Global Market Management: Strategy & Opportunity

Managing in the Global Marketplace

When companies conduct business in other countries, managers must understand that international business is fundamentally different from local (domestic) business.

The primary reason is that countries are inherently different. They possess distinct cultures, laws, political systems, economies, and levels of development. These significant differences necessitate adjustments in how companies operate globally.

For example:

• Selling a product in Brazil is not the same as selling it in Germany.

• Managing American workers is very different from managing Japanese workers.

• In Mexico, fostering strong government relationships may be crucial, whereas in Britain, it might be less significant.

Managers also need to address critical decisions such as:

• In which country should we produce to optimize costs and enhance value?

• Is it ethical to produce in countries with low wages and weak environmental regulations?

• Which foreign markets are attractive for entry, and which ones should be avoided?

• What is the most effective method to enter a foreign market (e.g., exporting, strategic partnership, establishing a branch)?

Identifying International and Global Business Opportunities

1. Market Research: Thoroughly study different countries to identify promising markets. Analyze factors such as market size, growth potential, competition, consumer preferences, and regulatory frameworks. Many companies invest in specialized reports and conduct their own primary research. Example: Diageo with Johnnie Walker.

2. Strategic Partners: Collaborate with local partners, trade offices, or business associations. They provide valuable advice and assist in understanding local culture, legal requirements, and logistics.

3. Competitive Analysis: Examine competitor activities to identify market gaps or underserved niche markets. Example: Diageo in Terrazas.

4. Economic and Political Stability: Prioritize countries with stable economic and political environments, as this significantly mitigates risks and enhances success rates.

5. Technology and Infrastructure: Access to robust internet, efficient transportation, and advanced technological systems facilitates growth, particularly for digital businesses and e-commerce ventures.

6. Customer Segmentation: Understand local consumer segments thoroughly and adapt products and marketing strategies to meet their specific needs.

7. Risk Assessment: Evaluate potential risks such as currency fluctuations, trade regulations, taxation, and legal issues. Utilize tools like currency insurance to mitigate financial exposures.

Strategic Positioning in Global Markets

Apple serves as an excellent example of strategic positioning. While phones existed previously, Apple differentiated itself by offering premium products that are also remarkably user-friendly. This approach significantly contributed to Apple's widespread popularity. Today, Apple commands 19% of the global smartphone market.

Strategic positioning involves differentiating your company from competitors, not solely through price, but by offering superior value or unique differentiation, such as enhanced quality, more features, or greater innovation. This distinct advantage must also be sustainable over time.

When a company plans to sell in international markets, it should consider these five crucial points:

1. Customer Profile: Thoroughly understand the local customer base. What are their preferences? What are their habits? (Example: Outplacement services are highly effective in Japan due to cultural factors.)

2. Price and Value: Adapt product offerings to align with market demands and pricing sensitivities. (Example: In China, facilitate payments via local platforms like WeChat.) Additionally, utilize currency insurance to protect against currency fluctuations.

3. Export and Delivery: Ensure your product complies with all export regulations (e.g., licenses, packaging). Verify that logistics and transport costs do not render your product uncompetitive.

4. Capacity: Be prepared to scale operations to meet increased demand if growth occurs. Simultaneously, ensure existing domestic customer needs are also met.

5. Local Presence and Support: Assess the necessity of a local team versus providing online support or remote assistance. Determine if physical presence is required to offer adequate help or support in that country.