2 Sesion 2 Marketing Internacional Sanchez I

M. ISABEL SANCHEZ – HERNANDEZ ((isanchez@unex.
es)
Marketing Internacional
M. Isabel Sánchez Hernández
isanchez@unex.es
Universidad de Extremadura – Fac. CC. Económica y Empresariales

Grupo de Investigación M@rkDo – http://merkado.unex.es
Edición 2015
M. ISABEL SANCHEZ – HERNANDEZ ((isanchez@unex.es)
UNIVERSIDAD DE EXTREMADURA
DPTO. DE DIRECCIÓN DE EMPRESAS Y SOCIOLOGÍA
FACULTAD DE CIENCIAS ECONÓMICAS Y EMPRESARIALES
Strategy and International Marketing

- The social innovation trend -
Mª Isabel Sánchez Hernández

isanchez@unex.es
Strategy
• What´s strategy
• Strategy and decision making
• Strategic management frameworks:
Porter´s Theory, Resource-based view of
the firm, The Delta model
What´s Strategy ?
The use of military metaphors is common in literature on
organizational strategy. This is understandable, for the
characteristics of military strategy:
1. Military strategy has to do with “the practical adaptation of the means

placed at a general´s disposal to the attainment of the object in view”.
2. In the formation of a strategy subjective assessment of imperfect or
incomplete information plays an important role.
3. The actual implementation of a strategy can lead to quite unexpected
results. Dealing with surprises and changing plans when necessary is
also part of strategic decision making.
4. Strategic decision making is not only based on rational calculation but
also on moral values and emotions, and possibly also intuition.
What´s Strategy ?
The word “strategy” is derived from the Greek
“strategos” – “the art of the general”.
http://suntzusaid.com/download.php
However there also is an important

difference between military and organizational strategy
Military strategy there is always an identifiable enemy –

sometimes several. Achieving the ultimate end is nearly always
dependent on the enemy not reaching his goals, whether these
are defensive or offensive.
THIS IS NOT TRUE OF BUSINESS FIRMS.

A business firm has its competitors, but economic competition
is not necessarily the same kind of zero-sum game (what one
party gains is a loss to another party as military warfare is).
Moreover, even an organization that has no competitors or
“enemies” can have a strategy.
M. ISABEL SANCHEZ – HERNANDEZ ((isanchez@unex.es) … difference between military and
organizational strategy
Therefore, organizational strategy can best be specified more broadly as the
determination of the function of the organization in its environment.
In defining this function, an organization may have to pay attention not only to its
competitors but also to any or all of the following groups of actors: CLIENTS, SUPPLIERS,
STOCKHOLDERS, EMPLOYERS, THE GOVERNMENT, THE GENERAL PUBLIC (Mintzberg,
1983)
A business firm will, in its strategy, Henry

typically define: Mintzberg
IN WHICH MARKETS IT WANTS Power in and around

TO COMPETE organizations, (1983)
Englewood Cliffs, NJ:
and Prentice Hall
WITH WHICH PRODUCTS OR Born in Montreal in 1939 and graduated in

SERVICES mechanical engineering from McGill
University where he now teaches
INTERNAL Stakeholders & EXTERNAL Stakeholders

VIDEO: HENRY MINTZBERG ON DECISION MAKING

http://www.youtube.com/watch?v=DyvXu3lSSG0
The use of GAME THEORY is ALSO common in literature on organizational

strategy. This is understandable, because strategy is associated with the
choice of a course of action in order to reach a given goal in a given situation.
The two prisoners (a paradigmatic example of game theory)

Two prisoners, who are accused of committing a crime together, make
decisions in order to minimize their sentence.
The choice options and the associated outcome are given: if both
plead not guilty there is only enough evidence to convict them of a
less serious offence, for witch the penalty is 5 years in gaol. If both
confess they will each go to gaol for 10 years. However, if only one of
them confesses (they are held in separate cells), he will serve as
witness for the prosecution, and receive a mild sentence of only a
year, while the other spends 20 years in prison.
Thus the situation, the choice options, the possible outcomes, and the
goals (minimize punishment) are all given.
However there also is an important difference

between GAME THEORY and organizational strategy
The goals of a business firm or other organization

are not given but have to be decided on. Very
general and abstract goals, like “maximization of
shareholder value” or “provision of optimal
services to clients” may be rooted in shared
expectations, or laid down in the articles of
association
IN CONTRAST TO THE GAME THEORY
SITUATIONS….
IN CONTRAST TO THE GAME THEORY SITUATIONS….

In the context of organizational strategy the situation cannot simply be
taken as given. Situational factors, like the number and kind of
competitors in a market, may be regarded as given at one particular
point in time.
BUT
As strategy has to do with the CHOICE of the TASK of the organization,
and with the CHOICE of MARKETS in which to compete, strategic
decisions made in the present very much shape the situation the
organization will be tomorrow.
THUS
Regarding the situation as given misses an important aspect of strategy.
Furthermore, strategic decision

making in organizations tends to
take place in unstructured, open
decision situations
This means that the set of options as well as the
set of outcomes are at best partially known.
AS A CONSEQUENCE, strategic decision
making has to do less with the logic of
maximization within constraints than with
heuristics for finding feasible solutions.
Strategy and Decision Making

What is a decision? The concept has to do with SELECTION and
COMMITMENT.
Before a decision is made two or more alternative purposes or courses
of action are competing for preference.
If a decision is taken this means that an actor (the decision maker) has
selected one purpose or plan and has committed himself to it.
Decision making is often seen as the CENTRAL ACTIVITY OF
MANAGEMENT.
There are four basic concepts to identify the conditions under which
theorizing about organizational strategic decision making has meaning:
Complexity Uncertainty Rationality Control
M. ISABEL SANCHEZ – HERNANDEZ ((isanchez@unex.es) A Conceptual Model of
Organizational Decision Making
Awareness
Awareness
Recognition Formulation
SWOT
ANALYSIS
Analysis
Goal Setting
Generating Options Evaluation Options
Action
Choice
Implementation Control
SWOT
ANALYSIS
Strengths Weaknesses Opportunities Threats
The SWOT analysis is assumed to set the agenda for decision making. It is a
methodical analysis of the issues found to be of interest in the INTERNAL and
EXTERNAL analysis.
Important trends or events in the environment are identified as either
opportunities and threats. Characteristics of the organization are divided into
strengths and weaknesses.
Next, a confrontation of strengths, weaknesses, opportunities and threats
takes place, in which questions are raised concerning the potentiality of using
stregths for exploiting opportunities and concerning the danger that
weaknesses may disable the organization in warding off threats, and so on.
M. ISABEL SANCHEZ – HERNANDEZ ((isanchez@unex.es) COMPETITIVE ANALYSIS GUIDE
• The starting point of • Determine the strategies
competivive analysis is the and objectives of your
identification of competitors competitors.
• To better understand where key competitors are

concentrating their product development and
marketing efforts, create a positioning map.
• Determine how each key

• Develop a “relative competitor reacts to moves by you
strengths” table to rate the and other firms.
strengths and weaknesses Is it slow to react?
of each competitor on key
market dimensions. Is it aggressive in the offense?
Will it fight hard to defend its turf?
THE STRATEGIC MANAGEMENT FRAMEWORKS
Porter´s Theory
The Frameworks
for Competitive Resource-Based
Positioning View of the firm
The Delta Model
M. ISABEL SANCHEZ – HERNANDEZ ((isanchez@unex.es) PORTER´S FRAMEWORK FOR
EXPLAINING THE
PROFITABILITY OF A BUSINESS
Competitive Positioning Industry Structure
Achieving sustainable Factors affecting

competitive advantage Industry profitability
Strategy Formulation
and Implementation
Defining and executing

Michael E. Porter the managerial tasks
is the Bishop William
Lawrence University
Professor, based at Harvard
Business School
ELEMENTS OF INDUSTRY
STRUCTURE: PORTER FIVE-FORCES
Porter´s framework for competitive

analysis encourages strategists to
examine five industry forces:
the threat of new entrants
the threat of substitute products or
services
the bargaining power of suppliers
the bargaining power of customers
tactical jockeying for position
among current competitors
Make a business in an attractive

industry where you can excel:
then excel by achieving a low
cost of differentiation though Source: Michael E. Porter (1979) “How Competitive
unique activities Forces Shape Strategy”, Harvard Business Review,
March-April, pp:141.
http://www.youtube.com/watch?v=mYF2_FBCvXw
M. ISABEL SANCHEZ – HERNANDEZ ((isanchez@unex.es) There are two ways to compete:
Low Cost or Differentiation
The efficiency of the low cost provider´s cost structure allows pricing below the
average competitor, which in the long run may put average competitors out of
business.
This is why the alternative to low cost needs to be differentiation, offering unique
product attributes that the customer values and will pay a premium for.
Porter´s Winning Formula:
Pick a business in an
attractive industry in which
you can excell.
Notice that Porter´s framework stressed rivalry and competition.
Therefore an attractive industry is one in which we can achieve as
close to a monopolistic position as possible. In turn, the message of
the value chain is to achieve sustainable advantage by beating your
competitors, if not is all, at least in those activities that are most crucial
to competition.
STRATEGY IS WAR!
Comments on Porter´s framework:
Rigorous methodology to describe industry structure

An economist´s perspective to understand how the
industry rent is appropiated
Emphasizes rivalry, threats and bargaining power
It aggregates and diffuses the role of the customer
Caveats on Porter´s framework:
If you are not careful Porter might lead you to the WRONG
CONCLUSIONS:
- Putting the competitor as the driving force
- Leading toward imitation, congruency, and commoditization
- Creating a rivalry attitude between you and the key players
- Limiting strategic options to low-cost or differentiation, a very narrow
set.
Caveats on Porter´s framework:
Exactly THE OPPOSITE SHOULD BE DONE:

-Putting the customer as the driving force
- Studiying your competitors, not to imitate them
-Embracing the extended enterprise
- Opening your strategic options to a wider range of offerings
What Is Extended Enterprise?

The term "extended enterprise" represents a new concept that a company is
made up not just of its employees, its board members, and executives, but
also its business partners, its suppliers, and its customers. The notion of
extended enterprise includes many different arrangements such as virtual
integration, outsourcing, distribution agreements, collaborative marketing,
R&D program partnerships, alliances, joint ventures, preferred suppliers,
and customer partnership.
Michael Porter , Innovation & Competitiveness
http://youtu.be/NZt6kUKE-88
http://www.labconvergencia.org:16080/sitio1/MEL/
HTML_nva_versionbckp2011/ana_estra_ind/Docu
mentos/U1/The_Microeconomic_Foundations.pdf
Resource-Based View of the Firm
Competitive advantage, whatever its source, ultimately can be attributed to the
ownership of a valuable resource that enables the company to perform activities better
or more cheaply than competitors.
WHAT MAKES A
RESOURCE VALUABLE?
Resource-Based View of the Firm
Resources can be classified into three broad categories:
Tangible Assets
Intangible Assets
Organizational capabilities
Tangible Assets
Tangible assets are the easiest to value, and often

are the only resources that appear on a firm´s balance
sheet.
They include real estate, production facilities, and
raw materials, among others.
Although tangible resources may be essential to a
firm´s strategy, due to their standard nature, they
rarely are a source of competitive advantage. There
are, of course, notable exception.
Intangible Assets
Intangible assets include such things as

company reputations, brand names, cultures,
technological knowledge, patents and trademarks,
and accumulated learning and experience.
These assets often lay an important role in
competitive advantage (or disadvantage), and
firm value.
Organizational capabilities
Organizational capabilities are not factor imputs like

tangible and intangible assets, they are complex
combinations of assets, people, and processes that
organizations use to transform inputs into outputs.
The list of organizational capabilities includes a set of
abilities describing efficiency and effectiveness: low
cost structure, “lean” manufacturing, high quality
production, fast product development…
Identify 5 primary
ACTIVITY…
competitive
advantages (based in
tangible, intangible
and/or organizational
capabilities)
Marks & Spencer,
for example, possesses a
range of resources that
demonstrably yield it a
competitive advantage in
British retailing. This is true
both at the single-business
level and at the corporate
level, where the valuable
resources might reside in a
particular function, such as
corporate research and
development, or in an asset,
such as corporate brand
identity. Superior performance
will therefore be based on
developing a competitively
distinct set of resources and
deploying them in a well-
conceived strategy.
Caveats on the Resource-Based

View of the Firm framework:
Develop resources and capabilities which are
rare, valuable, non-tradeable, that form the basis of
the core competencies of the firm.
Make those resulting advantages sustainable by
precluding imitation or substitution from competitors;
and make sure that the implmentation process is
done in such a way that its associated costs do not
upset the resulting benefits.
It is strategy by real estate!
Caveats on the Resource-Based
View of the Firm framework:
The greatest critique of this approach is the vagueness in

which resources and capabilities are treated – what are the key
resources and capabilities to acquire, how do we identify them, how do we
nurtures them, what purposes do they play, how will we obtain this elusive
competitive advantage?
Consequently the framework seems to work better to

explain how a firm has achieved competitive advantage
(expost), rather than to help us to acquire a sustainable one
(ex-ante)
We need a framework to guide the framework!
Additional Comments
Corporate resources and capabilities rather than

industry structure are the causes of superior
performance
Resource-Based View of the Firm should therefore
COMPLEMENT rather than replace Porter´s
Framework
It emphasizes the important concept of sustainability
Resource--Based Theory & Dynamic Capabilities

Resource
• Penrose (1959):
The Theory of the Growth of the Firm
• Chandler (1990):
Scale and Scope: The Dynamics of Capitalism
Resource-Based View of the firm
Penrose (1959):
This book helped provide the foundation for what has
become known as the resource-based view of the firm.
Back in 1959, when the male gender dominated the

economics discipline, Ms. Penrose set out to answer
this question: Was there "something inherent in the
very nature of any firm that both promoted its growth
and necessarily limited its RATE of growth."
“Edith Penrose´s pioneering work on the resource-based approach to the firm´s growth
has greatly inspired me and hundreds of other scholars. She is also one of the first to
recognize the role of Knowledge in business management. As we enter the “knowledge
society”, this reissue of her classic work with its new foreword is well-timed and
welcome”.
Ikujiro Nonaka
Penrose (1959):
• Penrose (1959) is concerned with the growth of firms and only

incidentally with their size.
• The focus is on an internal process of development leading to

cumulative movements of the firm in a particular direction.
• The emphasis is on the INTERNAL resources of a firm on the

productive services available to a firm from its own resources,
particularly the productive services available from management
with experience within the firm.
Penrose (1959):
• Experience of management will affect the productive services

that all its other resources are capable of rendering.
• As management tries to make the best use of the resources

available, a truly “dynamic” interacting process occurs which
encourages continuous growth but limits the rate of growth.
• The environment is treated as an “image” in the entrepreneur’s

mind.
Penrose (1959):
• A firm is MORE THAN AN ADMINISTRATIVE UNIT;

a firm is also a collection of productive resources
where the choice of different resources uses is
made by managerial decision.
• Subjective productive opportunity set of the firm is
determined by the resources and experiences of
the management team and this perceived
opportunity set is unique for each firm.
Penrose (1959):
• Strictly speaking, it is never resources themselves

that are the “inputs” in the production process, but
only the services that the resources can render.
• The capacities of the existing managerial

personnel of the firm necessarily set a limit to the
expansion of that firm in any given period of time,
for it is self-evident that such management cannot
be hired in the marketplace.
Penrose (1959):
• An administrative group is something more than a

collection of individuals; it is a collection of individuals
who have experience in WORKING TOGETHER, for
only in this way can “teamwork” develop.
• Experience that these managers gain from working

within the firm and with each other enables them to
provide services that are uniquely valuable for the
operations of the particular group with which they are
associated..
Penrose (1959):
• Existing management limit the amount of
new management that can be hired (after all
the services of existing management are
required even to greet, let alone to install
and instruct, the new personnel).
• Individuals cannot be hired from outside the

group, and it takes time to achieve the
requisite experience.
Penrose (1959):
• If a firm deliberately or inadvertently expands its
organization more rapidly than the individuals in the
expanding organization can obtain the experience
with each other and with the firm that is necessary for
the effective operation of the group, the efficiency of
the firm will suffer.
• Since the services from the “inherited” managerial

resources control the amount of new managerial
resources that can be absorbed, they create a
fundamental and inescapable limit to the amount of
expansion a firm can undertake at any time.
Penrose (1959):
“The Penrose Effect”
• The amount of activity that can be planned at a

given time limits the amount of new personnel
that can be profitably absorbed in the “next
period.”
• Through learning, managerial services absorbed

in the planning processes will be gradually
released and become available for future
projects.
M. ISABEL SANCHEZ – HERNANDEZ ((isanchez@unex.es) Penrose (1959): Key Ideas
• Firm growth can be studied as a dynamic process of management
interacting with resources.
• Firms are institutions by people to serve the purposes of people.
• Services of resources are drivers of firm-level heterogeneity. Services that
material resources will yield depend on the knowledge possessed by
human resources. The two together create a subjective opportunity set that
is unique for each firm.
• Firm-level growth is a function of firm-specific experiences in teams.
• Managerial capability is the binding constraint that limits the rate of the
growth of the firm - the so-called Penrose Effect
• Excess capacity of productive services of resources is a driver of firm-level
growth.
• Unused productive services of resources can be a source of innovation.
• Firm-level diversification is often based on a firm’s competencies that can
lead to sustained competitive advantage.
• An important component of the competitive process is experimentation.
Chandler (1990):
Scale and Scope represents ten years

of research into the history of the
managerial business system, this book
concentrates on patterns of growth and
competitiveness in the US, Germany
and Great Britain, tracing the evolution
of large firms into multinational giants.
Chandler (1990):
• Chandler maintains that as a result of the

regularity, increased volume, and greater speed of
the flows of goods and materials made possible by
the new transportation and communication
systems, new and improved processes of
production developed that for the first time in
economic history achieved substantial economies
of scale and scope..
Chandler (1990):
In order to benefit from economies of scale and scope,

entrepreneurs had to make three sets of inter-related
investments for achieving organizational capabilities:
Investment in
production facilities
large enough to national and managerial
utilize a technology’s international marketing recruitment and
potential economies and distribution training
networks
Chandler (1990):
• Organizational capabilities, in turn, provided an

INTERNAL DYNAMIC for the continuing growth of the
enterprise.
• In particular, organizational capabilities stimulated its owners

and managers TO EXPAND INTO MORE DISTANT
MARKETS in their own country and then to become
multinational by moving abroad. They also encouraged the
firm to diversify by developing products competitive in markets
other than the original one and so to become a multi-product
enterprise.
FINALLY,
I UNDERSTAND THE CAPABILITIES THEORY OF THE FIRM !!!
Strategic Frameworks (The Delta Model)
THE DELTA MODEL
The Delta Model is a NEW ORGANIZING
FRAMEWORK that was developed by
Dean Wilde, along with other members of
Dean & Company, and Arnoldo Hax of the
MIT/Sloan School of Management, to help
managers in the articulation and
implementation of effective corporate
and business strategies.
It grew from our conviction that the world

of business had been experiencing
transformations of such magnitude that
existing managerial frameworks were now
either invalid or incomplete.
THE DELTA MODEL
Moreover, the emergence of the Internet, with the previously
unimagined potentials for communication, and the technologies
surrounding e-business and e-commerce, made available some
powerful new tools that allowed the feasibility of completely different
business approaches.
The immediate result of this effort is an integrated strategy

development process that presents a new approach and a new
discipline to strategic management.
While focussing on a new set of strategic positioning options that

revolve around the concept of "bonding", the Delta Model also
addresses the critical issue of LINKING STRATEGY TO
EXECUTION through the discussion of the use of Adaptive
Processes, Experimentation and Feedback to drive performance.
THE DELTA MODEL
ARNOLDO HAX ON CORPORATE STRATEGY
http://youtu.be/n0wKuO8gWlY
Three Distinct Strategic Options
Options for Strategic Positioning
Delta Model Strategies



M. ISABEL SANCHEZ – HERNANDEZ ((isanchez@unex.es) The total customer
solutions positioning offers
a possible preferred Transforming the organization
alternative by introducing from best product to total
significant cost savings customer solutions, while seeking
(and/or revenue increases)
opportunities for system lock-in
to the customer
Central Lessons
If the HEART OF STRATEGY IS THE CUSTOMER, and
appropriate customer segmentation and creative value
proposition is often THE MOST IMPORTANT CRITICAL
STEP IN STRATEGIC THINKING.
Be creative, be bold, be fast.
The WINNING FORMULA is to have the overall network
as your primary scope. Don´t play the game alone. It is not
just you serving the customer. It is you, your critical
suppliers and the key complementors. In a large, diversified
corporation often the most important complementors are in
your own firm.
Axioms
The center of strategy is the CUSTOMER

You don´t win by beating your competition; you win by achieving
customer bonding
Strategy is not war, it is love
A product-centric mentality is constraining; OPEN YOUR MINDSET
to include the customers, the suppliers and the complementors as
your key constituencies
Don´t play the game alone; the relevant entity is the extended
enterprise
Don´t treat every customer equally; don´t commoditize your
customers.
Axioms
Try to understand your customer deeply. Strategy is done one customer
at a time. The fundations of strategy are two:
- Customer segmentation and value proposition
- The firm as a bundle of competencies
Reject the two “truism”: “The customer is always right” and “I know
the customer needs and know how to satisfy them”
We are not selling products; we are dealing with customer
solutions. Their identification and satisfaction can only be done by
working jointly with the customer.
Sales are too important to be left to the salespeople
Technology is too important to be left to the “techies”
The most critical measure of the strategic health of the firm is the
NET FLOW OF TALENT
Final remarks about process
The strategic planning process is a dialogue among the

key executives of the firm seeking a consensus on the
direction of the organization
Metrics are essential to quantify the value created and

the progress made in the strategy execution
Experimentation is crucial if we are attempting to change

the existing course of the business
Identify 3 international
ACTIVITY…
examples organization’s
primary competitive
advantage and the activities
and investments that create
them.
International Marketing
• The marketing environment

• Reasons for carrying business across borders
• Becoming international: the process
• Modes of entering through case studies
International Marketing is:
(a) The marketing of goods and services across national frontiers.
(b) The marketing operations of an organisation that sells and/or

produces within a given country when
(i) that organization is part of, or associated with, an enterprise

which also operates in other countries; and
(ii) there is some degree of influence on or control of that

organization´s marketing activities from outside the country in
which it sells and/or produces.
(Walsh, 1981)
International Marketing
Environment
Technology and Science Customers Economic

Forces
Government Firm in the

Legal and
and politics international Ethical constraints
environment
Competition Ecology
Cultural and
Demographic and resource
influences limitations
• The environment facing the international firm consists of the constellation of

demands and constraints to which the organization must adjust in order to
survive and grow.
• This environment consists of a number of elements, the underliying
characteristics of which are that they lie outside the control of the firm.
International Marketing Strategy

The distintive attribute of the strategic development of the firm in
international markets is that the firm transfers products and
services, packages of tangible and intangible assets or resources,
across national boundaries.
The GROWTH of the The motivation for

firm may be conceived GROWTH BY
as the replacement of INTERNATIONALIZATION Which ones?
markets or the creation of markets may be
of an internal market attributed to a number of
within the firm where reasons
none existed previously.
Reasons for carrying established

product across borders
There are many reasons to consider breaking out of your
domestic market and selling across borders. Following you
have many of the possible motivations:
1) SATURATION
Finding that the home market has peaked and
is now saturated with your product is the most
common reason for focusing a marketing effort
overseas.
Although true saturation is rarely achieved, it´s

sometimes easier to penetrate foreign markets
than new domestic ones, especially if you
operate in a large country.
2) DECLINING INTEREST
Every product has a life span in a particular

market before it´s overtaken by new or
improved products, which are often
developed internally (example: Windows
superseded DOS).
The original product, whose development

costs have long since been recouped, may
still be useful in markets untouched by the
original product line. Much of the West´s
technology was given just such a new
“product cycle” in the emerging markets,
some of which are decades behind in
technical matters.
3) FOREIGN DEMAND
It´s not a rarity for a company that´s doing

quite well in their domestic market, with
rocketing sales, to receive an unsolicited
demand from a foreign buyer.
This happens repeatedly in technology and

www.elnino-sweetwear.es consumer goods but also increasingly so in
many capital-intensive businesses (such as
auto production or hotel construction).
If you have a very high quality product or are

an industry leader, the foreign market may
come looking for you.
www.srarushmore.com
4) SHARE ENLARGEMENT
Many companies move into

foreign markets simply because
they can.
Flush with cash or energized

with curiosity, they wish to
increase their sales by
increasing their exposure.
High-end consumer goods or

specialist services (example:
investment banking) often go
hunting overseas, not out of
need but simple drive.
www.telefonica.es
5) COMPETITION
Once one company markets abroad, even just to test the waters, the
competition is quick to follow. Often, it´s a move made with great reluctance and
out of fear that allowing a competitor to reap riches in foreign lands may have
future domestic ramifications.
It´s fast becoming a reality that if you´re not an international player, you´re not a
player at all. Big business means global business.
Rushing onto the international stage, maybe even
feeling pushed, can be costly if planning is
sacrificed for speed. A prime example is the failed
attempt by Apple Computer in the early 1980s to
duplicate IBM´s success overseas, particularly in
Asia. The young company self-inflicted serious
brand-name damage and added impetuousness to
its long list of marketing mistakes.
Advise: It´s better to arrive a little late but

prepared than to leave early without a map.
El Corte Inglés has tryed to enter Italy

Internationally, the group was closed to opening its first department store in
Italy (Milan) and is also was looking at suitable sites in Rome.
All of the group's formats grew their turnover during the last years and the
majority also increased their net profit. Exceptions to the latter include
clothing business Sfera and the new DIY format Bricor, which are still
developing.
Sept/2007
Isidoro Alvarez awarded in
Altagamma in Rome
6) EXCHANGE VALUE
The value of national currencies can fluctuate wildly, often with deleterious
effects on domestic companies. The effect is even worse when the company
must buy foreign materials for production. When production costs rise and
domestic buying power declines, the marketer may have no choice but to
look offshore for customers.
High-ticket items are the most affected, though consumer goods

occasionally are as well. On occasion, a company may find that foreign
markets are ready, willing, and able to pay a higher price for a product.
Barring the intervention of customs officials, products normally earmarked
for domestic production are diverted overseas. If domestic consumption
remains stable, then local prices will rise to buy up the now-diminished
supply. The producer now has the best of both worlds.
if the wrath of the local government can be avoided. Commodities such as

beef and coffee are often subject to such surges in foreign demand.
M. ISABEL SANCHEZ – HERNANDEZ ((isanchez@unex.es) 7) PREPRODUCTION PENETRATION
Prior to setting up full-scale offshore production,

a company will sell to the targeted market as a
way of testing demand, observing price
elasticity, or educating the population about
a product.
The last reason keeps the price of the “learning curve”

low, in advance of producing inside of the new market.
Example: The computer hardware business has done this repeatedly in
emerging markets around the globe. Knowing full well that most of their
foreign production will be exported out of the producing country, hardware
manufacturers often “dumped” cheap computers into the target market as
a means of spurring interest and building future demand. (During the
1980s, Singapore made Compaq computers for export exclusively. Now
Singaporeans are also major users of the Texas company´s products.)
M. ISABEL SANCHEZ – HERNANDEZ ((isanchez@unex.es) 8) GOVERNMENT REQUEST
Many developing countries finance their growth

through exports, since domestic buying power is
limited.
Even some economic giants, Japan being the most

famous practitioner, greatly restrict imports and
encourage exports to finance growth. In both cases,
domestic producers are protected from foreign (and
often more efficient) producers, while hard currency
pours back through the busy port system. NOTE:
When governments
In extreme cases, export quotas may be rigidly set start to see rising trade
and marketeers are sent abroad with do-or-die deficits or droopy
marketing plans. Some countries purposely foreign currency
weaken their currency so as to encourage foreign reserves, overseas
companies to buy their products (Example: the marketing may no
United States is often accused of using this tactic by longer be an option
Japan, and vice versa). but a mandate.
Assets which create competitive advantage
for the firm in international markets
Proprietary technology Product and process
Management know-how Multicountry operations

Experience of different countries
Multinational distribution network Sales subsidiaries
Portfolio of markets
Access to scarce raw materials Ownership
Long-term contracts
Production economies of scale Low unit costs
Financial economies of scale Access to low-cost funds
Possession of a strong brand or trade name Reputation for quality and CSR
Grosse (1989)
Strategic thinking in
M. ISABEL SANCHEZ – HERNANDEZ ((isanchez@unex.es) international marketing
When the firm decides to expand abroad into new international markets it
usually discovers that markets for its products and services are fragmented,
BUT markets are continually fragmenting and companies face the task of
consolidating them.
Causes of market fragmentation and forces for consolidation
Market maturity New product markets New international markets
Difference in consumer tastes Difference in consumer tastes

MARKET
Low industry entry costs FRAGMENTATION Variations in technical standards
Government support for industry High industry exist costs
Standardized low-cost products Increased marketing expenditures

Acquisition of competitors MARKET Rationalization of production capacity
Increased investment in CONSOLIDATION Corporate and product branding
capital equipment
Becoming international

from a marketing point of view
Regardless of the means employed to gain entry into a foreign market,
a company may, from a marketing viewpoint, make no market
investment, that is, its marketing involvement may be limited to selling
a product or may become totally involved and invest large sums of
money and effort to capture and maintain a permanent, specific share
of the market.
In general, a business can be placed in at least one of the following
phases (distinct but overlapping) of international marketing
involvement.
Infrequent foreign
No direct marketing
Regular foreign Global
foreign marketing marketing
International marketing
marketing
No direct
foreign marketing
In this phase, there is no active cultivation of customers
outside national boundaries; however, this company´s
products may reach foreign markets.
Sales may be made to trading companies and other
foreign customers who come directly to the firm. Or
products reach foreign markets via domestic wholesalers
or distributors who sell abroad on their own without
explicit encouragement or even knowledge of the
producer.
An unsolicited order from a foreign buyer is often
what piques the interest of a company to seek
additional international sales.
Infrequent foreign
marketing
Temporary surpluses caused by variations in productions

levels or demand may result in infrequent marketing
overseas.
The surpluses are characterized by their temporary nature;
therefore, sales to foreign markets are made as goods are
available, with little or no intention of maintaining continuous
market representation.
As domestic demand increases and absorbs surpluses,
foreign sales activity is withdrawn. In this phase, there is little
or no change in company organization or product lines.
M. ISABEL SANCHEZ – HERNANDEZ ((isanchez@unex.es) Becoming international
At this level, the firm has permanent productive
Regular foreign capacity devoted to the production of goods to be
marketing marketed on a continuing basis in foreign
markets.
A firm may employ foreign or domestic overseas middlemen or it may have
its sales force or sales subsidiaries in important foreign markets.
The primary focus for products presently being produced is to meet
domestic market needs.
Investments in marketing and management effort and in overseas
manufacturing and/or assembly are generally begun in this phase.
Further, some products may become specialized to meet the needs of
individual foreign markets, pricing and profit policies tend to become equal
with domestic business, and the company begins to become dependent
on foreign profits.
International
marketing
Companies in this phase are fully committed and involved in

international marketing activities.
Such companies seek markets throughout the world and sell
products that are a result of planned production for markets
in various countries.
This generally entails not only the marketing but also the
production of goods throughout the world.
At this point a company becomes an international or
multinational marketing firm dependent on foreing revenues.
M. ISABEL SANCHEZ – HERNANDEZ ((isanchez@unex.es) Becoming international
Global
marketing
At the global marketing level, companies treat the
world, including their home market, as one market.
This is in contrast to the multinational or
international company that views the world as a
series of country markets (including their home
market) with unique sets of market characteristics for
which marketing strategies must be developed.
A global company develops a strategy to reflect the
existing commonalities of market needs among many
countries to maximize returns through global
standardization of its business activities – whenever it
is cost effective and culturally possible.
The social trend

The social trend
• The new economics of social change

• Strategies for corporate social innovation
• The road map to social innovation
The new economics of social change

Facts: Very few of the CSR programs generate any
measurable business value.
Key idea
How to turn social change into a powerful business strategy
Solution: Companies able to create powerful,
emotional bonds with customers by using their core
business to solve social problems…like soap
companies educating children about health care.
Doing well by doing good !!!!!!

Does that mean companies
have to sacrifice profits in Quite the opposite!
order to do good?
Because the market now values social impact,

companies are no longer expected to be purely
altruistic.
IN OTHER WORDS, IT´S OKAY TO USE SOCIAL CHANGE AS A BUSINESS STRATEGY

Business are now beginning to see the “hidden”
economic benefits of solving insoluble problems
facing society.
Embracing the business potential of issues like the
environment, education, health care, discrimination,
and economic development could earn companies
tens of billions of Euros, open up new markets,
attract new customers, prompt new innovations, and
dramatically lower costs.
“Base of the Pyramid” refers the more than four billion people globally with per
capita incomes below $1,500 (purchasing power parity). Since the idea was first
introduced by C.K. Prahalad and Stuart Hart in their book “The Fortune at the
Bottom of the Pyramid”. This book provided inspiration and rationale among
corporate leaders from Coke to Danone who sought to identify new markets of
growth, despite the increasingly competitive market conditions of the developed
world. These early Pyramid pioneers proposed that corporations would miss
great opportunity if they chose to ignore the pocket change of the poor.

1 - Corporations are more powerful than governments
2 – Consumers are more powerful than citizens

DRIVERS
3 – Social issues are now business issues
4 – Philanthropy has become a commodity (it is simply

expected of any successful corporation)
5 – The value of intangible assets is rising

Sustainability and citizenship reports

Fundamental PRINCIPLES
Fundamental PRINCIPLES
It´s not just about reputation anymore

It´s Okay to expect an economic return for doing good
Social strategies must become business strategies
Measurement must become a core competency

Strategies for corporate social innovation

STRATEGY 1:
CREATING REVENUES THROUGH SUBMARKET PRODUCTS AND SERVICES
TONIK
HEALTH INSURANCE
FOR “THE YOUNG
INVINCIBLES”

STRATEGY 2: ENTER NEW MARKETS THROUGH BACKDOOR CHANNELS
Today’s biggest barriers to entering new markets are often not political or
cultural, but social: lack of talent, poverty, insufficient infrastructure, uneducated
consumers, and so on.
TESCO
BUILDING OASES INTHE
FOOD DESERT
Tesco, the big European grocer, used this

strategy recently to enter the U.S. market,
addressing “food deserts” by developing
smaller-footprint stores that sell fresh fruits
and vegetables.

STRATEGY 3:
BUILD EMOTIONAL BONDS WITH CUSTOMERS
Today, companies are bumping up against brand parity, where most commodity
products are similar in terms of price, quality, and convenience.
Companies need a more powerful, differentiated value proposition, and many

are looking to social impact as a way to deepen customer loyalty and build-in an
emotional component to the customer experience.
Pampers did this by partnering with Unicef



STRATEGY 4
DEVELOP NEW PIPELINES FOR TALENT
Many businesses are concerned about the quality of education today, but
rather than just donating more money to education reform, companies are
getting more directly involved, solving the education problem in ways that
also benefit their business.
Cisco set up a Networking

Academy to train underserved
populations on how to become
Cisco-certified technicians.

STRATEGY 5
INFLUENCE POLICY THROUGH REVERSE LOBBYING
Rather than lobbying against new policies or regulations that advance

society, corporations are pro-actively reaching out to the government to
find ways to solve problems in ways that also benefit the business.
Safeway’s campaign for universal

healthcare is one example. When
companies get a seat at the table their
ability to influence the outcomes are
much greater.
The road map to

social innovation INNOVATE
IDENTIFY THE CORE

BUSINESS ASSETS
ANALIZE THE SOCIAL ISSUES

THAT DRIVE YOUR BUSINESS
SELECTING THE RIGHT

SOCIAL INNOVATION STRATEGY
ACTIVITY…
2º - DESCRIBE THE BUSINESS
4º - DO SOCIAL INNOVATION? WHAT KIND OF SOCIAL INNOVATION?
BENCHMARKING
CASE STUDY:
CASE STUDY: TOMS SHOES
With every product you purchase, TOMS will help a person in need. One for One.®
M. ISABEL SANCHEZ – HERNANDEZ ((isanchez@unex.es) CASE STUDY: TOMS SHOES
What began as a simple idea has evolved into a powerful
business model helping address need, and also advance health,
education and economic opportunity for children and their
communities around the world.
In 2006, TOMS founder Blake Mycoskie

befriended children in a village in Argentina and
saw that they didn't have adequate shoes to protect
their feet.
Wanting to help, he created TOMS Shoes, a

company that would match every pair of shoes
purchased with a pair of new shoes for a child in
need.
In 2011, the One for One model was expanded and

TOMS Eyewear was launched. With every pair
purchased, TOMS helps restore sight to a person
in need.
CASE STUDY:
TOMS SHOES
Until June 2013, TOMS has given more than 10 million

pairs of new shoes to children in need and helped to
restore sight to over 150,000 people.
They are incredibly proud by this milestone, and driven

more than ever to continue to evolve to positively impact
communities in need.
There are now dozens of One for One shoe
companies and one for one shoes available to
consumers and as part of the one for one movement,
these buy one, give one shoe companies donate shoes
to those in need.
Other one for one shoe companies
like Twins for Peace and Roma
Boots also adhere to the buy one,
give one model.
These companies, are among a

growing number of one for one
footwear companies that support
social causes with the donation of
products to those in need. More
companies also support the one for
one movement by participating in http://www.twinsforpeace.com/fr/content/8-projets
one for one glasses, one for one
sunglasses and other one for one
products.
http://romaboots.com/pages/about-us
“Our goal and our highest aim is to not only
provide aid, but to educate. By doing so we
will empower them to break out of their
cycle of poverty so that they can contribute
their gifts & talents to society, eradicate
poverty as a condition & a state of mind
and help make this world a better place”
Gracias por la atención

¿Preguntas?
M. Isabel Sánchez Hernández
isanchez@unex.es
Universidad de Extremadura – Fac. CC. Económicas y Empresariales

Grupo de Investigación M@rkDo – http://merkado.unex.es
Edición 2015

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M. ISABEL SANCHEZ – HERNANDEZ ((isanchez@unex.

Universidad de Extremadura – Fac. CC. Económica y Empresariales

Strategy and International Marketing

Mª Isabel Sánchez Hernández

1. Military strategy has to do with “the practical adaptation of the means

However there also is an important

Military strategy there is always an identifiable enemy –

THIS IS NOT TRUE OF BUSINESS FIRMS.

A business firm will, in its strategy, Henry

IN WHICH MARKETS IT WANTS Power in and around

WITH WHICH PRODUCTS OR Born in Montreal in 1939 and graduated in

INTERNAL Stakeholders & EXTERNAL Stakeholders

VIDEO: HENRY MINTZBERG ON DECISION MAKING

The use of GAME THEORY is ALSO common in literature on organizational

The two prisoners (a paradigmatic example of game theory)

However there also is an important difference

The goals of a business firm or other organization

IN CONTRAST TO THE GAME THEORY SITUATIONS….

Furthermore, strategic decision

Strategy and Decision Making

Strengths Weaknesses Opportunities Threats

• To better understand where key competitors are

• Determine how each key

THE STRATEGIC MANAGEMENT FRAMEWORKS

Competitive Positioning Industry Structure

Achieving sustainable Factors affecting

Defining and executing

Porter´s framework for competitive

Make a business in an attractive

Rigorous methodology to describe industry structure

Caveats on Porter´s framework:

Exactly THE OPPOSITE SHOULD BE DONE:

What Is Extended Enterprise?

Michael Porter , Innovation & Competitiveness

Resource-Based View of the Firm

Resources can be classified into three broad categories:

Tangible assets are the easiest to value, and often

Intangible assets include such things as

Organizational capabilities are not factor imputs like

Caveats on the Resource-Based

The greatest critique of this approach is the vagueness in

Consequently the framework seems to work better to

Corporate resources and capabilities rather than

Resource--Based Theory & Dynamic Capabilities

Back in 1959, when the male gender dominated the

• Penrose (1959) is concerned with the growth of firms and only

• The focus is on an internal process of development leading to

• The emphasis is on the INTERNAL resources of a firm on the

• Experience of management will affect the productive services

• As management tries to make the best use of the resources

• The environment is treated as an “image” in the entrepreneur’s

• A firm is MORE THAN AN ADMINISTRATIVE UNIT;

• Strictly speaking, it is never resources themselves

• The capacities of the existing managerial

• An administrative group is something more than a

• Experience that these managers gain from working

• Individuals cannot be hired from outside the

• Since the services from the “inherited” managerial

“The Penrose Effect”

• The amount of activity that can be planned at a

• Through learning, managerial services absorbed

Scale and Scope represents ten years

• Chandler maintains that as a result of the