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Global Marketing 5th Edition Johny K Johansson - Solutions
2. Adapt existing concepts and models of consumer behavior by incorporating new data about the local environment uncovered by marketing research.
1. Handle the conceptual rethinking that becomes necessary when trying to understand buyer behavior in a new local market.
5. What negotiation strategy would you have recommended for Mr. Illy?
4. What created the problems with the existing distribution strategy in the German market? Was the distribution alliance with Hag ill-advised?
3. What were the difficulties Illycaffe faced when expanding abroad? How did these impact its choice of entry mode?
2. How would you define Illycaffe’s FSAs? CSAs? Can they be transferred abroad?
1. To what extent do you think a global strategy in coffee is well-founded? For example, is the espresso market global or multidomestic?
3. Work toward a new contract with Hag-Goldene Tasse/Jacobs Suchard.
2. Look for a new partner in Germany who could offer a solid sales network and would agree to the terms outlined in the proposal prepared for Hag-Goldene Tasse.
1. Give full responsibility for rules and distribution back to Illy-Germany and work together with the German team to establish an effective sales force.
6. A new policy of communication at point-of-sales would be implemented through the use of Illy cups and billboards. Illy should have the authority to control the implementation of this activity through contracts and regular visits to clients.
5. A unit to supervise technical consulting/quality control at the point-of-sales would be created and managed by Illy-Germany.
4. Clear growth objectives would be stipulated in the contract. These objectives should be in line with Illy’s overall objectives for growth, and Hag should be obliged to achieve the stated objectives.
3. Hag-Goldene Tasse would be granted exclusive rights to the distribution of Illy coffee in Germany, contingent on the requirement that Hag-Goldene Tasse distribute only Illy’s brand of espresso coffee.
2. All marketing activities (especially advertising to the trade, to the consumer, and at the point-of-sales)would be managed and controlled by Illy’s new German subsidiary.
1. The selling price of Illy coffee to Hag-Goldene Tasse would be the same as in other European markets, and with the same payment conditions.
5. Given Wal-Mart’s threat in the U.S. market, what should Toys “R” Us future strategy in Japan be?
4. What were the problems in transferring the Toys “R”Us competitive advantages to a foreign market? Why did Toys “R” Us internalize the firm-specific advantages rather than license another retailer abroad?
3. How did Toys “R” Us manage to cross the entry barriers into Japan? What alternative modes of entry could have been tried?
2. What were the entry barriers into Japan? Any culturally based barriers, in terms of how to do business?
1. Was Japan an attractive market for Toys “R” Us? Do you think there were any cultural obstacles to product acceptance? Strong competitors?
26. This terminology is suggested in Riesenbeck and Freeling, 1991.
25. The figure of 10 percent keeps coming up in many informal conversations with executives. It is of course not a hard-and-fast figure—overseas potential should always be considered—but it seems that at about 10 percent of revenues, overseas markets develop enough “critical mass” to demand
24. See McKinsey and Co., 1993.
23. See Brush, 1992.
22. From Hertz and Mattsson, 1998.
21. See McKinsey and Co., 1993. The discussion of born globals here draws on the excellent overview of the research by Knight and Cavusgil, 1997.
20. See, for example, Cavusgil, 1980; Czinkota, 1982; Nordstrom, 1991.
19. As their annual reports show, these are the typical steps taken by Japanese firms in autos, electronics, and heavy equipment.
18. See “Ingvar Kamprad and IKEA,” Harvard Business School case no. 390-132.
17. An empirical evaluation of how transaction costs influence mode of entry is presented in Anderson and Gatignon, 1986. See also the discussion of transaction costs in Chapter 2.
16. The cultural distance and internationalization effects were first brought out by researchers at Uppsala in Sweden—see Johansson and Vahlne, 1977, 1992.
15. See Beamish, 1993.
14. This example is from “Food Distribution in Russia: The Harris Group and the LUX Store,”Harvard Business School case no. 9-594-059.
13. See Tse and Gorn, 1993.
12. See, for example, the reaction of Chrysler buyers to learning that the cars were built in Mexico(Nag, 1984).
11. See Johansson and Nebenzahl, 1986.
10. This discussion of FDI in overseas manufacturing is necessarily brief. A lot has been written on the topic, and the interested reader can find a good comprehensive statement of the modern FDI theory in most multinational texts, including Rutenberg, 1982.
8. See Contractor and Lorange, 1988; and Geringer and Hebert, 1991. There are many other forms of international ventures that are quite different organizationally—for example, the American
7. Hamel et al., 1989, give an upbeat view of competitive collaborations.
6. Bleeke and Ernst, 1991.
5. Bleeke and Ernst, 1991; and Parkhe, 1991, show the lack of durability of many strategic alliances.
4. See Terpstra and Simonin, 1993.
3. See Johansson, 1995.
2. See, for instance, Hamel, Doz, and Prahalad, 1989; and Bleeke and Ernst, 1991.
1. The terminology varies between writers. Some keep joint ventures separate from strategic alliances, arguing that the latter do not involve equity investments but are simple collaborations.From a marketing perspective, however, joint ventures and strategic alliances pose similar problems.See
5. Use the Internet to locate the Web site of a global company that has recently introduced a new product, brand, or model. Then assess from the information provided whether the introduction followed a sprinkler or a waterfall strategy.
4. The regional trade blocs represent “ready-made” target segments where trade barriers are low and therefore exporting is typically a strong option. Discuss the pros and cons of FDI versus an alliance when entering such a trade bloc for the first time.
3. How can control over local marketing be managed in exporting? In franchising? How can Starbucks, the specialty coffee retailer, maintain marketing control over its franchise operations in Japan?
2. In fast-food businesses (McDonald’s, KFC, Pizza Hut) franchising has become a popular mode of entry into foreign markets. Discuss the reasons for that. What alternatives could be used? Can you find any real-world illustrations of such alternatives?
1. While Disney World entered the Japanese market by licensing its name to a Japanese company, EuroDisney (now Disneyland Paris) outside Paris was established as a joint venture with European backing but with Disney holding majority control. To what would you attribute the difference in entry mode?
2. Even with a sales subsidiary, however, product entry mode is not irrelevant. For example, reliable and timely supplies to the local market cannot be ensured through exporting when protectionist pressures mount or when transportation is long and hazardous. Licensees may not perform as agreed, and
1. Local marketing control often can be effectively exercised via a sales subsidiary, regardless of the entry mode of the product.
5. Decide between a waterfall-expansion strategy with gradual entry versus a sprinkler strategy that attempts to cover all markets at once.
4. Find the optimal mode of entry by first finding a way over entry barriers and then making the necessary trade-offs between strategic posture and the market stage of the life cycle.
3. Work effectively with licensing and alliance partners who may be competitors in some product markets.
2. Spot when licensing and strategic alliances involve transfer of know-how and, therefore, possible dilution of firm-specific advantages.
1. Avoid entry barriers by unbundling the value chain and engage in nonexporting modes of entry.
16. See, for example, Alden, 1987, and Rangan et al., 1995.
15. Ibid. offers a brief but enlightening discussion of what makes for a great distributor.
14. See Beeth, 1990.
13. These are only the main changes. For further information, see Horlick and Shea, 1995, and Suchman and Mathews, 1995. Effective enforcement of the new rules is still in question, especially since individual countries may not agree to the binding arbitration stipulated through the new DSM
12. From O’Neill, 2001.
11. The host country governments have gradually grown in sophistication and try to stem this loophole in the trade barriers by requiring a certain percentage of local content in the value of the imported product. In autos, figures around 60–80 percent are typical.
8. Although the close company groupings in Japan called keiretsus have been acclaimed as a source of overseas success and a barrier to foreign entry at home, they are now also a burden as Japan’s financial crisis and recession mean that inefficient partners can no longer be supported by other
7. Personal interview with Mr. Isoda of Daiwa Securities, June 5, 1993.
6. See Czinkota and Kotabe, 1993.
5. Recognizing FDI and the multinational firm as an efficient response to barriers is one of the core propositions of the modern theory of the multinational—see Buckley, 1987.
4. The departments of commerce in different countries will have the tariff schedules for many countries and be able to give advice on how to analyze them. Also, some direct experience is, as always, useful. Watching a customs official decipher the schedules to assign the correct tariff instills
3. The cost of entry barriers is not an issue of free versus managed trade. All agree that barriers cost money and that consumers have to pay more for products and services. The policy difference is rather in terms of whether managed trade is worth it for the nation, since tariffs protect firms and
5. What are the advantages of the Internet in distributing your final product? What mode of entry would you propose?
4. What might be the natural entry barriers against foreign cars, if any, in the United States? In Germany? In Japan? Any natural barriers against foreign foods for the same countries?
3. For an industry or product of your choice, use Internet Web sites, library sources, U.S. Department of Commerce publications, and trade publications to find out when and where the major international trade fairs and conventions are held. Estimate how much participation would cost for a
2. Because it is located in the southern hemisphere, Chile’s strong fruit-growing industry has the advantage(an example of a CSA) in many northern markets of counterseasonal harvesting. What is involved in arranging for the exporting of the fruit crops to a market such as the European Union?What
1. What kind of entry barriers might be faced by Amazon.com in expanding its online bookselling business into European, Asian, and Latin American markets? How would entry mode be affected?
Before making the final choice, look for the distributor who has the key person for your line. This is a person who is willing to become the champion for the new product line.
Visit these two or three distributors and see which ones you would be able to sign up.
Talk to the ultimate users of the equipment to find out from which distributors they prefer to buy and why. Two or three names will be likely to keep popping up.
5. Understand the important role of importers as partners who have more intimate knowledge of the market demand in their country.
4. Select a local distributor who can help overcome restrictive government regulations, limited access to distribution channels, and pro-domestic consumer biases.
3. Decide between having an agent and a distributor handle the local marketing or establishing your own foreign sales subsidiary.
and how to find a local agent.
2. Handle a number of activities that are new to a marketer, including export pricing
1. Analyze barriers to entry, including tariffs, quotas, and discriminatory customs procedures, to decide between exporting and alternative entry modes.
5. New high-tech products—such as the Apple iPod—are often said to generate their own demand.What does this imply about the possibility of forecasting sales when such a product is first introduced?How could one forecast sales for it when later entering a market such as Russia?
4. Use the Web sites of companies in a given product category—such as pharmaceuticals, autos, or consumer electronics—to develop a short report on how their respective product lines overlap and therefore compete in a country market of your choice.
3. Access the available online services to create a database that would help a company decide how attractive a country market is. Product category and country are your choices.
2. What factors would you consider when helping an already global manufacturer of household vacuum cleaners choose between Mexico, India, and China as the next country to enter?
1. Company spokespeople are often heard to say, “We have to be in that market.” What is a likely explanation for this statement if the market is (a) China; (b) Germany; (c) Brazil; (d) Japan; (e) the United States? Give examples of products or services.
5. To what extent should Whirlpool adapt its global strategy?(You may want to access Whirlpool’s Web site and annual reports to see how the company has fared recently and whether its international commitment remains strong.)
5. Combine the quantitative forecasts with subjective estimates from personal visits and channel interviews.
4. Do sales forecasting for a given country, using techniques appropriate for the stage of the product life cycle (PLC) that the country market is in.
3. Find the relevant data needed for country evaluations, including the available data on the Internet as well as data from independent research agencies that provide customized analysis on specific products and markets.
2. Test the sensitivity of a country’s ratings against alternative scenarios of political developments and competitive reactions.
1. Evaluate country attractiveness by considering environmental factors such as political developments, trading bloc membership, and entry barriers, in addition to market potential.
4. To what extent does Whirlpool’s experience suggest that globalization is not a good idea in the appliance business? Explain fully.
3. Are Whirlpool’s difficulties with its global strategy due to internal factors or to external factors beyond its control?
2. What seem to be the key success factors in the appliance business?
1. To what extent is the appliance market regional rather than global?
4. How does the TV advertising campaign initiated by IKEA overcome the entry barrier of high advertising expenditures?
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