Key Issues of Global Marketing Strategy - Coursework Example

Global Marketing Strategy Table of Contents Global Marketing Strategy Table of Contents 2 Introduction 3 Theoretical framework: International business 4 Strategy for entering new markets 5 Entering through Collaboration and Partnership 5 Entering through Acquisition 6 Setting up manufacturing facilities in international locations 6 Risk and Barriers in International Business 6 Political risk 6 Cultural Risk 7 Tariff barriers 7 Currency Fluctuations 7 Default Risk 8 Overview of Bottled water market: Brazil 8 Recommendation 9 Conclusion 10 Reference 11 Brewer, T.L., 1985. Political risks in international business: new directions for research, management, and public policy. Praeger. 12 Introduction The twenty first century is an era of rapid development and fast paced changes all over the world, which has been triggered as a direct effect of globalization. The induction and diffusion of the effects of globalization in various parts of the world has been fast forwarded in a tremendous manner by the easy availability of high speed internet connectivity in every corner of the world. The easy availability of information in the various forms of virtual media like the online media forums, social networking sites and blogs have significantly contributed to the faster dispersion of the effects related to globalization. This has brought into play, a significant and constant process of change in the macro and micro environmental factors related to the development of business opportunities in the established as well as the developing economies of the world. As a positive impact of globalization, there has been a significant increase in the opening up of economies around the world. As a result of opening up of economies of various emerging and developing countries, new markets are emerging from various corners of the globe. The steady rise in the opening up of new markets around the world is leading to a tremendous increase in competition in the global marketplace. Talking on this note, it can be said that the process of opening up of markets around the world is allowing organizations located in various parts and corners of the world to look for opportunities related to market expansion by applying various strategy-based methodologies and action plans. This approach of entering new markets, by various international firms, is leading to the rise of business practices in the domain and arena of international business practices. Theoretical framework: International business Talking about international business, if we wish to define it, it can be said that the international business or international trade comprises of various business activities that are undertaken by business organizations around the world to develop new markets for the purpose of gaining significant growth opportunities by catering to the demands arising from the new markets. In an effort to do so, the international firms focus on the process related to generating, communicating, delivering as well as capturing of value for the customers of the new markets while customizing the product or service features as per their needs and requirements (Dlabay & Scott, 2011, p. 8). The concept of international business is also highly applicable and relevant in the case of various business firms who look forward to tapping significant amount of business opportunities by providing their services and products to various remotely located clients and customers who dwell in different countries. In the context of various business to business scenarios, international business represents the process of conduction of business between various business organizations through the mass conduction of import and export of goods and services. For the process of conduction of international business, opening up of economies as well as setting up of various investment friendly policies and tax laws in the new and developing economies is very essential. It is highly important to mention in this case that the flexibility in multiple government outlined policies and regular evaluation and revision of various legal and tax based rules and regulations will lead to the development of favourable scenarios that are useful for the purpose of attracting foreign investments like those of foreign direct investment (FDI) and foreign institutional investments (FII). Through the process of conduction of business in the international global markets, the firms of today’s date are increasingly looking forward to developing significant amount of competitive advantage with regard to reduction of operating costs, attaining of high sales growth as well as tapping of significant opportunities related to strategic and efficient sourcing of raw materials and relevant resources. Talking in general, it can be said that the international business phenomenon is a general and strategic approach on the part of many international business firms, and it is mainly applied and implemented for the purpose of attaining significant growth in revenue by entering new markets, while maintaining stable business operations in the domestic markets (Dlabay & Scott, 2011, p. 9) Strategy for entering new markets In order to participate in international business processes, it can be said that entering new foreign markets is a very basic requirement for the entire strategy. Hence, it is quite natural that the firms need to design and implement various strategies for the purpose of entering new markets. There are a series of strategies that are often implemented by the firms for entering new markets. Entering through Collaboration and Partnership A very common strategy that is often applied by various business firms for the purpose of entering new markets is the process of participating in collaborations or in stake based partnerships with a pre-existing company that has prominent presence in the markets the company is trying to enter (Buckley and Ghauri, 2002, p. 93). In the process of applying this strategy, the international company makes significant amount of financial investments in the already existing company. This helps the international company to significantly limit its exposure to various kinds of macro and micro based risks that are associated with entering new markets. Entering through Acquisition Another very relevant strategy that is implemented by most companies that are looking forward to enter international borders is the process of going through a hostile takeover of an already existing company. Talking on this note, by the process of applying this strategy, the company that is making the takeover bid and attempt, is gaining easy access to various resources essential to a business. It is important to note in this case that by employing this strategy, the acquiring firms gets a ready set of skilled manpower who were previously associated with the acquired company and are already highly efficient in handling the daily issues of the business in a regular manner. Setting up manufacturing facilities in international locations Many firms, in an attempt to reduce the cost of production, look forward to the process of setting up of manufacturing facilities in various international locations, where the cost of labour is low and there is easy availability of various resources that are highly essential to the process of production (NZTE.govt.nz, n.d). On a more factual basis, it can be mentioned that the firms look forward to entering into the process of international business, as a strategy to reduce the cost of conducting business operations and to achieve a significant increase in the generation of revenue. Risk and Barriers in International Business The process of entering new markets by various firms who are looking forward to attain a significant amount of business growth in a strategic manner is accompanied with barriers of multiple dimensions. Political risk The factor of political risk always exists in the case of international business. Escalation of tensions in the political arena of the new country, or creation of a scenario that is hostile to the purpose of smooth conduction of business operations, can significantly impact the firm (Clark and et.al, 1996, p. 93). Cultural Risk A very common risk that emerges in the process of doing business in the international arena is the threat of mismatch in culture, communication and language. Talking in more details, it can be said that the human resource of an organization located in a different regions is always familiar with a particular kind of work culture, language and communication process. A takeover by a new company brings into effect a massive change in culture, which becomes difficult for the employees of the acquired company to follow. This results in the hampering of employee productivity as well as failure in the delivery of desired business outcomes (Larmore, 2011). Tariff barriers When it comes to conducting international business, companies also face issues related to tariff barriers that are existent in a particular country. This slows down the process of conducting business operations and achieving a significant increase in growth as well as business efficiency (Srinivasan, 2011, p. 30). Currency Fluctuations A significant amount of threat arises from the fluctuations in currency of various countries and global markets. This threat is highly applicable for firms that have considered entering new markets for the purpose of receiving strategic benefits its business operations. The continuous currency fluctuation automatically sets in motion the risks associated with destabilizing of operational costs because of the continuous movement in the currency exchange rates (Schaffer, Agusti and Earle, 2008, p. 35). Default Risk The default risk is highly present in the case of business operations where firms participate in the process of exporting and importing of goods to clients and parties located in overseas markets. The risk is tremendously high as default in delivery of goods or payments by the deliverer or the receiver can lead to significant financial loss in the business of the parties involved (Russek and Pfluger, 2011, p. 1). Overview of Bottled water market: Brazil Talking about the bottled water market in Brazil which is one of the fastest emerging economies in the recent times, it can be said that the bottled water market is a highly fragmented one. The market in this particular sector is largely dominated by a number of major players who have their bases and headquarters in the domestic arena. The bottled water market of Brazil can be largely divided into flavoured and functional water based product offerings provided by the strong and prominent domestic companies. The market also has a considerable number of product offerings related to the sports drinks category. In the recent times, it can be said that the Brazilian market has reacted very strongly with respect to the category of flavoured water and is witnessing a major shift in consumer preference in this particular arena (Latin Business Chronicle, 2009). The international player that has gained a significant amount of presence in this particular market is the global FMCG giant Coca Cola, through their highly popular offering of flavoured bottled water (Datamonitor, 2011).Talking about the recent developments in this particular sector, it can be said that the market of Brazil is witnessing a steady change as various international players with significant amount of cash at their disposal are looking forward to increasing their presence by the process of acquiring and taking over various small players that are existing in the market. Talking in the context of the growth prospects provided by this sector in the upcoming future, it can be said that the bottled water market of Brazil is supposed to attain a growth of over 30% with respect to total volume as compared to the present scenario (Euromonitor.com, 2012). The variations in product packaging in various volumes as well as the different marketing strategies and approaches will act as key factors that will contribute to a significant growth is this sector. Recommendation Talking about a very favourable strategy that will help the Finland based Water Company to attain a significant level of growth by entering into a new market, it can be mentioned that Veen Water Company should strongly focus on applying the strategy that is already being implemented by various other international players for the purpose of entering the market of Brazil. Explaining in a more elaborate manner, it can be highlighted that the company of Finland should focus on entering the Brazilian bottled water market by going into acquisition of a number of small players that currently exist in that particular sector and market. Discussing broadly, it can be said that the company by implementing the strategy of acquisition of small players will be gaining a competitive advantage that will be highly required for the purpose of smooth conduction of business operations in the new markets. The acquisition of the smaller firms will provide Veen with the ability to acquire highly skilled human resources, who were already working with the companies in the same industry for a considerable amount of time and thus have a fair and high level knowledge and expertise regarding the rules, regulations and various other challenges that currently exist in the bottled water market of Brazil. Another important strategic benefit that the company will receive through the acquisition of the small companies is the ready availability of pre-existing distribution channels that the companies used to access for the purpose of delivering products to various outlets in the Brazilian markets. Conclusion Hence, on a concluding note, it can be recommended that the Finland based Veen Water Company should resort to the application of acquisition strategy for the purpose of gaining entry, and increasing its foot hold and market share, in the bottled water market of Brazil. Reference Dlabay, L.R., & Scott, J. C., 2011. International Business. 4e. USA: South Western Cengage Learning. Buckley, P. J and Ghauri, P.N., 2002. International Mergers and Acquisitions: A Reader. London: Thompson Learning. Euromonitor.com, 2012. Bottled Water in Brazil. [Online] Available At: http://www.euromonitor.com/bottled-water-in-brazil/report [Accessed 5.1.2013] Datamonitor, 2011. Bottled Water Market in Brazil to 2014 (Soft Drinks.) [Online] Available At: http://www.researchandmarkets.com/reports/1795906/bottled_water_market_in_brazil_to_2014_soft [Accessed 5.1.2013] Latin Business Chronicle, 2009. Brazils Bottled Water Boom [Online] Available At: http://www.latinbusinesschronicle.com/app/article.aspx?id=3300 [Accessed 5.1.2013] Russek,S and Pfluger, R., 2011. Business Conditions and Default Risks Across Countries [Pdf] Available At: http://www.lsw.wiso.uni-erlangen.de/BGPE/texte/DP/098_PfluegerRussek.pdf [Accessed 5.1.2013] Schaffer, R.., Agusti, F., and Earle, B., 2008. International Business Law and Its Environment. USA: Cengage Learning. Srinivasan, R., 2011. International Marketing, 3/e. New Delhi: Phi Learning Pvt. Ltd. Larmore, C., 2011. 10 International Business Risks and Challenges for Small Businesses. [Online] Available At: http://voices.yahoo.com/10-international-business-risks-challenges-for-7526598.html?cat=3 [Accessed 5.1.2013] NZTE.govt.nz, n.d. Manufacturing Overseas. [Online] Available At: http://www.nzte.govt.nz/develop-knowledge-expertise/Export-guide/Ways-of-entering-a-new-market/Pages/Manufacturing-overseas.aspx [Accessed 5.1.2013] Clark and et.al, 1996. Managing risk in international business: techniques and applications. UK: International Thompson Business Press Bibliography Hill, C., and Jones, G.R., 2010. Strategic Management Theory: An Integrated Approach. USA: South Western Cengage Learning. Belu, M and Caragin, A.R., 2007. Strategies of Entering New Markets. The Romanian Economic Journal. Neelankavil, J.P. and Rai, A., 2009. Basics of International Business. New York : M E Sharpe. Brewer, T.L., 1985. Political risks in international business: new directions for research, management, and public policy. Praeger. Lavin, F. and Cohan, P., 2011. 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