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International Marketing - Coggle Diagram

- - - - Exporting is the simplest form of international expansion. For e-commerce companies, exporting may begin with an unexpected order from another country. The most significant costs associated with exporting are delivery and customs charges. However, these fees are frequently passed directly on to the consumer
    - - Agents can form part of a company's distribution strategy and the benefits of using them are fully explained in Subtopic 4.5. An international agent can represent a company in a foreign country and attempts to sell the company's products to retailers or directly to consumers.
    - - When franchising, a company allows another company to use its brand name in exchange for a fee (see Subtopic 1.6). This method of expansion is common in the fast-food industry and has allowed companies such as McDonald's, Krispy Kreme and The Hard Rock Cafe to become global brands.
    - - A strategic alliance is when two companies commit resources to a joint project, but there is no separate entity formed. For example, when iPhones were first released in 2007, Apple formed strategic alliances with certain network providers to get the phone sold. In the UK, this alliance was formed with O2, which at that time was the country's largest mobile network provider.
    - - In a joint venture, two companies work together to create a separate entity. Joint ventures have many strengths. International companies bring their strong brand, investment capital and business systems, while local partners offer local knowledge. Joint ventures were initially discussed in Subtopic 1.6.
    - - Direct investment refers to a situation where a company opens operations in another country. This is commonly known as foreign direct investment or FDI, and is a topic dealt with in the Diploma Programme Economics and Geography subjects too.
- - - - A larger target market
        
        The main motivation for international expansion is, of course, to increase sales revenues. The global population is over 7 billion people and average incomes are rising.
      - Rapid growth in sales revenue
        
        According to the World Bank, high-income countries in North America and Europe can expect an average GDP growth of just 2.2% in 2017. Developing countries can expect to grow at a rate that is more than double this, an average of 5.4%. This growth represents a big opportunity for international companies to enjoy large increases in sales revenue and profits.
      - Economies of scale
        
        Economies of scale mean that, as a company increases its sales, the average cost of producing its good or service should reduce. There are many factors that lead to economies of scale, all of which are explored fully in Subtopic 1.6. Once average costs begin to fall, companies have two options. Firstly, they can reduce their selling price in an effort to gain more sales. Alternatively, they can keep their selling price the same and enjoy higher profit margins.
      - Spreading risk
        
        Diversifying into new markets allows companies to spread risk. Companies that suffer from falling sales in their home markets may look to boost sales overseas, and the large tobacco companies have done exactly this.
      - Increased brand reputation
        
        Once a brand is able to expand into a foreign market, it will benefit from increased recognition within that market and the original market. Part of this will be the result of knowing that the brand is from a particular country
      - Access to a global network
        
        Gaining entry to a market will provide new opportunities to the business. This is in terms of sales, as discussed above, and for gains to economies of scale, but also for gaining access to new suppliers and a different labour forc e
- - - - Price
        
        Prices are adjusted to meet the needs of the local market. Incomes, taxation rates and production costs will vary from country to country, even though the product may be identical.
      - Pormotion
        
        The music, actors and food shown in commercials will be adjusted to meet the needs and ethnic diversity of their target market .
      - Product
        
        Largely, the products sold abroad are the same, with slight adjustments made to suit local audiences. For some businesses, no changes need to be made other than the language on the packaging. However, for some industries, such as clothing, going global can pose significant problems.
      - Place
        
        Distribution strategies vary greatly depending on the country. If the business has pursued a direct investment strategy, it will operate its own stores in the destination country. However, it may be that the business has had to operate abroad alongside another company from that region. This may have been because of costs or because it provides an opportunity to attract customers through the use of the partner's established name. These strategies were covered in the previous sections of this subtopic.
- - - - Globalisation and the internet have revolutionised a number of industries. Movie studios used to stagger the release date of their films so that the lead actors could travel to different countries to promote the launch.
    - - The World Trade Organization (WTO) works to promote trade between countries. It originally started as the General Agreement on Tariffs and Trade (GATT), signed on 30 October 1947, and was an attempt to improve trade relations between countries after the heavy isolationist policies of the 1930s and the outbreak of the Second World War. The GATT was updated in 1994 to become the WTO, and has the following objectives:
        
        negotiating the reduction or elimination of obstacles to trade (import tariffs, other barriers to trade)
        
        administering and monitoring the application of the WTO's agreed rules for trade in goods, trade in services and trade-related intellectual property rights
        
        monitoring and reviewing the trade policies of members, as well as ensuring transparency of regional and bilateral trade agreements
        
        settling disputes among members regarding the interpretation and application of the agreements
        
        building capacity of developing country government officials in international trade matters
        
        assisting the process of accession of some 30 countries that are not yet members of the organisation
        
        conducting economic research and collecting and disseminating trade data in support of the WTO's other main activities
        
        explaining to and educating the public about the WTO, its mission and its activities.
    - - Television audiences are also becoming globalised. Shows like Game of Thrones, Mad Men or Veep are watched by millions. These shows are often sponsored by companies with pan-global marketing strategies that see them as opportunities to promote their brands. Some even pay to have their product used by the characters in the show.
    - - In 2014, over 3.2 billion journeys were taken by aeroplane. The number of journeys taken by plane has grown every year since 2008. This exchange of people, whether for tourism, work or to visit families, is an opportunity for global companies. As people travel, they try new foods and products. When they return home, they may seek out these products, creating potential new opportunities for companies.