SURVIVING THE IMPORT AND EXPORT LANDSCAPE

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1 October 19, 2017 SURVIVING THE IMPORT AND EXPORT LANDSCAPE Michele Vincenti Ph.D., MBA, M.A. (HOS), CIM, FCSI, STI, CMC, C.I.M., F.CIM, CMgr (UK), F.CMI (UK), CITP President, Alvana Business Consulting Inc.

2 AGENDA Trading Today Why Do Companies Expand into Foreign Markets? How Markets Differ from Country to Country Characteristics of Global Competition Trading Strategies Global Strategic Offensives Achieving Global Competitiveness via Cooperation International Strategies: Opposing Pressures

3 TRADING TODAY You have no choice but to operate in a world shaped by globalization and the information revolution. There are two options: Adapt or die. Andrew S. Grove The global marketplace provides many opportunities for firms to increase their revenue base and their profitability. However, managers face many opportunities and risks when they diversify abroad. What should a firm do in order to attain a competitive advantage in this global marketplace?

4 WHY DO COMPANIES EXPAND INTO FOREIGN MARKETS? Gain access to new customers Achieve lower costs and enhance competitiveness Obtain access to valuable natural resources Capitalize on core competencies Spread business risk across wider market base

5 HOW MARKETS DIFFER FROM COUNTRY TO COUNTRY Consumer tastes and preferences Consumer buying habits Market size and growth potential Distribution channels Driving forces Competitive pressures Market contest among rivals in one country not closely connected to market contests in other countries Buyers in different countries are attracted to different product attributes Sellers vary from country to country Industry conditions and competitive forces in each national market differ in important respects

6 Characteristics of Global Competition Competitive conditions across country markets are strongly linked Many of same rivals compete in many of the same country markets A true international market exists A firm s competitive position in one country is affected by its position in other countries Competitive advantage is based on a firm s world-wide operations and overall global standing

7 TRADING STRATEGIES PROFIT SANCTUARIES Profit sanctuaries are country markets where a firm Has a strong, protected market position and derives substantial profits CROSS-MARKET SUBSIDIZATION Involves supporting competitive offensives in one market with resources/profits diverted from operations in other markets

8 GLOBAL STRATEGIC OFFENSIVES 1. Attack a foreign rival s profit sanctuaries Approach places a rival on the defensive, forcing it to Spend more on marketing/advertising Trim its prices Boost product innovation efforts Take actions raising its costs and eroding its profits 2. Employ cross-market subsidization Attractive offensive strategy for companies competing in multiple country markets with multiple products 3. Dump goods at cut-rate prices Approach involves a company selling goods in foreign markets at prices Well below prices at which it sells in its home market or Well below its full costs per unit

9 Achieving Global Competitiveness via Cooperation Cooperative agreements with foreign companies are a means to Enter a foreign market or Strengthen a firm s competitiveness in world markets Purpose of alliances Joint research efforts Technology-sharing Joint use of production or distribution facilities Marketing / promoting one another s products

10 DOING BUSINESS GLOBAL RANKING

11 International Strategies: Opposing Pressures An international strategy requires diffusion & adaptation of the parent company s knowledge & expertise to foreign markets. A global strategy implies a firm is interested in lowering costs A multidomestic strategy puts emphasis on differentiating products & services to adapt to local markets A transnational strategy seeks global competitiveness via trade-offs

12 Tools Vendor Managed Inventory (VMI): A means of optimizing Supply Chain performance in which the manufacturer is responsible for maintaining the distributor s inventory levels. The manufacturer has access to the distributor s inventory data and is responsible for generating purchase orders. Collaborative Planning, Forecasting and Replenishment (CPFR): CPFR seeks cooperative management of inventory through joint visibility and replenishment of products throughout the supply chain. Information shared between suppliers and retailers aids in planning and satisfying customer demands through a supportive system of shared information.

13 The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.

14 Thanks Dr. Michele Vincenti