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International business strategy_Home replication strategy
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Transcript of International business strategy_Home replication strategy
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HOME REPLICATION STRATEGY
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Hanoi, Vietnam
Characteristics
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Hanoi, Vietnam
1. Characteristics
• Centralizes product development functions in home country
• Developed products transferred to foreign markets to capture additional value
• The company must posses a distinctive competence that local companies lack
• Headquarters maintains tight control over marketing & product strategy
• Subsidiaries leverage home country capabilities
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Hanoi, Vietnam
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Hanoi, Vietnam
Advantages:
• Cut the production cost down in the first stage of investment
• Engage in the home replication strategy as it initially expands into foreign markets
• In local market, not need to implement manufacturing but importing finished goods and apply marketing model
• For business, can be a competitive strength for newcomers
• Can leverage home country-based advantages.
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Hanoi, Vietnam
Disadvantages
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Hanoi, Vietnam
Disadvantages:
• No integration economies• A firm most often adjusts its structure to include
an international division. • International division is separate from all other
divisions and oversees activities (exporting, franchising, and licensing ) =>leads to critical problems
• The primary drawback is its low dedication to local responsiveness => alienation of foreign customers
• Lack of local responsiveness
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Hanoi, Vietnam
Case Study
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Hanoi, Vietnam
Procter & Gamble (P&G)
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Hanoi, Vietnam
Procter & Gamble
• The large U.S. consumer products company - the world’s best marketers
• A dominant global force in laundry detergents, cleaning products , personal-care products
• Expanded abroad in the post-World War II years • The strategy was flawed began to emerge in the
1970s• By 1985, after thirteen years in Japan, losing $40
million a year there
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Hanoi, Vietnam
Procter & Gamble• Since the late 1980s: Attempting to delegate far
more to its major firms in Japan & Europe• Summer of 1991: Entered the Polish with Vidal
Sasson Wash & Go, a bestseller in the United States & Europe
At first: captured more than 30% of the market for shampoos in Poland. Early 1992 sales suddenly plummeted. The rumors—Wash& Go caused dandruff and hair loss => allegations P&G has strenuously denied.
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Hanoi, Vietnam
“I washed my car with Wash & Go, and the tires went bald.”
Where did P&G go wrong?
Procter & Gamble
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Hanoi, Vietnam
Procter & GamblePromoted Wash & Go too hard in a
country has little enthusiasm for brash American-style advertising
Some believe Wash& Go was developed for U.S. consumers
Marketing strategy wholesale from the US to another country without modification accommodate the tastes and preferences of local consumers.
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Hanoi, Vietnam
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