno              E.Paulistano       F.Caricaeno

DBA. in Global Management.  By Dr.Samai Hemman

ANSWER            A. Rio de Janeiro, Brezil

                                B. Lima, Peru

                                C. Buenos Aires, Argentina

                                D. La Paz, Bolivia

                                E. São Paulo, Brazil

                                F. Caracas, Venezuela

Objectives. The market penetration of television sets may be used as a proxy variable for the potential demand for video recorders. Similarly, n an industrial setting, information about plans for new port facilities may be useful in determining future containerization requirements. The researcher should proceed with caution when comparing secondary data across borders.

                The researcher must use creative inferences, and such creativity brings risks. Therefore, once analysis and interpretation have taken place, a consistency check must be conducted. The researcher should always cross-check the results with other possible open up one’s eyes to new market potential.

CONDUCTING PRIMARY RESEARCH

Even though secondary data are useful to the researcher, on many occasions primary information will be required. Primary data are obtained by a firm to fill specific information needs. Firms do specialize in primary global research, even under difficult circumstances, as indicated in Figure 10.6. Although the research may not be conducted by the company with the need, the work must be carried out for a specific research purpose in order to qualify as primary research. Typically, primary research intends to answer such clear-cut questions as:

FIGURE 10.6 An Example of

Primary Research Under

Difficult Conditions

·       What is our sales potential in market X?

·       How skilled is the labor force in this region?

·       What will happen to demand if we raise the price by 10 percent?

·       What effect will a new type of packaging have on our sales?

When extending his or her efforts abroad, the researcher must determine the specific country or region to be investigated. Conduction research in an entire country may not be necessary if, for example, only urban centers are to be penetrated. Multiple regions of a country need to be investigated, however, if a lack of homogeneity exists because of different economic, geographic, or behavioral factors. The researcher must, of course, have a clear idea of what the population under study should be and where it is located before deciding on the country or region to investigate. Conducting primary research internationally can be complex due to different environments, attitudes, and market conditions. Yet it is precisely because of these differences that such research is necessary. Global Learning Experience 10.4 provides an example of such a situation.

Industrial verses Consumer Sources of Data

The researcher must decide whether research is to be conducted in consumer or the industrial product area, which in turn determines the size of the universe and respondent accessibility. Consumers usually are a very large group, whereas the total population of industrial users may be fairly limited. Cooperation by respondents may also vary, ranging from very helpful to very limited. In the industrial setting, differentiation between users and decision makers may be important because their personalities, their outlooks, and their evaluative criteria may differ widely. Determining the proper focus of the research is therefore of major importance to its successful completion.

Determining the Research Technique

Once the type of data sought is determined, the researcher must choose a research technique. As in domestic research, the types available are experimentation, observation, and surveys. Each one provides a different depth of information and has its unique strengths and weaknesses.

Experimental Techniques Experimentation determines the effect of an intervening variable and helps establish precise cause-and-effect relationships. However, it is difficult to implement in global research. The researcher faces the task of designing an experiment in which most variables are held constant or are comparable across cultures. An experiment to determine a causal effect within the distribution system of one country may be different. For this reason, experimental techniques are only rarely used, even though their potential value to their global researcher is recognizes.

Observation Observation requires the researcher to play the role of a nonparticipating observer of activity and behavior. In a global setting, observation can be extremely useful in shedding light on practices not previously encountered or understood. This aspect is especially valuable to the researcher who has no knowledge of a particular market or market situation. It can help in understanding phenomena that would have been difficult to assess with other techniques. For example, Toyota sent a group of its

GLOBAL LEARNING EXPERIENCE 10.4

Market Research Russia

Western firms can spend years of frustration and mistakes trying to navigate the often chaotic markets of economies in transition. Market research companies can often help steer them back on track by giving valuable insight into market characteristics and customer tastes. Exporters operating in Russia are finding market researchers crucial to solving the riddle of Russian economic activity and consumer preferences. Reporting on even basic facts about the Russian economy is murky, so market research firms in Russia work to establish reliable databases on everything from the number of firms operating in a given area to apartment sales.

                Market research companies in Russia are filling the gap between academic research and conventional wisdom about Russian businesses. For example, a statement widely reported by economists claims that official Russian statistics understate the rapid growth of the economy by not counting small service-sector companies the elude tax authorities. These academics claim there are 300,000 private commercial companies in Moscow. But one market research firm, Mobile, found that only 8,000 of the companies in Moscow actually advertise or do business, indicating that tax avoidance gives the impression of more private commercial activity than exits in reality. This firm also uses electricity consumption data to measure production and consumption in different regions.

                Mobile’s analysis of apartment sales in Moscow helped one supermarket chain determine where to locate its three next outlets. The client found the Mobile study that broke down apartment sales by metro station particularly useful, finding that the most profitable sales occurred around a few central metro stations. Other services offered by Mobile include tracking product sales and polling dealers. Out of their databases, Mobileanalysts produce weekly bulletins summarizing the markets for computers, home appliances, office equipment, real estate, medicine, and construction. Major Mobile clients include Apple, Matsushita, Samsung, Daewoo.Hitachi, Philips, Sharp, Canon, Rank Xerox, and Deloitte & Touche.

                Russian Markets Research Co. is another firm that helps Western exporters understand the Russian market. The firm’s director, Greg Thai, believes that a major difficulty facing market researchers in Russia is the lack of understanding of basic business concepts among Russians. This creates problems in training interviewers and even in interpreting survey results. Thain emphasized the need to find market researchers with a Western understanding of sales and marketing problems.

                Product research can clear away other more basic obstacles to doing business in Russia. For instance, Russian Market Research Co. tested U.S.-made mayonnaise with Russian focus groups. Their difficulties in translating the concept of American mayonnaise in a country where mayonnaise is a cream used in apple pie and in soups, not just in salads, alerted Western manufacturers to the need to reformulate their mixtures in the Russian market.

                Whether the problem facing Western exporters in Russia is a matter of determining consumer tastes, tracking sales, or exploring investment possibilities in a region, market research firms can help solve the puzzle of a market in the country Winston Churchill once described as “a riddle wrapped in a mystery inside an enigma.”

engineers and designers to southern California to nonchalantly “observe” how women get into and operate their cars. They found that women with long fingernails have trouble opening the door and operating various knobs on the dashboard. Toyota engineers and designers were able to “understand” the women’s plight and redesign some off their automobile exterior and interior, producing more desirable cars.

All the research instruments discussed so far are useful primarily for the gathering of qualitative information. The intent is not to amass data or to search for statistical significance, but rather to obtain a better understanding of given situations, behavioral patterns, or underlying dimensions. The researcher using these instruments must be cautioned that even frequent repetition of the measurements will not lead to a statistically valid result. However, statistical validity often may not be the major focus of corporate research. Rather, it may be the better understanding, description, and prediction of event that have an impact on decision making. When quantitative data are desired, surveys and experimentation are more appropriate research instruments.

Surveys Survey research is useful in quantifying concepts. In the social sciences, it is generally accepted that the cross-cultural survey is scientifically the most powerful method of hypothesis testing. Surveys are usually conducted visa questionnaires that are administered personally, by mail, or by telephone. Use of the survey technique presupposes that the population under study is accessible-able to comprehend and respond to the question posed through the chosen medium.

                Often personal interviews with knowledgeable people can be of great value for the corporation desiring international information. Because bias from the individual may be part of the findings, the intent should be to obtain not a wide variety of data, but rather in-depth information. Particularly when specific answers are sought to very narrow questions, interviews can be most useful.

                For mail and telephone surveys, a major precondition is the feasibility of using the postal system or the widespread availability of telephones. Obviously, this is not a given in all countries. In many nations. Only limited records about dwellings, their location, and their occupants are available. In Venezuela, for example, most houses are not numbered but rather are given individual names like Casa Rosa or E1 Retiro. In some countries, street maps are not even available. As a result, reaching respondents by mail is virtually impossible. Global Learning Experience 10.5 summarizes this type of problem in one of the world’s major cities-Tokyo. In other countries, obtaining a correct address may be easy, but the postal system may not function well. The Italian postal service, for example, repeatedly has suffered from scandals that exposed such practices as selling undelivered mail to paper mills for recycling.

                Telephone surveys may also be inappropriate if telephone ownership is rare. In such instances, any information obtained would be highly biased even if the researcher randomized the calls. In some cases, inadequate telephone networks and systems, frequent line conduction surveys. Yet, with today’s communication capabilities, some research firms are able to conduct telephone research around the world from a single location.

                Since surveys deal with people, who in a global setting are likely to display major differences in culture, preference, education, and attitude, just to mention a few factors, the use of the survey technique must be carefully examined. For example, in some regions of the world, recipients of letters may be illiterate. Others may be very literate, the use of the survey technique must be carefully examines. For example, in some regions of the world, recipients of letters may be illiterate. Others may be very literate, but totally unaccustomed to some of the standard research scaling techniques used in the United States and therefore unable to respond to the instrument. Other recipient of a survey may be reluctant to respond in writing, particularly when sensitive questions are asks. This sensitivity, of course, also varies by country. In some nations, any questions about income, even in categorical form, are considered highly appropriate; in others, the purchasing behavior of individuals is not easily divulged.

                The researcher needs to understand these constraints and prepare a survey that is responsive to them. For example, surveys can incorporate drawing or even cartoons to communicate better. Personal administration or collaboration with locally accepted intermediaries may improve the response rate. Indirect questions may need to substitute for direct ones in sensitive areas. Questions may have to be reworded to be reworded to ensure proper communication. See Global Learning Experience 10.6.

Focus Groups Focus groups are a useful research tool resulting in interactive interviews. A group of knowledgeable people is gathered for a limited period of time (two to four hours). Usually, seven to ten participants is the ideal size for a focus group.

GLOBAL LEARNING EXPERIENCE 10.5

In Tokyo, Finding the Correct Address Is Not Easy

Conduction consumer research using personal interview or mail surveys is easy-all you need is an accurate mailing address so that the local postal service or interviewer can find the respondent and deliver the survey package or conduct the interview. Surprisingly, it’s not that simple, as many places in the world do not have street names and there are not rules in the world do not have street names and there are not rules for numbering the houses; large Japanese cities are good examples.

                Tokyo is one of the largest metropolitan centers in the world, but very few of the streets have names. The streets themselves are confusing as they wander in every direction. A Tokyo address includes the name of the area and numbers representing the district, block, and house. The house closest to the Imperial Palace is supposed to be No. 1, and all other houses are supposed to be numbered from that point clockwise around the block. The problem is that many times these rules are not followed. In some instances, all of the houses on the block have the same number.

                How, then, does one find a specific house in the maze of unnamed streets and houses numbered in odd ways? The answer-with great difficulty. Tokyo residents try to get around the problem by describing the house location relative to some conspicuous landmark; even then It’s not easy to find the house.

                For the market researcher, conducting surveys in cities like Tokyo presents special problems. The problems can be minimized by a comprehensive understanding of the market and careful preplanning of the research.

In Japanese cities, finding a street address can be a time-consuming task. Shuichi Abe, a delivery man at Express Company, looks for a house in an alley in central Tokyo to deliver a package.

               

                A specific topic is introduced and thoroughly discussed by all group members. Because of the interaction, hidden issues are sometimes raised that would not have been detected in an individual interview. The skill of the group leader in stimulating discussion is crucial to the success of a focus group. Focus groups, like in-depth interviews, do not provide statistically significant information; however, they can be helpful in providing information about perceptions, emotions, and attitudinal factors. In addition, once individuals have been gathered, focus groups are highly efficient means of rapidly accumulation a substantial amount of information.

                When planning global research using focus groups, the researcher must be aware of the importance of language and culture in the discussion process. Not all societies encourage frank and open exchange and disagreement among individuals. Status consciousness may result in the opinion of one participant being reflected by all others. Disagreement may be seen as impolite, or certain topics may be taboo. Unless a native focus group leader is used, it also is possible to completely misread the interactions among group participants and to miss out on nuances and constraints participants feel when commenting in the group situation. Before deciding on a focus group in a global setting, the researcher must be fully aware of these issues.

Summary of Survey Methods

In spite of all the potential difficulties, the survey technique remains a useful one because it allows the researcher to rapidly accumulate a large quantity of data amenable to statistical analysis. With constantly expanding technologic capabilities, global researchers will be able to use this technique even more in the future.

                Table 10.3 summarizes the major advantages and disadvantages of each survey method. The reader should note the possible additional disadvantages of using these methods globally.

GLOBAL LEARNING EXPERIENCE 10.6

What’s in a Street Name? In Mexico City, Plenty!

If you’re thinking of conducting a survey in Mexico City that requires the use of street names and addresses, you would be well advised to plan the effort with great care. North America’s largest city has 25,000 public avenues, and its metropolitan area has 75,000. New York City, by comparison, has about 13,000 streets. The problem is not the number of streets, however, but how they are named.

                Naming a street should be relatively simple, but not in Mexico City. The residents take their street names seriously. They have never tolerated numbered streets, and few streets have names as simple as Elm orMain. Street signs ring with history and culture, with names like Pioneers of the Cooperative Movement, or Division of the North, which honors Pancho Vill’s fierce revolutionary cavalry. City leaders were stunned when a survey in 1998 showed that 80,000 city blocks had no street signs and that thousands of other public avenues lacked any official name. The survey also found that many streets were named for political leaders now held in ill repute.

                Most street names are cherished. Pedestrians on Tacuba, a cobblestone street, tread the path followed by Hernán Cortex during his disastrous retreat in 1520, when hundreds of his conquistadors, weighted down with plundered gold, perished under an Aztec onslaught. Sister Juana lnes de la Cruz, the seventeenth century nun and poet, is remembered in the names of 82 city roadways. Thousands of streets commemorate Mexico’s struggle for independence including 760 named for the Reverend Miguel Hidalgo, the priest who roused his parish peasants into anti-Spanish fervor at the on set of the anti-colonial war in 1810. About 800 streets are named for Benito Juarez, the nineteenth century president who was a contemporary of Abraham Lincoln and is often compared to him. More than 100 city streets are named for Porfirio Diaz, a nineteenth-century president.

                Venustiano Carranza, the general who assumed the presidency in 1916, is named on an additional 208 streets. The name of every modern president adorns at least a few streets, including a number of them who were generally disliked by the public. Jose Lopez Portillo, whom Mexican s routinely insulted in public for years because of his catastrophic economic stewardship, is honored along 75 public avenues. No less than 17 streets are named for Carlos Salinas de Gortari, Less than 17  streets are named for Carlos Salinas de Gortari, who was widely associated with the plundering of the public treasury from 1988 to 1994.

                Mexico City’s largest map company is unable to keep up with the changes in the city’s landscape-some 1,500 new streets are developed each year and another 300 are renamed. Each new edition of the maps of the city are instantly obsolete. So, if your survey includes some folks on 

Juarez street

it would be a good idea to determine which of the 800 Juarez streets is involved.

Scenario Building

The information obtained through research efforts can then be used to conduct a scenario analysis. One approach involves the development of a series of plausible scenarios that are constructed from trends observed in the environment. Another method consists of formally reviewing assumptions built into existing business plans and positions.

DBA. in Global Management.  By Dr.Samai Hemman

TABLE 10.3 Advantages and Disadvantages of Survey Methods

Advantages	Domestic Disadvantages	Additional Potential International Disadvantages
Personal Interview ·  High response rate-50%-80% ·  High rate of properly completed questionnaires ·  Complex questions can be asked Telephone ·  Moderately low cost ·  Fast ·  High response rate-40%-75% ·  Works well with short questionnaire ·  Respondents more likely to answer phone than admit interviewer into their homes Mail ·  Low cost ·  No interviewer bias Focus Groups ·  Cost-efficient interviewing method – one interviewer and 10-12  respondents ·  Inexpensive ·  Fast ·  Flexibility in obtaining meaningful response ·  Interaction among respondents can stimulate response from shy respondents	·  High response rate-50%-80% ·  Moderately slow ·  Interviewer fraud ·  Interviewer may bias results personally or in interpreting answers ·  Necessity to call back ·  No phone ·  Unlisted phone number ·  People not at home ·  Refusal to answer/hang ups ·  Possibility of interviewer bias ·  Low response rate ·  Slow ·  Old mailing list, incorrect addresses ·  Not recommended for complex questions ·  Frequent blanks or don’t know response ·  Funny/joke responses-not useable ·  May be treated as junk mail ·  Respondents may not be typical of universe being researched ·  If respondents are typical, group is too small to be an accurate statistical sample ·  Success of interview depends on skill of interviewer ·  Single individual may try to dominate group	·  Cultural resistance to answering questions, particularly by women ·  Inability of respondents to express feelings or opinions about a product or service ·  Problem of physically reaching and finding respondents in rural areas ·  Relatively few people with telephones ·  Poor telephone service ·  Lack of telephone directories · No mail delivery · Theft of mail · Mail is “postage due” · Lack of street numbers or names · Literacy of respondents · Lack of mailing lists · All of personal interview disadvantages listed above · Cultural problem in mixing genders and different social levels in one group

DBA. in Global Management.  By Dr.Samai Hemman

Subsequently, some of these key assumptions such as economic growth rates, import penetration, population growth, and political stability can be varied. By projecting variations for medium-to long-term periods, completely new environmental conditions can emerge. These conditions can then be analyzed for their potential domestic and international impact on corporate strategy.

                The identification of crucial variables and the degree of variation are of major importance in scenario building. Frequently, key experts are used to gain information about potential variations and about the viability of certain scenarios.

                A wide variety of scenarios must be built in order to expose corporate executives to a number of potential occurrences. Ideally, even farfetched scenarios deserve some consideration, if only to address worst-case possibilities. A scenario for Union Carbide Corporation, for example, could have included the possibility of a disaster as it occurred in Bhopal.

                For scenarios to be useful, management must analyze and respond to them by formulation contingency plans; such planning will broaden horizons and may prepare managers for unexpected situations. By anticipation possible problems, managers hone their response capability and in turn shorten response times to actual problems.

SUMMARY

Constraints of time, resources, and expertise are the major reasons not to conduct global research. Nevertheless, firms need to carry out planned and organized research in order to explore foreign market opportunities and challenges successfully. Such research must be linked closely to the decision-making process.

                Global research differs from domestic research in that the environment-which determines how well tools, techniques, and concepts apply-is different abroad. In addition, the global manager must deal with duties, exchange rates, and international documentation; a greater number of interacting factors; and a much broader definition of the concept of competition.

                The research process starts by recognizing the need for research which is often not well understood. When the firm is uninformed about foreign market environments, the need for global research is particularly great. Research objectives need to be determined based on the corporate mission, the level of international expertise, and the business plan. These objectives will enable the research to identify the information requirements.

                Given the scarcity of resources, companies beginning their global effort must rely on data that have already been collected. These secondary data are available from sources such as governments, international organizations, directories, or trade associations.

                To fulfill specific information requirements, the researcher may need to collect primary data. An appropriate research technique must be selected to collect the information. Sensitivity to different international environments and cultures will aid the researcher in deciding whether to use interviews, focus groups, observation, surveys, or experimentation as data-collection techniques.

Why is it said that gauchos, cowboys of the Argentine Pampas, don’t use forks?       QUESTION

ANSWER            Gauchos say that if you need a fork, then you need a plate, then you need a table, and then you need a chair-and before long you’re living in a house with a woman and a bunch of kids and a dog that kills your chickens. So forget the forks. Stick with your caballo (horse) and eat with your manos (hands), say the gauchos.

KEY TERMS AND CONCEPTS

Market segmentation                         proxy information                             mail survey

Data                                                       experimentation                                  telephone survey

Information                                         observation                                          focus groups

Primary data                                        surveys                                                  scenario building

Secondary data                                   personal interview                            

QUESTIONS FOR DISCUSSION

1.             What is the difference between domestic and global research?

2.             You are employed by National Engineering, a U.S. firm that designs subways. Because you have had a course in global business, your boss asks you to spend the next week exploring global possibilities for the company. How will you go about this task?

3.             Discuss the possible shortcomings of secondary data.

4.             Identify the major sources of secondary data.

5.             Why should a firm collect primary data in its global research?

6.             How is global research affected by differences in language and culture?

7.             Is highly priced personalized advice from an individual really worth the money?

RECOMMENDED READINGS

                Barbuta, Domenica M.The International Financial Statistics Locator : A Research and Information Guide, New York, Garland Publisher, 1995.

                New York, Garland Publisher, 1995.

Churchill, Gilbert A. Marketing Research : Methodological Foundations, 7^th ed. Fort Worth, TX,

Dryden Press, 1999.

Delphos, William A. Inside Washington : Government Resources for International Business,          

              Washing ton D.C., Venture Publishing , 1995.

Directory of Online Databases, Santa Monica, CA: Cuadra Associates, published annually.

Palvia, Prashant, Anil Kumar, Nadesan Kumar, and Rebecca Hendon. “Information Requirements of a Global

EIS: An Exploratory Macro Assessment,” Decisions Support Systems, 16, on.2 1996: 169-179.

Patzer, Gordon L., Using Secondary Data in Marketing Research: United States and Worldwide, Westport,Conn., Quorum Books, 1995.

NOTES

1.             George S. Yip, Total Global Strategy: Managing for Worldwide Competitive Advantage (Englewood Cliffs, NJ: Prentice-Hall, 1922), 242-246.

2.             “Grabbing Markets from the Giants,” Business Week/21^st Century Capitalism (1994), 156.

3.             Saeed Samiee and Kendall Roth, “The Influence of Global Marketing Standardization on Performance, Journal of Marketing 56 (April 1992):1-17.

4.             Michael Porter, Competitive Advantage (New York: The Free Press, 1987), ch. 1.

5.             David A. Ricks, Blunders in International Business (Cambridge, Mass. : Blackwell, 1993).

6.             Vinay Kothari, “Reseaching for Export Marketing,” in Export Promotion : The Public and Private Sector Interaction, ed. M.Czinkota (New York : Praeger, 1983), 155.

7.             S. Tamer Cavusgil, “International Marketing Research : Insights into Company Practices,” in Research in Marketing , vol. 7, ed. J.N. Sheth (Greenwhich, Conn. JAI Press.1984), 261-288

8.             Susan P.Douglas and C.Samuel Craig, International Marketing Research (Englewood Cliffs, NJ: Prentice-Hall, 1983), 2.

9.             Cavusgil, “International Marketing Research,” 261-288.

10.      Reijo Luostarinen, Internationalization of the Firm (Helsinki, Finland: The Helsinki School of Economics, 1979), 124-33.

11.      Franklin R. Root, Entry Strategies for International Markets (Lexington, Mass.: Lexington Books, 1994), 15-20.

12.      For one of the best summaries, see Business International, Indicators of Market size for 109 Countries (New York: Business International, 1986).

13.      Phillip Kotler, Marketing Management: Analysis, Planning and Control (Englewood Cliffs, NJ:Prentice Hall, 1984), 234.

14.      Reed Moyer, “International Market Analysis,” Journal of Marketing Research 16 (November 1968): 353-360.

15.      The World Bank, World Development Report (Oxford, England: Oxford University Press, 1990), 236-237.

16.      Root, Entry Strategies for International Markets, 19.

17.      Rahul Jacob, “The Big Rise,” Fortune (May 30, 1994):74-90.

18.      Igal Ayal and Jehiel Zif, “Marketing Expansion Strategies in Multinational Marketing,” Journal of Marketing 43 (Sprint 1979):84-94.

19.      David J. Andzlman, “Betting on the Net,” Sales and Marketing Management (June 1995) : 47-59.

20.      Stephanie Losee, “How to Market on the Digital Frontier,” Fortune (May 1, 1995) : 88.

21.      Michael R. Czinkota and Masaaki Kotabe, “Product Development the 

Japanese Way

,” The Journal of Business Strategy, 11, 6 (November-December 1990) : 31-36.

22.      Lothar G. Winter and Charles R. Prohaska, “Methodological Problem in the Comparative Analysis of International Marketing Systems,” Journal of the Academy of Marketing Science 11 (Fall 1983) : 421.

23.      Douglas and Craig, International Marketing Research, 200.

24.      William H. Davidson, “The Role of Global Scanning in Business Planning,” Organization Dynamics (Winter 1991): 5-16.

DBA. in Global Management. 

DBA. in Global Management.  By Dr.Samai Hemman

APPENDIX 10B

                                Selected U.S. Government

                Publications and Services

MACRODATA

World Population is issued by the U.S. Bureau of the Census., which collects and analyzes worldwide demographic data. Information is provided about total population, fertility, mortality, urban population, growth rate, and life expectancy. Also published are detailed demographic profiles, including an analysis of the labor force structure of individual countries.

                Foreign Trade Highlights are annual reports published by the Department of Commerce. They provide basic data on U.S. merchandise trade with major trading partners and regions. They also contain brief analyses of recent U.S. trade developments.

                Foreign Trade Report FT410 provides a monthly statistical record of shipments of all merchandise from the United States to foreign countries, including both the quantity and dollar value

                World Agriculture, a publication of the U.S. Department of Agriculture, provides production information, data, and analyses by country along  with review of recent economic conditions and changes in agricultural and trade policies. Frequent supplements provide an outlook of anticipated developments for the coming year.

COUNTRY INFORMATION

National Trade Data Bank, a key product of the U.S. Department of Commerce, provides monthly CD-ROM disks that contain overseas market research, trade statistics, contact information, and other reports that may assistU.S. exporters in their international marketing efforts.

                Country Commercial Guides report on a particular country’s commercial environment including economic, political, and market analysis.

                Industry SubSector Analyses are market research reports, ranging from 5 to 20 pages, try’s people, geography, economy, government, and foreign policy. The reports also include important national economic and trade information.

DBA. in Global Management.  By Dr.Samai Hemman

PRODUCT INFORMATION

Export Statistics Profiles analyze exports for a single industry, product by product, country by country , over a five-year period. Data are rank-ordered by dollar value for quick identification of the leading products and industries. Tables show the sales of each product to each country as well as competitive information, growth, and future trends. Each profile also contains a narrative analysis that highlights the industry’s prospects, performance, and leading products.

                SBA Automated Trade Locator Assistance System (SBAtlas), available through the U.S. Small Business Administration, provides small businesses with product reports which rank the top 35 import and export markets for a particular good or service and country reports which identify the top 20 products most frequently traded in a target market.

SERVICES

Agent Distributor Service (ADS) :The Foreign Commercial Service (FCS) provides a customized search for interested and qualified foreign representatives for a firm’s product.

                Aglink : Collaborative effort between the Foreign Agricultural Service and the Small Business Administration to match foreign buyers with U.S. agribusiness firms.

                Business Briefings and Technical Symposia : The U.S. Trade and Development Agency sponsors technical seminars abroad designed to promote sales of sophisticated products and technology.

                Catalog Exhibitions : The Department of Commerce organizes displays of product literature and videotape presentations overseas.

                Customized Market Analysis: The FCS provides a custom foreign market survey on a product’s overall marketability, names of competitors, comparative prices, and customary business practices.

                Economic Bulletin Board: The Department of Commerce provides access to the latest economic data releases, including trade opportunities, for online users.

                Foreign Agricultural Service : Employees of the U.S. Department of Agriculture, stationed both abroad and in the United States with the mission to facilitate agricultural exports from the United States. Provides counseling, research, general market information, and market introduction services.

                International Buyer Program: The FCS publishes background research conducted by FCS officers abroad on potential trading partners, such as agents, distributors, and licensees.

                Matchmaker Events :The Department of Commerce introduces U.S. companies to new markets through short visits abroad to match the U.S. firm with a representative or prospective partner.

                Trade Missions : Groups of U.S. business executives, led by Commerce Department staff, meet with potential foreign buyers, agents, and distributors.

                Trade Opportunity Program : The FCS daily collection of trade opportunities world wide is published and electronically distributed to subscribers.

                For further information on U.S. Department of Commerce exporter assistance programs and trade information, contact them at 1-800-872-8223.

               

DBA. in Global Management.  By Dr.Samai Hemman