International Marketing Strategies

“If you do not develop a strategy of your own, you become part of someone else’s strategy.” 

                                                  ~Alvin Toffler

          Toffler’s enlightened words reverberate in business practices, internationally as well as domestically.  A company must develop a strategy, not only to stay ahead of the competition, but also to not surrender to forces they could have controlled with strategic planning and prudent decision-making.  Whether these strategies involve offshore outsourcing, licensing, or global partnerships, strategic assessment must be administered to attain advantageous outcomes.

Criteria for Offshore Outsourcing Decisions

         By 2015, an estimated 3.4 million white-collar jobs, with annual wages of $151 billion, will leave the United States for low wage jurisdictions globally.  This estimation is a direct reflection of offshore outsourcing, a $500 billion business.  Outsourcing ensues when a company subcontracts a process or product to an outside supplier, a practice that has become extremely popular because of its innate ability to reduce communication, operational (sales and development), and recruitment costs, as well as acquisition of human capital, and proliferation in scalability and flexibility of operations. 

          There are certain criterion company management must consider when constructing offshore outsourcing decisions.  Especially since there are, some risks involved, essentially relating to process management, contracts, and loss of classified information.  More complex risks’ which can impose potential problems in offshore outsourcing include, companies relying on third parties, which can maximize an organization’s liability of malfeasance or misfeasance, possibility of erosion of brands, and breaches of intellectual property, as well as other intangible assets.  Thus, a Risk Intelligence strategy should be employed.

            The Risk Intelligence approach utilizes a five-stage model:  Strategic Assessment, Business Care Development, Vendor Selection, Contracting, and Service Transition.  In the first stage, Strategic Assessment, an organization needs to assess how its offshore outsourcing strategy will reinforce its business goals, and design a strategy that will encompass company objectives, and determine if offshore outsourcing will aid in reaching these goals.  The second stage, Business Care Development, which extends past operational savings and costs, involves analyzing the benefits, as well as costs of outsourcing, and utilizes copious due diligence to support expectations.  After the company follows the first two steps of the Risk Intelligence approach, then, they need to assess vendor selection, resources, and adroitness.  Moreover, the fourth stage is Contracting, which includes insurance requirements, contract, legal, and regulatory checklists.  Finally, the last stage in the Risk Intelligence approach is service transition, which includes elements such as transition training, planning, transfer, knowledge, and personnel retention.  Furthermore, if a company employs a successful strategy for offshore outsourcing, then the benefits will be rewarding.  For example, Delta Airlines utilized offshore outsourcing for some of its worldwide reservation services to Wipro Spectramind, a third-party vendor located in India, in return, saving Delta $26 million, in 2003. 

Advantages and Disadvantages of Using Licensing as a Market Entry Strategy

         When a company endeavors to enter a foreign market, one of the strategies they could implement is licensing, which is considered to have limited risks, as well as less demand of resources.  Licensing entails a contractual agreement through which an organization licenses the rights to specific intellectual property and trademarks, patents, design, and technological ingenuity to a non-domestic organization, in exchange for remuneration or alternative indemnification types.  By way of illustration, licensing was the method of entry Disney implemented in Japan, as the requirement for the licensor was a small investment, hence, licensing can return a monumental ROI.  On the other hand, being that the licensee markets and manufactures a product, the possible restitution from marketing activities and manufacturing could be forfeited.  Licensing offers companies many advantages, but along with advantages comes disadvantages.  The following is a comparison of the two:

Advantages	Disadvantages
ü      Rapid entry ü      Little capital requirements in setting up manufacturing operations ü      Quick returns for manufacturing efforts ü      Regulations and tariffs are not applicable because the local organization holds the license	ü      Possibility of losing control of the use of assets because of manufacturing and marketing ü      Risk of generating future local competitors ü      Returns may be lost

Moreover, the foreign company must devise a cogitated licensing agreement, as well as secure patent and trademark registration to protect intellectual property.  In addition, rules of licensing are different in every country; hence, a company needs to bear this in mind for its licensing strategy. 

             Numerous food and beverage companies utilize licensing.  Such as, the candy bars, Almond Joy and Mounds, which is owned by Cadbury Schweppes, a British food and beverage company; the candy bars are manufactured in the United States, under license by Hershey Foods.  Another example is that of the German beer, Lowenbrau Pils, a German- owned brand, which is under license, and brewed, by the United States firm, Miller Brewing Company.  The United States company, RJR Nabisco, is a licensor for the French food manufacturer, BSN, a subsidiary of Britannia Brands, Ltd., who produces Planters nuts in Singapore.  These familiar brand names are just a few food and beverage brands under license internationally.

Global Strategic Partnership and Joint Venture

            Two or more companies combining their individual strengths and collaborating to improve performance and reduce non-value adding activities, defines global strategic partnership.  In order for this relationship to work mutual benefit has to be present, or in other words, developing a “win-win” alliance.  This alliance is a way to impede weaknesses and aggrandize competitive strengths.  There are many reasons for engaging in strategic partnerships, these include additional sources of capital, entry to new technologies, more economical in marketing and production costs, and opportunities for expeditious accession to new markets.  Furthermore, strategic partnership infers there exists a common objective, if one partner is weak, then it is equipoise by the other’s strength; fulfilling the objective separately would be deemed too costly, too risky, and take too much time; and, in union, their specific strengths aids in reaching the stated objective, whereas separately, may not be obtainable.  Moreover, a strategic partnership is a synergistic relationship, which are formed to actualize a common goal where both partners profit. 

                    Global Strategic Partnership should not be confused with joint venture, even though in the marketing world they are often used interchangeably.  However, joint ventures differ from global strategic partnerships in that it is a more formal agreement, constructed to embark on a specific project or transaction.  In joint ventures, the organizations involved commonly compose a separate company to perform the deployment and operation of a project.  Normally, the objective is to expand into new markets, or to cultivate new products or services.  Joint ventures often require legal documentation to dictate objectives of the venture, as well as what each entity will provide in terms of services, capital, and technical support.  In addition, legal documentation will be comprised of exit strategies, management rights, rules and regulations, and division of profits and losses. 

 Conclusion

       One must implement a strategy for mode of entry into foreign markets.  It is important that companies know the advantages, as well as the disadvantages of each of these modes, to initiate the right course of action for its strategy, ergo, without a concise strategy, and proper decision-making, a company cannot flourish in global marketplaces.