International marketing theories

Why I am successful, will I be successful?

n    Basis of success at home – strengths, resources and competences

                          applicable abroad?

§    Weaknesses at home?

§    Opportunities and threats at home and abroad?



   what are the sources of the success…and competitive advantage of firm?



COUNTRY- SPECFIC ADVANTAGES       FIRM- SPECIFIC ADVANTAGES

      COUNTRY-SPECIFIC ADVANTAGES theories



n    Tomatoes, shoes, butter, cars, textile and cloth, cosmetics, alcohol beverages……





                                       Austria,Czech Republic, Slovakia, Italy, Poland, Spain,
China, Finland, France, Germany…..

                              WHY ???????? BENEFITS FOR WHOM???

n    YOUR COUNTRY – which comparative (or absolute) advantage?

n    ECONOMIC ADVANTAGE – ONE COUNTRY PRODUCES PRODUCTS BETTER OR MORE CHEAPLY (OR LESS COSTLY)
THAN THE OTHER -

n    Comparative advantage – free trade between two countries yields economic pay-offs to the
countries (different endowments of resources, country production involves less sacrifice in the
output compared to other country – specialization

n    Ricardo: COMPARATIVE (RELATIVE) ADV. - one country may be better in producing many products
but should produce only what it produces best



REASONS FOR EXPORT + BENEFITS

Country benefits

n    Import can help save precious domestic sources

n    Not enough or no domestic sources

n    Competition

n    Grater quantity and variety of goods customers

n    Innovation – technologies - knowledge

n    Lower prices

n    employment

Customer benefits

n    Competition

n    Grater quantity and variety of goods for customers

n    Lower prices



THEORIES…BUT!!!

n   Developed countries trade more among themselves than with developing countries

n   Cars from Germany, Italy and France are imported to France, Italy and Germany…

n   „Born globals“ – international new ventures  - what and why?

National competitive advantage – Michael Porter – „diamond of national advantage“ - 4 factors
determining CA/disadvantage:

        Diamond of national advantage
    (more possibilities to stay competitive)
         book  1990 The Competitive Advantage of Nations

n    Factor conditions – nation´s position in factor of production (skilled labour,
infrastructure…..)- degree of mobility = (climate      physical infrastructure     natural
resources       educational system      human resources       technological infrastructure –
software, com. network…     capital)

n    Demand conditions – nature of the home demand

n    Related and supporting industries – internationally competitive suppliers and supporters
existence or absence

n    Firm strategy, structure and rivalry – the conditions in the nation governing how companies
are created, organized and managed and the nature of home rivalry

The international product life cycle (IPLC) – Raymond Vernon, 1966

n   Examples???

n   What in management and in the international marketing activities is influenced by IPLC?



n    The new trade theory – (in 1970s) – looks at the benefits of economies of scale. „only a few
firms will be able to prosper in any one industry  - countries have a trade pattern influenced by
the profile of the large firms that they possess - + these firms must be „first movers“ – helps to
build up market share and obtain economies of scale

n    - differences in knowledge, skills, abilities, competences – REGIONAL CLUSTERS

n    EXAMPLES?????????

§    Country-of origin effects – quality perception of products – differ by product category
(cosmetics, wine, fashion…)

FIRM-SPECIFIC ADVANTAGES theories

n    Unique to a particular enterprise („monopolistic“)

n    Patent, brand, control of raw-materials, know-how, control of distribution outlets, process
technology, managerial capacity, marketing skills…(can have their source in country-specific
variables but a particular company can use them)

n    Resource-based theory – resources and capabilities of a firm (e.g. marketing capabilities -
???brand, distribution, advertisment…..EXAMPLES

§     Internalization perspective (Buckley and Casson, 1976) – internalization (within own
boundaries – subsidiary abroad) = FIRM-BASED SOLUTION vs externalization (some form of
collaboration with foreign partner – e.g. licence, joint-ventures…)= MARKET-BASED SOLUTION

§     OLI eclectic framework – Ownership – Location internalization – Dunning, 1988 – 3 conditions
for international production/or trade: ownership advantages (ownership of foreign facitlities –
advantage ´e.g. know-how), locational advantages (factors like labour, energy, materials,
transport, communication channels…), internalization advantages (more profitable is to use its
advantage than to sell it)



Value chain (Porter)

Uppsala internationalization model – Johanson and Wiedersheim-Paul, 1975

The transaction costs analysis model
Coase, 1937, Williamson, 1985)

n    Organization of international activities and the choice of international market entry mode

n    „If the transaction costs through externalization (e.g. through an importer or  agent) are
higher than the control cost through an internal hierarchical system, then the firm should seek
internalization (hierarchies)  of activities, i.e. implementing the global market strategy in
wholly –owned subsidiaries. Or… if the frictim between buyer and seller is  too high then the firm
should rather internalize, in the form of its own suubsidiaries.“(Hollensen, S., 2007)

Transaction costs

n    TC = different forms of costs related  to the transactional relationship between buyer and
seller

n    = ex ante costs (search + contracting costs) + ex post costs (monitoring  enforcement costs)

n    Why many countries do no engage in trade with Africa?

n    Examples???