Marketing Management, Millenium Edition - epiheirimatikotita.gr

is headed by Goeran Lindahl. The company’s motto is “ABB is a global companylocal everywhere.” It established English—or “broken English,” as Lindahlsays—as the company’s official language (all ABB managers must be conversantin English), and all financial results must be reported in dollars. ABB aims toreconcile three contradictions: to be global and local; to be big and small; andto be radically decentralized with centralized reporting and control. ABB hasonly 170 staff people at headquarters (with about 19 nationalities among them),compared to the 3,000 who populate Seimens headquarters. The company’smany product lines are organized into 8 business segments, 65 business areas,1,300 companies, and 5,000 profit centers, with the average employee belongingto a profit center of around 50 employees. Managers are regularly rotatedamong countries and mixed-nationality teams are encouraged. Depending onthe type of business, some are treated as superlocal businesses with lots of autonomyand others as global businesses with major central control.S U M M A R Y1. Companies cannot simply stay domestic and expect to maintain their markets. Despitethe many challenges in the international arena (shifting borders, unstablegovernments, foreign-exchange problems, corruption, and technological pirating),companies selling in global industries need to internationalize their operations.2. In deciding to go abroad, a company needs to define its international marketingobjectives and policies. The company must determine whether to market in a fewcountries or many countries. Then it must decide on which types of countries toconsider. In general, the candidate countries should be rated on three criteria: marketattractiveness, risk, and competitive advantage.3. Once a company decides on a particular country, it must determine the best modeof entry. Its broad choices are indirect exporting, direct exporting, licensing, jointventures, and direct investment. Each succeeding strategy involves more commitment,risk, control, and profit potential. Companies generally begin with indirectexporting, then proceed through later stages as they gain more experience in theinternational arena.4. In deciding on the marketing program, a company must decide how much to adaptits marketing mix (product, promotion, price, and place) to local conditions. Atthe two ends of the spectrum are standardized and adapted marketing mixes, withmany steps in between. At the product level, firms can pursue a strategy of straightextension, product adaptation, or product invention. At the promotion level, firmsmay choose communication adaptation or dual adaptation. At the price level, firmsmay encounter price escalation and gray markets, and it may be very difficult toset standard prices. At the distribution level, firms need to take a whole-channelview of the challenge of distributing its products to the final users. In creating allelements of the marketing mix, firms must be aware of the cultural, social, political,technological, environmental, and legal limitations they face in other countries.5. Depending on the level of international involvement, companies manage their internationalmarketing activity in three ways: through export departments, internationaldivisions, or a global organization. Most firms start with an exportdepartment and graduate to an international division. A few become global companiesin which the top management plans and organizes on a global basis.A P P L I C A T I O N S388part threeDevelopingMarketingStrategiesC O N C E P T S1. Because of shrinking domestic markets due to competition, a moderate-size companyin the salad-dressing industry is trying to decide “whether to go abroad.”