International Marketing Strategy-Dessiertaion

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INTERNATIONAL MARKETING STRATEGY

OF INNOVATIVE COMPANIES

FOR NEW MARKETS WITH CULTURAL DIFFERENCES

- British Companies -

ACKNOWLEDGEMENTS

Until, I finish writing our thesis, many people encourage us to do our best. Thanks to them, we

could develop the final version and learn a lot during whole process. First and foremost, we

would like to thank to our supervisor ABC. With the valuable guidance and advice, he inspired

us to work in this thesis in better ways. Also, we appreciate University of Wales for giving us to

start and concentrate on our project. It gave us to study and learn about our topic. Besides,

friends in London who care and support us gave us big helping hands. Especially, every

member in our group seminar was good advisor as well. With suggestions and critiques from

them, our research could get the meaningful result. Finally, an honorable mention goes to our

families and friends for their understandings and supports on us in completing this project.

Without the particular helps mentioned above, we would face many difficulties while doing this

project. Hayes, London, UK. 2010

SUMMARY

Title: International marketing strategy of innovative companies for newmarkets with cultural

differences. - British Companies

Authors: Llus Costa (840326)Mehyuk Kwon (880408)

Supervisor: ABC

Level: Masters Thesis in Business Administration, Marketing

Key words: Culture, Innovative company, International strategic marketing

Purpose: To understand how international established innovative companies overcame cultural

differences through Strategic Marketing processes.

Method: The research method used in this thesis is based on developing multiple case studies

which are relevant to answer purpose of thesis. Companies which fit into criteria - Be British,

innovative, international - are chosen and case studies about the companies situation are

developed. It is based on the secondary data from a qualitative point of view.

Theoretical framework: To set theoretical background, literature reviews which are about

strategic marketing process and culture are dealt with. Based on the discussions, the

conceptual framework is created. It explains influences of culture to international strategic

marketing process and the firms decision as the outputs.

Conclusions:

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Conclusion for each case is summarized and cross analysis for related cases is following.

Based on all the previous findings, general conclusion is derived and the purpose of the thesis

is answered. Besides, quality of thesis is also delivered. Possible further research is suggested

as well.

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Table of contents

1.

INTRODUCTION..................................................................................................... 3

1.1.

BACKGROUND ...................................................................................................... 3

1.2.PROBLEM................................................................................................................ 5

1. INTRODUCTION

In this chapter, we introduce the background about the topic of this thesis. The reason why

companies should pay attention to this issue for improving competitive advantages which are

innovation and internalization is delivered as well. Then, we discuss the problem, cultural

differences, which innovative and international companies faced during strategic marketing

process in abroad. Also, we present the aim and the purpose of our study, and our research

question to look further into regarding these problems. We finally discuss our expected

audiences, definitions of main concepts, and how its going to be structured

1.1. BACKGROUND

The global economy is in a severe recession inflicted by a massive financial crisis and acute

loss of confidence. Economies around the world have been seriously affected by the financial

crisis and slump in activity. Therefore, Industrial production, trade, and employment havedropped sharply since the blowout in the financial crisis in September 2008. Recent data on

business confidence and retail sales (See Fig. 1) provide some tentative signs that the rate of

contraction of the global economy may now be moderating (International Monetary Fund, 2009)

1. As the global economy slowly slides into recession, organizations face other challenges and

opportunities. Firms become more global minded (international), but also considering its ability

to innovate. Indeed, in nowadays world market situation, it is crucial to consider innovation as a

competitive advantage to offer more value to the customers than competitors (Frey, 2008).

Besides, firms need to have a sufficient degree of internationalization, being active in many

markets, to capture successfully the fruits of innovation (IESE Business School, 2009).

Opportunities presented by the globalization and the entwined simultaneous

1 Sources: CPB Netherlands Bureau for Economic Policy Analysis for CPB trade volume index;

for all others, NTC Economics and Haver Analytics.

1 - Argentina, Brazil, Bulgaria, Chile, China, Colombia, Estonia, Hungary, India, Indonesia,

Latvia, Lithuania, Malaysia, Mexico, Pakistan, Peru,

Philippines, Poland, Romania, Russia, Slovak Republic, South Africa, Thailand, Turkey,

Ukraine, and Venezuela.

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2 - Australia, Canada, Czech Republic, Denmark, euro area, Hong Kong SAR, Israel, Japan,

Korea, New Zealand, Norway, Singapore, Sweden,

Switzerland, Taiwan Province of China, United Kingdom, and United States.

3 - Percent change from a year earlier in SDR terms.

4 - Japans consumer confidence data are based on a diffusion index, where values greater

than 50 indicate improving confidence.

Figure 1: Global Economic Indicators (IMF, 2009)

Pressure to innovate open for firms to new arenas to engage in global innovation activities to

gain the competitive position (Tiwari et al., 2007). Regarding to that, also the International

Advisory Board (IAB) of the IESE Business School agree mix innovation and internationalization

in the business strategy of a firm is a possible solution to emerge from this recession (IESE

Business School, 2009) .

In many ways, the recession has forced the companies to improve its approach to innovation.

All the companies that The Global Innovation 1000 Booz & Companysannual study(Jaruzelski

and Dehoff, 2009) contacted noted that they have learned to streamline R&D processes, to

make sure their product development filters more effectively reflect economic reality, to make

smart bets on advantaged technologies, and to kill weak projects more quickly. All these

changes should help them get more from their R&D investments over time. Accordingly, with

two analyses of Global Innovation 1000 companies, the most of these companies increasedtheir R&D budgets, even if they were not profitable (top) or if their net income fell (bottom)

(Jaruzelski and Dehoff, 2009).

It becomes into a clear competitive advantage for any company that want to compete in

global market, as it is nowadays, and look for new opportunities. Obviously, having these

competitive advantages (be international & innovative) allows a firm to compete in an active way

in the markets, even more when the firm interacts in different foreign markets. In this context,

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the innovation represents one of the most important factors in increasing the national and

international competitiveness of the firms. Being innovative allows the company, on one hand,

to obtain products, with superior characteristics as the ones offered by the competition (product

innovation) and, on the other hand, to reduce the costs of production (process innovation) and

consequently the prices. In this way, the innovative firms obtain some competitive advantages

that give to them the possibility to compete in an active way in different markets. The companieswhich have those competitive advantages of innovation and internationalization have been

getting attention. Also, it is called an innovative and international company (Eusebio and

Rialp, 2002).

1.2. PROBLEM

Strategic marketing refers to a process that can allow an organization to concentrate its limited

resources on the greatest opportunities to increase sales and achieve a sustainable competitive

advantage, and Strategic marketing process is the key part of general corporate strategy

(Baker, 2008). Also, strategic marketing process consists of three crucial phases, which are

planning, implementation, and control. The planning phase is the most crucial stages in a firm's

strategic marketing process and each stage includes several sub-steps (Kerin et al., 2007;

Kotleret al., 2005). Strategic marketing helps the innovative companies deliver their innovative

factors such as products or services, distributions, and specialties to consumers. Strategic

marketing is well positioned to participate in the understanding and management of innovation

within firms and markets because a primary goal of innovation is to develop new or modified

products for enhanced profitability. A necessary component of profitability is revenue, and

revenue depends on satisfying customer needs better than competitors can satisfy those needs

(Hauser et al., 2006). The innovative companies which operate their business internationallyshould care more elements to appeal their innovativeness to consumers who have different

tastes. In this context, as a final stage of communicating with consumers, finding how innovative

and international companies have planned their marketing strategies is helpful and important to

understand these companies business.

However, the main problem with this process is that the environment in which businesses

operate is constantly changing. So, a company must adapt to reflect changes in the

environment and make decisions about how to change the marketing implementation in order to

succeed. Especially, in the case of international strategic marketing process, more difficulties

and problems have been existed because of totally different environment of the markets.

Differences in economical environment, political legal environment, and cultural environment are

the typical barriers to success at the new markets (Kotleret al., 2005). Due to the importance of

strategic marketing process, innovative and international companies must cross many hurdles in

order to implement strategic marketing process successfully.

Unlike economical or political-legal environment such as tariff and regulation of government,

cultural environment is not easy to be measured and defined. However, cultural environment

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has a special importance in multinational business and marketing activities (Miroshnik, 2002).

For example, even in Europe, with economic union and a progression toward the

standardization of the political and social infrastructure, national cultural values are strongly

rooted in history, and appear to be stable over time (DeMooij, 2000). Further, even after

tremendous exposure to globalization, consumers from different cultures have different

attitudes, perceptions, tastes, preferences and values, and remain reluctant to purchase foreignproducts (Suh and Kwon, 2002). Hence, it can be posited that cultural differences remain an

important aspect of international strategic marketing because cultural norms and beliefs are

powerful forces shaping peoples perceptions, dispositions and behaviours (Markus and

Kitayama, 1991; Triandis, 1989).

According to Hopstede (1980, p 25), culture is suggested as A collective programming of the

mind which distinguishes one group from another. Like this definition, values are shared in the

certain country as a cultural group and these values represent identity of the society.

Accordingly, although the cultural environment is some extent abstract, in order to understand

the new market of other countries, innovative and international

companies had to take into account the cultural aspects in the strategic marketing process. The

problem can be recognized in this stage. How the innovative and international companies could

control the cultural differences? Was there any difficulty because of their innovativeness when

they appealed to consumers who have different cultural value?

Why do we pay attention more to the influence of cultural differences to strategic marketing of

innovative companies? Van Everdingen and Waarts (2003) found that cultural variables have

significant impact on the adoption of innovations. Also, Mahajan et al. (1990) point out members

in a society as having different reliance on mass media or other interpersonal communication

channels and that these communications are important influences in determining the speed with

which an innovation will be adopted (Tellefsen and Takada, 1999). Therefore, it is possible toinfer that particular cultural aspects are related to innovation or the adoption of innovation.

Innovative companies introduce something new, even though there is various degree of

newness, to the market to pursue higher profit and to get more loyal consumers through

continuous innovation. Attracting international consumers who have different cultural values is

more difficult to innovative companies because their new business is adopted by different way

per consumers in different countries. For instance, in one country a new product can be

welcomed but in another country the product can be treated excessive. Therefore,

understanding cultural effect on the acceptance of new products in a specific country is

necessary to plan strategic marketing by decreasing the perceived uncertainty of foreign cultural

environments (Yeniyurt and Townsend, 2003). Innovative companies which are in internationally

high position also went through these difficulties while they implemented their strategic

marketing process. Then, how international established innovative companies overcame these

problems and achievedtheir goals successfully?

.

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International Marketing Strategy-Dessiertaion

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