THE SCOPE OF INTERNATIONAL MARKETING
It is generally understood that a company like Boeing, the world's largest commercial airline
manufacturer engages in international marketing when it sells its aeroplanes to airlines across the globe. Likewise, Ford Motor Company, which operates large manufacturing, plants in several
countries, engages in international marketing even though a major part of its output is sold in the
country where it is manufactured.
Today, however, the scope of international marketing has broadened and includes many other
business activities. The activities of large department store chains include a substantial element of importing. When these stores search for ...view middle of the document...
The firm is also able to create a switching cost that will tie customers into patronizing the firm’s product and services. A typical example is Spacefon’s entry into the telecommunication industry by way of first mover advantage. The company have been able to build a strong brand, wide customer base and built sales volume by riding down the experience curve with a cost advantage.
The Scale of entry by a firm into foreign markets requires the commitment of significant resources and implies large scale rapid entry. Spacefon committed a significant amount of resources and they entered the market very big and quite rapidly by mounting masts all over the country to create the widest network coverage. These funds went into compensating individuals or other organizations whose houses or properties were used to site their equipments. By this action Scancom, the operators of Spacefon made a strategic commitment because their decision to enter on a large scale meant that decision has a long term impact and it is very difficult to exit. By making such a strategic commitment, Spacefon which over the years has metamorphosed to Spacefon-Areeba, then to Areeba, and then finally rebranding to become MTN was able to change the competitive playing field by unleashing a number of innovative products which to a large extent triggered reaction from its competitors. There are however an advantage of small scale entry which allows time for the firm to study the market and also limits its exposure.
A firm can enter an international market by adopting the following entry strategies;
Firstly by forming Strategic Alliances, this is a form of business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective. Strategic Alliances are sought as a way to shore up weaknesses and increase competitive strengths. A case in point is the strategic alliance between KLM and Air France. These two organizations share competitive advantage in markets which are operated by one of them. An example is the Accra route which is operated by KLM, for every flight that operates from France with an onward connection to Ghana, Air France flies the passengers from Paris to Amsterdam and then KLM will in turn fly them from Amsterdam to Accra. By doing so, both airlines benefit. They also share cost by KLM operating under KLM/Air France in one office under same management. This alliance enables passengers to experience seamless travel and this increases the competitive advantage of both companies. Firms enter into strategic alliances for rapid expansion into new markets, access to new technology, more efficient production and innovation and access to additional source of capital. Licensing, Joint Venture and consortia are a few examples of forming Strategic Alliance Partnerships. Strategic Alliances has the tendency of creating opportunism. However the following can structure the alliance to reduce the issue of...