Course-19

International Business Environment

2. Why why firms go international? Discuss the problems faced

by MNC’s in introducing a new product.

Introduction: -One of the advantages of the multinational corporation

(MNC) is that it can exploit new product ideas globally in a rapid

manner. This raises the issue of control of MNC new product

introductions. It has been demonstrated that control over MNC

subsidiaries differs depending on the strategic role assigned to the

subsidiary. But, in addition to its role in the MNC, a subsidiary also has a

role in a business network of relationships with important customers,

suppliers, and other business partners. There is a latent conflict

between these two roles.

There are various reasons to going internationally, but the goal of every

company growth or expend its business whether a company hires

international employees or searches for new market, and expend its

customer base. Some reasons are as follows:

1. Growth: Every company wants to growth in its business, Launching

products in International market to increase customer and to capture

more market share to becoming a leader.

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2. Employees: Every company wants to the skilled and well trained

employees to its. so company goes to the internationally to find

alternate source of the labor and to look for lower cost manufacturing,

technology assistance and other services in order to maintain

competitive advantage.

3. Resources: Some companies go for resources which are not

available in domestic country at better or competitive price.

4. Ideas: Company go to internationally to collect the different ideas

from the different culture of different countries.

Marketing on a global scale is almost never easy. The efforts and costs

required in establishing a marketing base in foreign countries can be

significant. This often means only the largest firms become full-fledged

global marketers. While the Internet is helping make all companies

visible throughout the world, to be truly a global player requires much

more than a website and a FedEx or UPS shipping account.

Instead, companies looking to go global must invest significant capital,

manpower and time if they want to compete in foreign markets. For

marketers, this includes gaining a deep understanding of the markets

they are entering. And, this is no simple task as each country is

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different and the marketing decisions needed to reach customers in

each country may be different.

While expanding beyond a home market is risky, for marketers that

become global players the rewards are often well worth the effort as

foreign markets offer new opportunities for growing a business.

Additionally, for other marketers, becoming a global player is a

necessity if the marketer wants to stay in business especially if the

marketer’s home market is showing signs of slow growth.

This story looks at how marketers are embracing globalization in the

Asian market by painting a nice picture of what companies, such as

McDonalds, General Mills and Pizza Hut, are doing from a customer

research side to make sure sales continue to grow. While the story

looks only at examples in the Asian market, the overall ideas presented

here are fundamental to virtually all global markets.

While choosing new markets, MNCs need to consider several macro and

micro factors.

Macro issues:

Political/regulatory environment,

Financial/economic environment,

Socio cultural issues and technological infrastructure.

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Micro issues:

Competitive considerations and

Local infrastructure such as transportation & logistics network

Availability of mass media for advertising is important.

While entering new markets, an MNC has various options. These

include

• Contract manufacturing,

• Franchising,

• Licensing,

• Joint ventures,

• Acquisitions and

• Fully fledged green field projects.

Conclusions: -

Global marketing strategies have to respond to the twin needs of global

standardization and local customization. In their quest to maximize local

responsiveness, companies should not overlook opportunities to

standardize and cut costs. On the other hand, an excessive emphasis on

generating efficiencies through a standard marketing mix may result in

the loss of flexibility. The challenge for global marketers is to identify

the features which can be standardized and build a core product. Then

customized offerings can be designed around the core product for

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different markets. In real life, striking the right balance between

standardization and customization can be extremely challenging.