Global Marketing Management - Assignment Example

Global Marketing Management: Geographic/Demographic Segments, Licensing, & GSPs Outline: Introduction: Answers to three questions: Q1. Identify the major geographic and demographic segments in global markets. Q2. The president of XYZ Manufacturing Company of Buffalo, New York, comes to you with a license offer from a company in Osaka, Japan. In return for sharing the company’s patents and know-how, the Japanese company will pay a license fee of five percent (5%) of the factory price of all products sold on the U.S. Company’s license. The President wants your advice. What would you tell him? Q3. Six attribute that distinguish GSP from traditional joint venture Conclusion Introduction An organization’s aim is to understand and satisfy all the customer needs and wants better than its competitors. In the current scenario, the company can survive only by following the strategies associated with going global market. This can be achieved only through market segmentation which refers to dividing the market into a number of groups with similar traits of individuals. Q1. Identify the major geographic and demographic segments in global markets. Geographic segmentation refers to dividing the whole market or world into geographical subgroups. A multinational corporation operating across the boundaries should consider this segmentation in order to meet the different requirements of consumers in each geographical segment in which they operate. The variables on which geographical segmentation is done are region; customer groups; population density and climate. Regional segmentation divides the customers on the basis of continent, country or state. Size of population of the particular regions decides the customer groups. The population size of density may be on the basis of urban, suburban or rural. Geographical segmentation can also be based on the climate prevailing in the countries i.e. countries having same climate are geographically segmented. (Market segmentation, (n.d)). Demographic segmentation refers to dividing the customer groups on the basis of age, gender, family lifecycle, generation, income, occupation and education. On the basis of age, we can group the whole world as global teenagers, youngsters, middle age groups and old age groups. Female and male are the two classifications which can be made on the basis of gender. The family lifecycle may be classified as married, family with one child, family with two children etc. Low level income group, middle income group and higher income group are the three groups which come under income segmentation. Market could also be classified as regular income group or those employed and those non-employed. Education is also one of the variables used for segmentation. (Keegan, W,2002, p.192). Q2. The president of XYZ Manufacturing Company of Buffalo, New York, comes to you with a license offer from a company in Osaka, Japan. In return for sharing the company’s patents and know-how, the Japanese company will pay a license fee of five percent (5%) of the factory price of all products sold on the U.S. Company’s license. The President wants your advice. What would you tell him? “A patent sale is an outright transfer of all patent rights from the seller to the buyer.” (Patent sale transactions, (n.d)). Technically the sale of this right is called an assignment. Usually patent sale takes place with a return of the license from the buyer. The transaction starts with the identification of the patents and the buyer makes a tentative offer to the seller. The importance of license to the seller requires much discussion. Patent, trademarks, brand names etc are some of the firm’s specific advantages. Licensing is one way of entering into another market by the company. In licensing the ownership advantages are transferred to the other company with a mutual agreement. (Chapter 2 theoretical foundations, (n.d)) Licensing is usually done to enter into a new market or for expansion strategy. Licensing is done by a well equipped company with advanced technology or know-how. Attractive return on investment is the main benefit associated with it and the only cost is the cost of signing the agreement. The company can obtain a potential return from the manufacturing offered by the other company. (Keegan, W, 2002, p. 291). The XYZ Manufacturing Company can accept the licensing agreement with the other company by taking following decisions before signing the agreement. 1. The present strategy of the company. Whether the company requires expansion or entry into new market. 2. The company should demand more extensive market participation in the coming years. 3. The company can adopt a path of joint venture with licensing for other forms of market participation. 4. Costs benefit analysis of selling the patent and involving in the licensing agreement. Q3. Six attribute that distinguish GSP from traditional joint venture GSP refers to Global Strategic Partnership. Collaborative agreements, strategic alliances, strategic international alliances are the other possible terms used with respect to global strategic partnership. In GSP there is cooperation between customers, competitors and markets for the benefits. There is independence between the participants and they share the benefits of the ongoing contributions in technology, products etc. The participants in the GSP also control the performance of the assigned tasks. The five attributes of a Global Strategic Partnership are as follows. “Two or more companies develop a joint long term strategy, relationship is reciprocal, partners vision and efforts are global, relationship is organized along horizontal lines, when competing in markets not covered by alliance, participants retain national and ideological identities.” (Blanchard, 2009). A Global Strategic Partnership differs from the traditional joint venture in the following ways: 1. Mission: in GSP mutual importance is given to all the partners and mission statement is pursued by both the participants. Thus both the participants can win. 2. Strategy: it is not necessary that a company can establish only one GSP. Sometimes a company may establish different GSP s with different participants. But one think to be kept in mind is that the strategy should be developed according to the needs of the different partners to avoid conflicts. 3. Governance: there should be well established norms for the discussions between the partners. If a company has many partners, all the partners should be treated equally. 4. Culture: as culture is different in different countries, the selection of partners is very important. A set of values could be developed by the cultural combination of the partners. 5. Organization: to reduce the complexities of management of different partners, an innovative structure should be developed. 6. Management: “GSP s invariably involves a different type of decision making. Potentially divisive issues must be identified in advance and clear, unitary lines of authority established that will result in commitment by all partners.” (What are the 6 success factors of GSP?). Conclusion: These three questions discuss about the issues in international marketing. International market nowadays is getting more prominence since every company wanted to do business internationally. When we enter into an unfamiliar market, there will be new challenges to face. The company has to tackle issues such as licensing, market segmentation, GSP, Joint venture, etc. Since each have different characteristics and advantages, a firm should adopt the best suitable strategy. A thorough analysis of all these issues will help us for having a clear understanding for the decision making. Reference Blanchard, Kristopher. (2005). Chapter 9: Global market entry strategies: Licensing, investment, and strategic alliance. Prentice Hall. Retrieved April1, 2009, from http://bm.gduf.edu.cn/kcpt/global%20marketing/PPT/Chap09pp.ppt# Chapter 2 theoretical foundations. (n.d). Retrieved April1, 2009, from http://www.westga.edu/~busn/MKTG6820/2_Theoretical%20Foundations.pdf GSP. (n.d). Retrieved April1, 2009, from http://www.miti.gov.my/cms/content.jsp?id=com.tms.cms.section.Section_697f7757-c0a81573-66466646-1561dbc6t GSP: What is GSP. (n.d). Retrieved April1, 2009, from http://www.miti.gov.my/cms/content.jsp?id=com.tms.cms.section.Section_697f7757-c0a81573-66466646-1561dbc6 Keegan, W. (2002). Global Marketing Management.7th edition. 291. Prentice Hall: NJ Keegan, W. (2002) Global Marketing Management. 7th edition.192. Prentice Hall: NJ Market segmentation. (n.d). Business Teacher. Retrieved April1, 2009, from http://www.businessteacher.org.uk/markets/market-segmentation/ Patent sale transactions. (n.d). TYNAX: The Technology Trading Exchange. Retrieved April1, 2009, from http://www.tynax.com/ttx1/Transactions-Patent-Sale.asp Ward, Susan. (2009). Joint ventures: Diamonds on the beach. About.com: Small Business: Canada. Retrieved April1, 2009, from http://sbinfocanada.about.com/od/management/a/jointventure.htm What are the 6 success factors of GSP? Retrieved April1, 2009, from www.vision.byus.net/tt/attachment/811196118.pdf Read More