Three organisational types of International Marketing
The three organizational types – multinational, global and international – differ according to a degree of centralization and emphasis on either efficiency or effectiveness.
The transnational type combines the advantages of market proximity (differentiation) and like (standardization).
Multinational companies act according to the needs of the specific national markets. Well-known examples are Nestlé and Unilever offering food, washing powder and hygiene items. Before Unilever could sell margarine in the Asian market, they had to change eating habits first.
Global Enterprises pursue a world market orientation where marketing activities are standardized. Their main objective is to achieve a maximum benefit from economies of scale.
Adidas is an example for a global enterprise. Its design, development, production and sales outlets are centralized at a few locations. The goods are produced in South East Asia and distributed by a logistics centre in Hongkong.
“Activities of the company and its around 170 subsidiaries are directed from the Group’s headquarters in Herzogenaurach, Germany. It is also home to the adidas brand. Reebok Headquarters are located in Canton, Massachusetts. TaylorMade-adidas Golf is based in California. The company also operates creation centres and development departments at other locations around the world, corresponding to the related business activity.
adidas Sourcing Ltd., a fully-owned subsidiary headquartered in Hong Kong, is the worldwide sourcing agent for the adidas Group.
Effective December 31, 2012, the adidas Group employed 46,306 people.”
Source: http://www.adidas-group.com/en/ourgroup/our_business/default.aspx (18.04.2013)
International enterprises are mixed forms of the above two extreme types. Certain responsibilities and decisional structures are delegated to national units to generate a balance between economic marketing efficiency and a broader effectiveness.
Here is the formulation example of the carmaker Fiat’s PALIO. The development of this car was guided by awareness that the demands of customers in the developing countries are distinct from those in the industrialized nations. Fiat decided to offer a product variant tailored to customer preferences in the developing countries. The PALIO offers a strengthened chassis and body for use on purely surfaced roads. The wheels were modified in terms of suspension and design. The bumpers had greater resistance to flying stones and dirt. The production facilities for the PALIO: Poland, Venezuela, Brazil, Argentina, India, Turkey, South Africa and China. It is also built under licence in North Korea. Assembling and logistics were controlled centrally in Turin.
Source: Backhaus, K. , Büschken, J. & Voeth, M. (2005). International Marketing. New York: Palgrave Macmillan. p 27-29
Launched in 1996 in Brazil, as part of Fiat’s “178 project”, the Palio was Fiat’s first attempt to build a world car, the same basic design being produced in numerous nations around the globe. Four principal models were produced -hatchback, sedan, pickup and station wagon-, with different versions being built for different markets. The powerplants, both diesel and petrol, also varied from region to region depending on local production capability, legislation and market requirements.
The basic chassis was a development of the Fiat Uno, but little remained unchanged. The entire structure was significantly stronger in order to be suitable on the rougher roads found in some of the markets for which it was intended, as was the suspension. The body was a completely new design by the I.DE.A Institute of Turin, who also designed the new interior.
Production began in 1996 in Brazil and was followed later that year by a plant in Argentina. 1997 saw production starting in Venezuela, Poland and Morocco whilst Turkey started building the same car in 1998. India and South Africa began production in 1999, Egypt in 2001 and China in 2002.
A complete new-generation Palio was announced by Fiat Auto in early 2007. Some prototypes have seen spotted in Italy in an early stage of development. [1] but this news was wrong. The car spotted was the new Ford Ka, which has been tested in Italy. The Ford Ka is a co-development between Ford and Fiat (The 500).
Second generation (2011-present): An all-new generation of Palio was revealed in October 2011.
Source: http://en.wikipedia.org/wiki/Fiat_Palio (18.04.2013)
Questions
1. Explain the terms
- Global Marketing
- Multinational Marketing
- International Marketing and
- Transnational Marketing.
What are the main differences?
2. Go to the Websites of Nestlé, Unilever, Fiat and Adidas. Create a summary of their international marketing activities.