Marketing in the Global Firm and International Human Resource Management
Market Segmentation and Global Strategy
Market Segmentation: The process of dividing a customer base into clusters based on similar features like income, lifestyle, or culture.
Global Market Segment: A group of customers sharing common characteristics across multiple national markets, often targeted with uniform marketing programs.
Adaptation: Modifying marketing elements to meet specific requirements in individual foreign markets.
Standardization: Making marketing elements uniform to target entire regions or the global marketplace.
Balancing Act: Firms like Dell standardize core components (identical machines) while adapting specific features (keyboards and software) for local conditions.
Global Product Development: Focuses on core commonalities across countries, utilizing a global new-product planning team to determine standardization versus adaptation.
International Pricing and Distribution
Pricing Complexity: Affected by multiple currencies, trade barriers, and longer distribution channels.
Pricing Strategies: * Rigid cost-plus pricing: Adding a flat percentage to domestic prices. * Flexible cost-plus pricing: Adjusting prices for local market conditions and purchasing power. * Incremental pricing: Covering only variable costs, assuming fixed costs are paid by home sales.
Price Escalation Combat: Shortening distribution channels, redesigning products (e.g., Whirlpool no-frills machines), or shipping unassembled parts for lower tariffs.
Gray Marketing: Legal importation of genuine products by unauthorized intermediaries, often caused by price or exchange rate differences; managed by cutting prices or adding exclusive features.
International Advertising: Influenced by local media availability, literacy, and regulations. In , spending was approximately billion each in Western Europe and Asia, and over billion in the United States.
Distribution: Considered the most inflexible marketing element. Common approaches include independent intermediaries or establishing a subsidiary via direct investment.
International Human Resource Management (IHRM)
Employee Categories: * Parent-country nationals (PCNs): Citizens of the country where the MNE is headquartered. * Host-country nationals (HCNs): Citizens of the subsidiary's country. * Third-country nationals (TCNs): Citizens of countries other than the home or host country.
Domestic vs. International IHRM: International involves additional responsibilities like international taxation, relocation, and deeper involvement in employees' personal lives (e.g., housing, education).
Key Tasks: Includes international staffing policy, training, performance appraisal, compensation, and managing labor relations.
Staffing and Expatriate Management
Essential Characteristics: Technical competence, self-reliance, adaptability, interpersonal skills, and physical/emotional health.
Expatriate: An employee working abroad for an extended period. Failure occurs if the employee returns prematurely, often due to culture shock.
Culture Shock: Mental confusion or anxiety from living in a foreign culture; can be reduced through exercise, journals, or preparation.
Training Components: * Area studies: Historical and economic knowledge. * Practical information: Daily living skills. * Cross-cultural awareness: Interaction skills.
Repatriation: The process of returning to the home country, which may involve "reverse culture shock."
Performance and Compensation
Performance Appraisal Challenges: Includes non-comparable outcomes due to local conditions, incomplete information from geographic distance, and the maturity levels of different subsidiaries.
Compensation Components: Includes base remuneration, benefits (health care), allowances (housing, travel), and incentives. It is designed to maintain the employee’s usual standard of living abroad.
Market segmentation divides customers into groups based on similar traits. A global market segment includes customers with shared features across different countries, targeted with the same marketing. Adaptation means changing marketing to fit local needs, while standardization means using the same marketing across all regions. Companies like Dell balance standardization of core products with local adaptations. Global product development focuses on shared features through a global planning team. Pricing can be complex due to different currencies and trade barriers. Pricing strategies include rigid cost-plus pricing, flexible cost-plus pricing, and incremental pricing. To combat price escalation, companies might shorten distribution channels or redesign products. Gray marketing involves unauthorized imports of genuine goods due to price differences. International advertising varies by local media, literacy, and regulations, with significant spending in regions like Western Europe and the United States. Distribution is often inflexible and may involve intermediaries or subsidiaries. In international human resource management (IHRM), there are three employee types: parent-country nationals, host-country nationals, and third-country nationals. IHRM is more complex than domestic management and includes aspects like taxation and relocation. Key IHRM tasks involve staff policies and training. Effective expatriates have technical skills, adaptability, and good health. Culture shock can occur for employees working abroad and can be managed through preparation. Training for expatriates includes learning about the new area, daily living skills, and cross-cultural interactions. Repatriation is the process of returning home and can involve reverse culture shock. Performance appraisals can be challenging due to different local conditions. Compensation for expatriates includes salary, benefits, allowances, and incentives to maintain their living standards abroad.