Unit VI Journal

 

Instructions

The unit lesson explains five international marketing philosophies. Which orientation mostly applies to Maytag’s washers and dryers? Explain why.

Your journal entry must be at least 200 words. No references or citations are necessary.

MBA 6601, International Business 1

Course Learning Outcomes for Unit VI

Upon completion of this unit, students should be able to:

8. Examine the major marketing considerations applicable to international business.

Reading Assignment

In order to access the following resource(s), click the link(s) below:

Dev, C. S., & Schultz, D. E. (2015). From the four Ps to the four ‘why’s’. Marketing News, 49(9), 40–47.

Retrieved from
https://libraryresources.columbiasouthern.edu/login?url=http://search.ebscohost.com/login.aspx?direc
t=true&db=bth&AN=109289010&site=ehost-live&scope=site

Seeds, D., & Khade, A. S. (2008). Transforming a multi-national corporation from a centralized organization to

a decentralized organization. Journal of International Business Strategy, 8(3), 99–104. Retrieved from
https://libraryresources.columbiasouthern.edu/login?url=http://search.ebscohost.com/login.aspx?direc
t=true&db=bth&AN=35637667&site=ehost-live&scope=site

Van Meir, C. (2016). Branding benefits: Apply the four Ps of marketing to make benefits more engaging.

Benefits Magazine, 53(3), 34–39. Retrieved from
https://libraryresources.columbiasouthern.edu/login?url=http://search.ebscohost.com/login.aspx?direc
t=true&db=bth&AN=113183936&site=ehost-live&scope=site

Unit Lesson

There are two ways to look at global marketing strategies. One way is to look at a company’s marketing
orientation. Marketing orientation refers to the philosophy that guides a company’s marketing strategies. In
the United States, marketing orientation started with the production concept (1920s) and evolved to the
present day holistic marketing concept. Along the way, several distinct variations emerged that seem to work
well in the foreign markets. These orientations depend on the types of products produced and the types of
buyers purchasing the goods. The second way to study global marketing strategies is to analyze the
marketing mix of the product. The marketing mix is the 4 Ps: product, place, price, and promotion.

Marketing Orientations

There seem to be five types of marketing philosophies that have managed to stay significant. Typically, a
company’s marketing strategy will depend on whether the company is production oriented, sales oriented, or
customer oriented. A combined strategy of all three yields a strategic marketing concept. Last and still
emerging is the force of social marketing, sometimes referred to as nonmarket strategies.

Production orientation: The production concept focuses on products that are mass produced, have a low
price relative to disposable income, come with a standard design, have low risk of product failure, and a short
window from purchase to consumption. These types of products require advertising and sales promotion to
pull them through the distribution channel. Consequently, manufacturers achieve high production efficiency,
low costs, and mass distribution. This type of product could be a low value-added commodity, such as copper
or wheat, or a high value-added product, like a candy bar or a standard automobile. This type of concept
works well in a country that has low labor manufacturing costs, such as in China or Vietnam.

Sales orientation: The sales concept focuses on products that are custom made. The consequences of
failure might be high, the expense is so high only large organizations like governments can afford them, and

UNIT VI STUDY GUIDE

Managing International Operations, Part 1:
Marketing and Organizational Structures

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the product takes years to build. This type of product might be a dam, a nuclear reactor, a turnkey factory,
large airplanes, or ships. The manufacturer usually provides a sales team to work out the details, and the
buyer usually reciprocates with a purchasing team to ask all of the appropriate questions.

Customer orientation: Sometimes referred to as the marketing concept, this philosophy is a customer-
centric concept. The job here is to find, develop, and produce the products that the customer wants. One
version of this takes a basic product like a computer and allows the customer to add on or take off features
they want and are willing to pay for. This approach works well with products customized with little effort. A
good example is Burger King, a worldwide restaurant chain. Its slogan—up until recently—“Have it your way”
implied a hamburger made with your choices of condiments and sides (“Burger King ditches,” 2014).

Strategic marketing orientation: In the traditional view, you first make the product (design, procure, and
manufacture) and then sell the product (price, sell, advertise, distribute, and service). In the strategic
marketing concept, marketing is at the beginning of the planning process. Instead of stressing production and
selling, firms decide on the product/service they are going to provide based on their ability to create the most
value. According to this view, the firm first segments the market, selects the target market, and conducts
value positioning. Then, the company develops the product, prices it, manufactures it, distributes it, and
services it. The company also communicates the value to the target market through sales, sales promotion,
and advertising.

Social marketing orientation: Companies, now more than ever, are cognizant of the public’s attention to
environmental and public health issues that affect them. Consumers tend to seek out products and services
that are environmentally friendly, healthy, and socially responsible. In the United States, such programs are
not required. However, customers are more sophisticated and gravitate to companies that show social
responsibility. Corporate social responsibility has become a competitive advantage like branding or
advertising. In the 1970s, Nestlé pushed its infant formula into African communities with disastrous results.
Consequently, while the consumer may not have the sophistication to know better, most governments have
wised up, and many now require programs that consider not only how a product is purchased but also how it
is made and disposed of, as well as how it might be changed to be made more socially acceptable. This
philosophy is sometimes referred to as a nonmarket orientation because it plays mostly to foreign
governments and activist groups.

Marketing Mix (The Four Ps)

Product strategies: The product is the item for sale. It can be tangible like a car or it can be intangible like
the knowledge to build a nuclear reactor. According to the World Trade Organization, tangible products are
“merchandise” and intangibles are “commercial services” (2015). In 2014, the United States exported $687
billion in commercial services and $1.621 trillion in merchandise (World Trade Organization, 2015).

Product characteristics include the product and/or service qualities (e.g., types of warranties, service
contracts), labeling, packaging, and branding opportunities. By branding opportunities, the product line can
extend the brand to similar products that may fit in, just as General Motors has several brands like the Chevy
Malibu and the Chevrolet Impala. Companies strive to make their product(s) as unique as possible to make
them stand out from other products. This is product differentiation.

When it comes to producing the merchandise, the emphasis is on product standardization. Companies can
usually cut production and inventory costs this way. However, companies must adapt the products to meet
the legal, cultural, and economic needs of the customer in different countries. While many countries have
adopted universal standards on some products, such as mobile phones, other standards are lacking, such as
those for railroad gauges and power supplies. In fact, three countries have yet to adopt the metric system for
weights and measures: the United States, Liberia, and Myanmar.

Pricing strategies: There are numerous strategies and tactics to pricing. If the company is selling a premium
product, the price should reflect a premium. If the company is building market share, then a low price that
barely covers the cost would be plausible. If the product goes through a long distribution channel, then
consider there will be markups at each juncture of the channel, making the price relatively high. A longer
distribution channel suggests higher transportation costs as well.

One variable not encountered domestically is the foreign government’s posture towards a given product. A
foreign government may have quota limits, which restricts the number of products a company can send in or

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maybe a tariff that will cause the price of its product to go up. The foreign government can also apply
penalties against products that are imported and sold below the sales price in its domestic country (World
Trade Organizations, n.d.).

In Unit IV, hedging strategies were discussed. A company that can bring a product in from a country with a
weak currency to a country with a stronger currency will have the hedging advantage. The possibility of the
currency growing stronger will add to the profitability. However, if the product comes in from a country with a
strong currency to a country with a declining currency, the profits will be less.

Promotion strategies: The integrated marketing strategy should address advertising, personal sales, events
and experiences, public relations, sales promotion, branding, and direct marketing. This section includes all
forms of communication from the producer to the consumer. The concept of push-pull originates in this area
of marketing. Sales people are responsible for contacting buyers and pushing their product onto the buyer.
This type of communication works well for expensive institutional size products like Boeing 767 airplanes.
Promotion and advertising are responsible for communicating product attributes directly to the consumer
through social media, mass advertising, and sales promotions. This is pull marketing because many
consumers will ask the distributor to stock the product, in essence pulling the product through the distribution
channel. This type of communication works well for mass produced products with lots of standardized
features like fast food restaurants or laundry detergent.

Promotion strategies include branding. A brand is an identifying mark, picture, logo, sound, jingle, or word that
makes you think of the product. Advertisers will promote the brand with all of the good and pleasant features
that the product has. Consequently, when a consumer sees the brand, and they have a need, they buy the
product. Repetitive and frequent advertising causes the consumer to link the need with the brand, and
purchase becomes automatic. Proctor & Gamble (P&G), the world’s largest advertiser, spends $5 billion just
on repetitive and frequent advertising for consumer products (Young, 2015). While the languages are
different, and the products are adapted to the cultural needs, repetitive and frequent advertising works in all
cultural environments.

Place strategies: The word place in this context means distribution strategies. The distribution strategy
should address the transportation of the product through the distribution channel. Before the Internet, the
product had to be available in a physical location. The Internet has changed that way of thinking because
people can order from social media or website intermediaries. The range of physical distribution locations
ranges from discount stores to upscale department stores, dealerships, farmer’s markets, convenience
stores, shopping centers, warehouses, and the list goes on. The Internet has made it possible to order
virtually anything from anywhere. The problem in that situation is product delivery and service after delivery.

The marketing mix is a way to look at the different marketing techniques that affect any given product or
service. Some academics have gone as far to add additional Ps. Other Ps could stand for people, processes,
programs, performance, and politics. Traditionally, the original four Ps are inclusive, but if nothing else,
marketing is a flexible science.

Organizational Structures

Most people recognize that an organizational structure is the arrangement of roles and positions of people in
multinational enterprises (MNEs). This arrangement represents how assets, authority, and communication run
throughout the organization to achieve certain objectives. Rapid changes in technology and economics
demand that businesses structure themselves such that they bend with the stress and snap back to take
advantage of opportunities. Organizations that cannot adapt quickly will not be competitive. Research shows
that certain organizational structures work better in certain situations.

Centralization Versus Decentralization

The traditional structures of centralized and decentralized organizations still abound and are probably still in
the majority of businesses. A quick review of what they do is important.

Centralized organizations: Decision-making authority is concentrated in the top executive levels. The
premise of this scenario is that senior executives have more experience and have more information regarding
access to capital, staffing, corporate needs, and strategy. Advantages would be avoiding duplicate activities in
different subsidiaries, dealing with strong unions (General Motors & United Auto Workers Union) and strong

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vendors (P&G versus Walmart). The disadvantages of this structure are bureaucracy, loss of initiative, and
mostly downward communication.

Decentralized organizations: Decision-making authority flows down to the managers at the local level. The
premise of this scenario is that the local managers have knowledge of what the current business trends are
through dealing with individual customers and vendors. The advantages of this situation are that it
encourages entrepreneurial decisions, makes the organization more innovative and flexible, and encourages
managers to become responsible for their decisions. The disadvantages are that local decisions might
jeopardize global decisions, more risk is accepted, and duplicate activities may take place at different
branches.

Some industries are prone to one type of organization over the other. For example, fast food restaurants work
better with decentralized structures; however, companies with capital-intensive operations do better with
centralized structures. In some cases, hybrids are evolving where anything over the subsidiary level is
centralized, but anything below the subsidiary level is decentralized. In principle, decision-making should
occur at the level of those who are most affected by the outcome and those who have the most knowledge of
the situation (Daniel, Radebaugh, & Sullivan, 2015).

There are variations of these organizational structures that have emerged in corporations that have wide
geographical coverage. The most common MNE organizational structures are listed below:

 Functional structure: This variation allows the concept of centralized decision-making to trump local
responsiveness. Essentially, the company is broken down into functions such as production,
marketing, and administration with each function having a foreign branch. All decisions are made at
the functional level.

 Divisional structure: This is virtually the same as the functional structure except the company is
broken down into product divisions. A company may have automotive and aerospace divisions, each
with a foreign subsidiary. Again, all important decisions rise to the divisional level.

 Geographic structure: A hybrid of the previous two structures could be a geographic structure.
Decisions would be more focused on area needs but still distant from the local branch. For example,
there may be a North American Division and a Western European Division.

There are other variations such as the matrix structure and the mixed structure, but they are also composed
of traditional command and control principles.

Non-traditional structures have emerged due to new Internet technology, allowing the workforce and the
buyers and vendors to collaborate on the production and consumption of new products. Social media
technology has improved to the point where people from different locations around the world can work on any
given project. It is easier to acquire human talent, physical resources, and distribution networks. These virtual
organizations are temporary: forming, disbanding, and reforming as each new project comes forward.

Organizational Culture

An important byproduct of the organizational structure is the organizational culture. From Unit I, we know how
country culture influences the country’s political, legal, and economic decisions. Corporate culture has that
same impact in a company. People inculcated with a set of beliefs have shared expectations of decisions and
outcomes. Because of this, international companies recognize two problems. First, there are differences in
values from one company to another. Second, there are differences in values from one country to another.
Putting a manager from one country over the workers of another country can be disastrous if the manager is
not properly trained. Companies recognize the strategic importance of culture, and many of the leading
corporations are actively training their employees on how to make decisions based on company philosophy.
For example, Toyota, with 27 overseas plants, has trained over 700 foreign executives in the “Toyota Way,” a
collection of company values (Fackler, 2007).

References

Burger King ditches ‘have it your way’ slogan. (2014). Retrieved from

http://www.foxnews.com/leisure/2014/05/20/burger-king-ditches-have-it-your-way-slogan/

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Daniels, J., Radebaugh, L., & Sullivan, D. (2015). International business: Environments & operations (15th
ed.). Upper Saddle River, NJ: Pearson.

Fackler, M. (2007). The ‘Toyota way’ is translated for a new generation of foreign managers. Retrieved from

www.nytimes.com/2007/02/15/business/worldbusiness/15toyota.html

World Trade Organization. (n.d.). Anti-dumping. Retrieved from

https://www.wto.org/english/tratop_e/adp_e/adp_e.htm

World Trade Organization. (2015) United States. Retrieved from

http://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx?Language=E&Country=US

Young, N. (2015). P&G, the world’s biggest advertiser, gives top media role to woman who ran their pet

empire. Retrieved from http://www.thedrum.com/news/2015/01/17/pg-worlds-biggest-advertiser-
gives-top-media-role-woman-who-ran-their-pet-empire