Case Study #1 :

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-Biotechnology startup company from France

-International development axes#1 : markets# 2 : production# 3 : technology / R&D

ABCAR DIC PRocess: a French biotechnology

startup with many different markets.

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http://www.abcar-dic.com/index.php?id_site=2&id_page=

Applications of Technology :- Rice : improve quality (and retail price) of upon harvest

[Markets : Thai, Vietnam rice processors, world’s 2nd & 3rd]

- Oil extraction (palm…) : with application on biofuels,

etc. [Markets : Indonesia, Malaysia]

- Fruit and vegetable drying :

- For food industry : high quality ice creams, etc

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- For food industry : high quality ice creams, etc

- For food retail : create range of fruits and veggie snacks

- Baby powdered milk : bacteria destruction & vitamin

preservation.

Rice Oil extraction Food Baby

powdered milk

Market A few Asian countries ; a

handful of actors ; large

potential mkt

A few Industrial

users only :

easy to

negotiate

(Mitsubishi

Corp…) ; large

potential mkt

Many possible

actors , many

markets ����

either 80/20

rule or chose

easiest SUPPLY

‘LANE’

A handful of

actors

worldwide

(Nestle, Mead

Johnson…), with

strong

technology

culture

Critical Achieve long R&D in

collaboration with powerful

Achieve control of

supply of raw

Capacity to achieve

quality

Summary of markets:

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Critical

success

factor

collaboration with powerful

actors having poor

technology culture, and a

different business culture

(Asia, mass market, low

emphasis on quality…)

� Ditto

supply of raw

materials /

capacity to deliver

required quantities

to supermarkets…

quality

requirements of

clients during test

phase

Type of

partnershi

p for

O’seas

activities

ALLIANCE with Powerful

technology broker familiar

with rice industry and Asian

culture (=> Mitsubishi

Corporation)

� Ditto JV with (1)

farmers, (2)

wholesaler of

fresh

fruits/veggies,

(3) distribution

contract with

CONTRACT

(technology

transfer) with 1

of these world

leaders (

royalties)

Innovation Strategy of ABCAR

Goal : for each major application (rice, oil

extraction, fruits/veggie, powdered milk) , (1)

market research, (2) identify & negotiate with

potential partners.

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potential partners.

Constraint : the company is a startup, therefore

has limited resources for its int’l strategy.

Therefore…

PROBLEM : too many possible applications/markets!!!

Final market :Supermarkets

(Europe, USA, Asia)

fruit snacks

Processing FactorySupply

Sept

Nov.

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fruit snacks

Requirements :-Steady supply over the year-Flexibility (quantities)

Sept

Nov.

?

Innovative contract with farmers : Pre-purchase harvest

Where to locate ? 1- cheap labor? 2- presence of local J.V. partner3- Low transport cost (raw material )4- Low transport cost (finished product)

[…] H.Q. (France)

Rep. Office in ASIA :(1) Booming region (market + sourcing)

(2) Location in MALAYSIA : centre of Asia, presence in key

markets (oil), presence of multinationals (Nestle)

Fruits &

Veggies:

Powdered

Milk

Palm Oil :Rice :

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Identify Decision Maker :

Timing : complementarity with other party’s « strategic clock » (competition on

market, individual’s carreer moves…)

Fit technology / « client »’s market .

Negotiation Process:

FIT: fine-tune match between technology offered & other party’s needs

Marketing strategy TRIAL & ERROR : eg Fruits & Veggies : product in its retail

form OR for INDUSTRIAL usage (Hagen Daazs…)

[powdered milk]

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March 2005

March 2006

March 2007

March 2008

March 2009

-very interested intechnology ;-Executive has noauthority to recommend

-Sends engineer toFrench startup tpevaluate facilties andtechnology

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1st meeting BMS Q.C. executive, Philippines factory

authority to recommendto H.Q. (USA, Indiana).� Result : only infoXchange on Technology

Commission large study on BMS milk powders .

Technology transfer contract?

Executive becomes Head of Q.C. at H.Q.

technology-Start technicalexchanges betw. R&Dunits (France- Indiana)

����Technology transfer : -French startup grants right to build machines using its technology ; no investment required.-French startup receives royalty [ x % per ton of milk processed in each factoryworldwide]

[powdered milk]

(1) Client evaluates technology :

test

Modify technology

time

Modify technology

test test

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time

Contract( technology transfer)

H.Q. (France)

H.Q. (Mead

Johnson, USA ) Number of plant where technology is to be installedRevenue model ( $ xx /ton) * number of yearsIntellectual Property agreementPossible role in technology upgrade

What does theory say about :

Forms of International Behavior ?

OUTWARD FORMSExport IntermediaryExport AgentExport Direct

INWARD FORMSImport IntermediaryBuying AgentImport Direct

« LINKED » FORMSStrategic Alliance

11“International Marketing – An SME perspective”. De Buca, Fletcher and Brown, Prentice Hall, 2004, p249, Fig 7.5

Export DirectSales Office O’seasLicensor O’seasFranchisor O’seasFDI to supply

Import DirectBuying Office O’seasLicensee in Home countryFranchisee in Home CountryFDI to source

Strategic AllianceCooperative Manuf.Countertrade

What does theory say about :

The stages of Market Research process ?

Problem Identification

RESEARCH PROCESS

Define Research strategy

INTERNATIONAL ISSUES

Construct & Measure & Sample equivalence

Geography + distanceCultureLack of market knowledge

12“International Marketing – An SME perspective”. De Buca, Fletcher and Brown, Prentice Hall, 2004, p162, Fig 6.1

Data collection

Analysis and Interpretation

Disseminate results

Secondary data : (accuracy, comparability, reliability, source) Primary data :

researcher and respondent bias

Results : comparability & local biases

Avoid Culturally offensive conclusions

Results : comparability & local biases

Problems with secondary data : the most important

sources of information by country, by order of importance.

JAPAN S’pore TAIWAN KOREA

Customers

Govt

In-house surveys

Personal contacts

Local Surveys

Government

Political contacts

In-house surveys

Customers

Business contacts

Customers

In-house surveys

Competitors

Govt

Personal contacts

Customers

In-house surveys

Personal contacts

Business contacts

Political contacts

13“International Marketing – An SME perspective”. De Buca, Fletcher and Brown, Prentice Hall, 2004, p173

HK China Etc …

Customers

Personal contacts

In-house surveys

Trade Associations

Magazines

Business contacts

Customers

Political contacts

Newspapers

Personal contacts

Magazines

Challenges against accurate data :

1- lack of local resources and skills (developing countries )

2- Official sources can be trusted? China : complex, multi-level, vertical reporting system encourages optimistic

reporting of economic data

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3-Information kept secret by competitors. China : why is cost of freeze drying so cheap ?

4- Hidden barriers to entry. Japan : why is it difficult to introduce technology?

� The case of Bluetooth Watch for children at Tokyo Disneyland

“International Marketing – An SME perspective”. De Buca, Fletcher and Brown, Prentice Hall, 2004, p175

Case Study #2

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-I.C.T. startup company from France

- development axes#1 : markets# 2 : production# 3 : technology / R&D

Stage 1 : a simple watch for young children

The company, its technology and

products

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Stage 2 : a bluetooth/wifi watch for value added

services (education, entertainment)

Stage 3 : a social network for young children

Breakthrough stage 4 : Internet access security

( corporate & consumer markets)

Stage 1 : A time-teaching watch for children

below 6 yrs of age

Traditional analog or digital displays are not adapted to young children’s psychology of time(positioning oneself in time eg at one precise moment of the day ; understanding of ‘time budget’, eg the ‘amount’ of time available before going to bed).

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An original time display technology :

- key moments’ in the day (meal, shower, nap, play, bus ride, study...), a combination of 2 pictograms : • activity (a pillow for the nap...) • phase of the day (a round and shining sun at noon...).

(1) Laboratoire de psychologie expérimentale, (2) U.P.R.E.S. E.A. 2114, Université François Rabelais, Tours, France.

The child : (1) memorises sequence of activities, (2) capable of anticipating which activity comes next, (3) estimate the time remaining before next activity starts.

children <6 yrs : the market

An attractive market.From TV to toy industry, from food to consumer electronics companies, the marketfor young children (less than 6 years old) has tremendous attraction : the marketsize (75Mn children between 3 and 6 years of age in the developed world only ), itsvery high annual renewal rate (30% per year ... hence preventing saturation) andthe increasing share of their budget that middle classes are spending on theirchildren’s welfare, leisure, education.

Market size (developed countries) 75 Mn

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Market yearly renewal rate 30%

Amount spent annually on child < 6 years old () $7000

[1] US DOA 2004 (Department of Agriculture) :

Very little innovation...

Estimating the market …

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Stage 2 : Bluetooth/wifi watch

Cause : Make pictograms customizable from a PC Cause : Make pictograms customizable from a PC

Unplanned result : INNOVATION Unplanned result : INNOVATION

http://en.prim-time.fr/http://en.prim-time.fr/

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http://en.prim-time.fr/http://en.prim-time.fr/

Sets ALARM (buzz, SMS) when out of range

Sensors at hazardous spots

DOMOTICS sensor

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Similar concepts(1) Map-based location

GPS + 3GCellphone for kids

(3) ‘PROXIMITY’ monitoring

Bluetooth / RFID

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(2) Input/Output monitoring

NFC (RFID)Wearable TAG

Bluetooth / Wifi

RFID

WARNING

Sensor

Sensors at hazardous spots

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WARNING GATE

WARNING GATE

GSM

Partenaire Finland

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Stage 3 : a social network for young children

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http://www.iht.com/bin/printfriendly.php?id=7914803

Stage 3 : a social network for young children

http://en.prim-time.fr/

� Educatif

� Ludique

� Espace publicitaire

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http://en.prim-time.fr/

Stage 4 : access authentication to internet, information systems

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Summary of markets:

Pictogram watch Bluetooth Watch Social site Internet access

control

Market /

channels

Worldwide /

Supermarkets,

ecommerce,

timepiece retailers

/ royalties

Worldwide /

bundling with

telcos; White-label ;

Worldwide /

pay-per-click

revenue model

Worldwide :

large

corporations ;

social networks

(Facebook, …)

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Market size 1 Mn/y * €15 net

margin + royalties

3 Mn/y * €10 net

margin

(eyeball-based

revenue)

€100K - €1Mn

per corporate

client

Technology

+location +

Production

Fully owned /

minor

development

ahead .

Production : OEM

(no IP risk)

Fully owned / major

devel. ahead

(diabetes, …) ;

partners in any

developed country.

Production : OEM (

IP /cost arbitration)

Fully owned ;

webdesigners

(anywhere :

labor-cost basis)

; worldwide

partners with

original content

Fully owned /

central database

to be located in

tax friendly area.

USING A COMPANY OWNED SALES FORCE

• Advantages

– far greater control over sales and marketing effort

– facilitates formation of closer manufacturer-customer

• Disadvantages

– relatively larger resource

commitment

– higher exit costs

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manufacturer-customer relationships

– can be used to identify and exploit new international marketing opportunities

– increased exposure to

unexpected changes in

political/social environment

of host country