DECISIONFRAMEWORKDevelopedMarketsDevelopingMarketsEmergingMarketsKeyDecisions:ProductDesign,ChoosinganEntryMode,Targeting,BuildingBrandEquity*DecisionCriteriaforCountrySelectionMarketSizeandGrowthRisk(Political&Economic;Internal&External)GovernmentRegulationsCompetitiveEnvironmentLocalInfrastructureCountryClassificationPlatform–gatheringintelligenceandestablishanetwork(Singapore,HongKong)EmergingMarket–Vietnam,KazakhstanGrowthMarkets–TheCzechRepublic,China,BrazilMaturingMarkets–Japan,GermanyTheTriadFrameworkNAFTAUSCanadaMexicoTotalPopulation–425MGDP-$17.
1trillionEUTotalPopulation–460MGDP-$12.
86Japan–GDP-$4.
22,Population–127MAustraliaGDP–$666B,Population–20MNewZealand–GDP$106B,Population–4MElementsfrom:China–GDP$10T,Population–1.
3BIndia–GDP$4.
0T,Population–1.
1BTheTroublewithIndiaIndiahasunderinvestedininfrastructurefor60yearsandare10to12yearsbehindCrumblingroads,jammedairports,andpowerblackoutscouldhobblegrowthWithnotransitinBangalore,IndiantechnologyfirmsInfosystechnologiesltd.
Spends%5millionayearonbusesminivans,andtaxistotransportits18,000employeestoandfromElectronicsCity.
Growthisrunningat9%plusthisyearRealestatepriceshaveshotthroughtheroofwithsomepricesdoublinginthepastyearHighways,modernbridges,worldclassairports,reliable,andcleanwaterdesperatelyfallshortinsupplyEconomiclossesfromcongestionandpoorroadsaloneareashighas$6billionayearIntelrecentlychoseVietnamasopposedtoIndiabecauseofthelackofreliablepowerandwaterinIndiaThisiswhyIndia'sexportsarelessthan1%whereChina'sis7%.
Iftheinfrastructuredevelopmentgetsdelayed,theeconomicdevelopment,jobcreation,andforeigninvestmentgetdelayedaswellGDPgrowthwouldrun2%pointshigherifthecountryhaddecentroads,railways,andpowerTheproblemsareevencontributingtooverheatingintheeconomyIndiatodayiswhereChinawasadecadeagoFortunatelyafterdecadesofunderinvestmentandpoliticalinertia,India'spoliticalleadershiphasawakenedtothemagnitudeoftheinfrastructurecrisisExample:ThefirstphaseofanewsubwayinNewDelhiwascompletedin2005Onthewholetherearesomanyinfrastructurechallenges,butalsotherearealotofopportunitiestoassistmeetingthosechallengesThisiswhysomanymultinationalcompaniesareflockingtoIndiarangingfromtouristclasshotelroomstotelecomWhilethelawsofsupplyanddemandwouldindicatethatIndia'sinfrastructuregapcanbefilled,thatlogicignoresthecorrosiveeffectofthecountry'spoliticsNoneofthesolutionstoIndia'sinfrastructurechallengesaresimple,butbusinessleaderssomeenlightenedgovernmentofficials,andevenordinarycitizensarechippingintohelpmakethingsbetterUnlessthenationshakesoffitslegacyofbureaucracy,politics,andcorruptionitsabilitytobuildadequateinfrastructurewillremainindoubtaswillitseconomicdestinyTheChineseCenturyAlreadyacommercialgiant,ChinaisaimingtobetheworldsnextgreatpowerYoumayknowallabouttheworldcomingtoChina–aboutthehordesofforeignbusinesspeoplesettingupfactoriesandboutiquesandshowrooms,butyouprobablyknowlessabouthowChinaisgoingoutintotheworldThroughitsforeigninvestmentsandappetiteforrawmaterials,theworldsmostpopulouscountryhasalreadytransformedeconomiesfromAngolatoAustraliaAtpresentChinaisturningthatcommercialmightintorealpoliticalmuscle,stridingontotheglobalstageandactinglikeanationthatverymuchintendstobecometheworld'snextgreatpower.
ChinaseemsreadytochallengeandpossiblyevenunderminesomeofWashington'sotherforeignpolicygoalsChinaisstillapoorcountrywhoseleadersfacesomanyproblemsChinaisanenvironmentaldystrophic,itscitiesairfoulbeyondimaginationanditscleanwaterisscarceThemostimmediatepriorityforChina'sleadershipislesshowtoprojectitselfinternationallythanhowtomaintainstabilityinasocietythatisgoingthroughthesortofsocialandeconomicchangethat,inthepast,hasledtochaosandviolenceChinasobjectiveistoensureasteadysupplyofnaturalresources,sothatitseconomycansustainthegrowththatofficialshopewillkeepalidonunrestathomeThisisthereasonwhychinahasreachedouttoresourcerichdemocracieslikeAustraliaandBrazilasmuchasithastosuchinternationalpariahsasSudanandBurmaAssumingabiggerglobalpresencehasforcedBeijingtolearntheartofinternationaldiplomacyWithinitsownneighborhoodtherearesignsthatChinasbehaviorischanginginmoreconstructivewaysTodayChinasrelationswithitsneighborsareviewedaspositiveattheexpenseoftheUS.
TherearesomeChinawatcherswhofearapointtotwofactors:modernizationofChina'sdefenseforcesandtheriskofwaroverTaiwanChina'smilitaryspendinghasincreasednearly300%inthepastdecadeAfter200yearsChinasprospectsarenowbetterthaneverandtheopportunitiesofitspeopleimproveeachyearAsChinagetsricheritspopulationwillpressforamoredemocraticfreedomsanditsrulingelitemindfuloftheneedforchangewillgrantthemThreeDimensional–ThemarketsofJapan,Korea,andChinaAsiaisoneoftheworldsmostdynamicregions,andoffersmultipleopportunitiesforbusinessandinvestorsAsianconsumershavedifferenttastes,preferences,andmoderatedbydifferentincomelevels.
AtendencyhasoccurredtogroupthesecountriestogetherbutshouldnotbedonebecausetheyaresodifferentGDPandpurchasingpoweroJapan–$4.
80trillion,$4trillionoChina-$1.
84,$7trillionoKorea-$.
72trillion,$1trillionJapanKoreaandChinadifferintheirbrandorientations,attitudestowarddomesticandforeignproducts,qualityandpriceperceptions,andproductfeaturepreferenceBrandOrientationJapanMostbrandconsciousandstatusconsciousLovehighendluxurygoodsCountryrepresents20%ofGucci'sworldPreferbrandsthatcontributetotheirsensesofidentityandselfexpressionHighlygrouporientedconsumersKoreaSophisticatedtastesShowimmensepassionfornewexperiencesandfavorpremiumandexpensiveimportedproductsGreatinterestingenerationalfadsandselectproductsthatfollowtheirgenerationsjudgmentsandpreferencesChinaPreferluxurygoodsBrandandstatusconsciousConsiderluxurygoodstobepersonalachievements,bringinghighersocialstatusPurchasingbehaviorsareregionalFourthlargestmarket"ThenewJapanese"WealthypeoplehungryforbrandsandfanaticalaboutspendingDomesticVS.
ForeignJapanConsumersextremelydemandingandhavedifferentperceptionsofproductmadeinothercountriestheyaregenerallyacceptingofqualityforeignproducts.
DominatedbywellestablishedcompaniessuchasCanon,Sony,andToyotaKoreaConsumersholdnegativeattitudestowardforeignbusinesses;themajoritybelievesthatthesebusinessestransferlocalwealthtoothercountriesandcrowdoutsmallestablishmentsConsumersveryproductanddemonstrateacomplicatedlovehaterelationshipwithforeignbrandsKoreacampaignsrequiresignificantre-branding–useoflocalizedbrandstoinfluencelocalperceptionsCountryisincreasinglycomfortablewiththepresenceofforeigncompaniesChinaAttitudestowardforeignproductsdifferdependingonconsumersagegroupsBelieveimportedproductsunderforeignbrandsnamesaremoredependableForeigncompaniessuchasNikeNokiaSonyhavereplacedwellknownbrandsCountry'sconsumersareinspiredbydesignandfunctiontheypreferdomesticbrandsbecauseoftheirfoodvalueforthemoneyQualityandPriceJapanConsumersaretheworldsstrictestwhenitcomestodemandforproductqualityandtheyclearlyarticulatetheirneedsdesiresaboutaproductorpackageoperationForeigncompaniesdon'tfullyunderstandandmeetconsumersneedsexpectationsstrugglewiththeirinvestmentsTocatertothemmanufacturershaveadoptedatotalqualityapproachKoreaConsumptionhasbeensluggishsincethefinancialcrisisof1997-1999YoungergenerationisattheforefrontofanewandemergingpatterandholdsopposingexpectationsofpreferencesforlowpricedandhighpricedgoodsChinaPricesensitiveandtrytosafeguardtheirincomeforinvestmentMarketislucrativewithgrowingdemandforeignbrandsTechnologyFeaturesJapanoConsumerspreferhightechgadgetsoConsumerarewillingtopayforbettercoolerfeaturesandtechnologicalsophisticationoBecauseofsmalllivingquarter,manufacturershavebecomeexpertsatminimizingandcreatingmultifunctiondevicesKoreaoMostwiredcountryintheworldisaleaderininternetusageandhightheindustriessuchasmobilephones,liquidcrystals,andsemiconductorsoCyberspacereachesmorethanofthepopulationChinaoImperativeforcompaniesounderstandthemajordifferenceinconsumerbehaviorbetweengenerationsoYoungconsumersarepassionateaboutthelatestdevelopmentso40'sand50sconsumersarepriceconscious,brandloyal,andlesssensitivetotechnologyRecommendationsMarketersneedtotailorcountryspecificstrategiestotargetconsumersinKorea,Japan,andChinaTheexistenceofstrategicallyequivalentsegmentssuggestsageocentricapproachtoglobalmarketsSimilaritiesallowforstandardizedstrategiesacrossnationalboundariesCompaniesnotonlypreserveconsumerorientation,butalsoreducethenumberofmarketingmixestheyhavetoofferAModelForSelectingForeignMarketsPreliminaryOpportunitiesCountryPriorityListingsProbableOpportunities1.
MacroLevelResearch(GeneralMarketPotential)EconomicstatisticsThepoliticalenvironmentSocialstructureGeographicfeatures2.
GeneralMarketRelatingtotheProductGrowthtrendsforsimilarproductsCulturalacceptanceofsuchproductsAvailabilityofmarketdataMarketsizeStateofdevelopmentTaxesanddutiesPossibleOpportunities3.
MicroLevelResearch(SpecificFactorsAffectingtheProduct)ExistingandpotentialcompetitionEaseofentryReliabilityofinformationSalesProjectionsCostofEntryProbablyproductacceptanceProfitpotential"Feel"4.
TargetMarketsCorporatefactorsaffectingimplementationRejectedCountriesOpportunityMatrixLMHHMLBusiness&PoliticalRiskMeasuredOverTimeMarketOpportunityMarketStageInfancyDevelopingMature(Typesofaftermarkets.
)CustomersProductIntroductionDistributionPriceCompetitiveStrategiesCriteriaUsedinChoosingEntryStrategiesExternalCriteriaInternalCriteriaMarketriskfactorCompetitioninthemarketPoliticalconditionsMarketconditionsFuturemarketpotentialAvailabilityofdesireddistributionoutletsAvailabilityofventurecapitalAvailabilityofknow-howTimeorientationNeedforcontrolDegreeofinternationalizationUrgencyofgoinginternationalAbilitytohandleinternationalriskEntryDecisions:StrategicParametersInputProcessOutputAstrategicplanincluding:*Motivation(s)forentryDecisionrulesfor*Modeofentrysite(s)selection(riskscontrol,legalissues)*Inventoryofown*Operationalandresourcesimplementationprograms*Inventoryofcompetitorsresources*Marketintelligence*IPprotectionInternationalMarketEntry–FunnelApproachRegionalFocusModeofEntryRegionalFocusThe"Triad"JapanNorthAmericaEuropeTradingcompaniesExportingLicensingManufacturingJointVenturesStrategicAlliancesManagementContractsUsinganentryintooneNationalmarketingasasteppingstoneforlaunchingmarketPenetrationintoothermarketsIdentificationofALeadCountry(FunctionoftheFirmSize)EmergingMarketsLatinAmericaVenezuelaArgentinaBrazilColumbiaChilePacificBasinChinaIndiaMiddleEastOrvariousclusteringschemese.
g.
"seekers"vs.
Climbers*LessDevelopingRegions*Apopularclusteringapproachconsistsofcriteriasuchasdevelopmentlevel(urbanization,lifeexpectancy,infantmortality,literacyrte,percapitaGDP),EconomicPerformance(GPD,inflation,investmentforeigntradeanddebt,etc.
,andPoliticalandEconomicLiberalization.
TheSpectrumofInternationalBusinessInvolvementInactiveExportingProactiveExportingLicensingFranchisingTurnkeyContractJointVentureManagementContractStrategicAllianceDirectInvestmentLessinvolvedMoreinvolvedContractualRelations/ArrangementsHENKELCASETheoretical&StrategicCosiderationsFRAMEWORKOFGLOBALSTRATEGYFORCESPositionandResourcesofBusinessandParentCompanyOrganization'sAbilityToImplementaGlobalStrategyAppropriateSettingforGlobalLeversMajorMarketPresentationProductStandardizationActivityConcentrationUniformMarketingIntegratedCompetitiveMovesIndustryGlobalizationDrivers:MajorMarketCostFactorsEnvironmentalFactorsCompetitiveFactorsBenefits/CostsofGlobalStrategyTheEPRGFramework(Companies'PhilosophiesonInternationalInvolvement)EthnocentricOrientation:Firmsareguidedbyadomesticmarketextensionconcept.
(Disney–inthepast)PolycentricOrientation:Firmsareguidesbyamulti-domesticmarketconcept.
(Someofthecarcompanies)RegiocentricOrientation:Firmsviewworldregionsasdistinctmarkets.
(PepsiCo.
,Otis)GeocentricOrientation:Theworldisperceivedtobeapotentialmarketregardlessofgeographiclocationornationality.
(McDonalds,IBM)ThankYou
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