Entry mode strategy in global marketing

Published on November 30, 2009 Reviewed on July 31, 2016   41 min

Other Talks in the Series: Exporting, International and Global Marketing Management

0:00
SVEND HOLLENSEN: Hello. My name is Svend Hollensen. I'm an Associate Professor in International Marketing at University of Southern Denmark. Today, I'll be talking about entry mode strategy in global marketing. Why is this an important theme in international marketing? Well, when a company has selected its target market, it must also decide how to enter the market. And basically it can choose among three different categories of entry modes. Export, intermediate, and hierarchical modes. And, I will talk about these three categories today.
0:39
The starting point of my presentation will be my "Global Marketing" textbook, which I will also refer to during my presentation.
0:50
In this book, I have structured the international marketing process in five stages. Stage number one is the decision to internationalize. So should the company stay at home or should it go abroad? Stage number two is the international market selection. Here the company decides which markets to enter. Stage number three is the entry mode strategy. And this is what I'll be talking about today. Stage number four is designing the global marketing program, the marketing mix of the global markets. And the final stage is implementing and coordinating the global marketing program. And in this presentation, our focus is on stage number three, the entry mode strategy.
1:42
The structure for this presentation is like this. First, I'll identify and specify the different market entry modes. Then, I'll identify the factors to consider when choosing between the three categories of entry modes. Then, I'll be talking about the different categories. First, I'll talk about the export modes. Then, I'll talk about the intermediate modes. And finally, I'll talk about the hierarchical modes. And I will end the presentation by making a kind of conclusion.
2:18
For many smaller companies, globalization is still an unknown concept. They are not realizing that the globalization is just outside their window. The big multinational companies are just outside their window. And they are coming to attack their market share in their home market.
2:40
The starting point for all business activities and global marketing activities is the importers value chain. In the following, I'll show the simplified version of this value chain. It consists of four main functions. First, we have the research and development function. It is about developing the product and the services for the company. Then, we produce the product and the service. Then, we try to market the product globally. And finally, the product has to be supported by sales and services. These are the four main functions. And then we will divide these four functions up in two categories. Upstream functions and downstream functions. And, we divide them in such a way that research and development, plus production belongs to upstream. This is what takes place internally. And the two downstream functions consist of marketing and sales and service. And these functions are targeted towards the market and the customers.
3:57
The main idea behind the simplified value chain is that we can move around with the value chain functions. Here, we have a situation where we have centralized the upstream functions. This means research, development and production. And then we have decentralized the downstream functions to the different markets where we are doing business. This means that we can utilize our experience in the headquarters for deciding for the right products. And then we can adapt the product and the services to the different markets where we are doing business.
4:38
A good example of dividing upstream and downstream functions is "Pocoyo", which is a TV animated series. In this concept, Zinkia Entertainment in Madrid is responsible for the upstream functions about creating the right concept and making the animation of the TV series. And then we have Granada Ventures in UK, which is responsible for the downstream functions. And is responsible for selling the concepts and the TV series to a number of different TV stations around the world. At the moment they are selling the concept to 100 countries. After we have looked at the upstream and downstream functions
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Entry mode strategy in global marketing

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