Global Marketing_a Market-responsive Approach
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Book Reviews GLOBAL MARKETING: A MARKET-RESPONSIVE APPROACH Svend Hollensen Prentice Hall Europe, Hemel Hempstead, U.K., 1998, 604 pp.
It is well known today that global marketing management is a complex task. Managers are challenged to design marketing programs and strategies that will work well across many countries with different economic, political, social, and cultural characteristics. Svend Hollensen, associate professor of international marketing at Southern Denmark Business School, The Netherlands, provides an analytical framework for the development and implementation of global marketing programs in his book Global Marketing: A Market Responsive Approach. His academic background and practical experiences are well reflected in his work. The book is logically organized into five parts that correspond to decision-making steps. Part I is “The Decision Whether to Internationalize.” It is followed by Part II, “Deciding Which Markets to Enter,” and Part III, “Market Entry Strategies.” Part IV is titled “Designing the Global Marketing Programme.” Part V is “Implementing and Coordinating the Global Marketing Programme.” The book ends with an appendix titled “Global Marketing Research/Decision Support Systems.” At the end of each part, several illustrative cases are presented. The questions at the end of these cases provide the opportunity to apply chapter knowledge. Moreover, the cases themselves are inherently interesting, particularly because they cover a wide range of industries in a variety of countries. Each chapter starts with learning objectives that lay out what to expect in the coming pages. The comprehensibility of chapters is greatly enhanced through excellent use of visual tools such as tables, charts, diagrams, graphs, exhibits, and maps. The examples of global marketing practices by companies are particularly useful in helping readers digest the text material. The first four chapters of the book constitute Part I. Chapter 1 (“Global Marketing in the Firm”) starts with Solberg’s (1997) contingency framework, which describes the strategic choices involved in the internationalization decision. The characterization and comparison of the management styles of small and medium-sized enterprises (SMEs) and large-scale enterprises (LSEs) are given in the next section. Subsequently, the role of global marketing in the firm is described from a holistic point of view by means of Peters and Waterman’s (1982) 7-S (structure, systems, style, staff, skills, strategy, and shared values) model. Finally, the concept of the value chain (Porter 1986) and its usefulness as a framework for identifying international competitive advantage are explained.
120
Book Reviews
Chapter 2 (“Initiation of Internationalization”) analyzes the reasons for going international (initiating exporting) and distinguishes between proactive and reactive motives. Next, the external and internal triggers of export initiation are explained. A description of different factors that hinder export initiation is followed by a discussion of critical barriers in the process of exporting. Chapter 3 (“Export Behavior Theories”) concentrates on three central theories that explain companies’ internationalization process. These are the Uppsala internationalization model, transaction cost theory, and the network model. In addition, four cases of internationalization (early starter, lonely international, late starter, and international) are identified on the basis of the degree of the firm’s and the market’s internationalization (Johanson and Mattson 1988). Chapter 4 (“Development of the Firm’s International Competitiveness”), the last chapter of Part I, focuses on how the firm creates and develops competitive advantage in the international market. Porter’s (1990) diamond framework is used to analyze the competitiveness issue from a macro perspective. Next, competitiveness at the industry level is explained in terms of Porter’s (1980) five forces model (competitors, supplies, buyers, substitutes, and new entrants). Subsequently, another framework (the five sources model; Burton 1995), which focuses on the assessment of collaborative (Kanter 1994) rather than competitive advantage, is presented. Value chain analysis is discussed. At the end of the chapter, a model for the development of core competencies is presented. Part II consists of Chapters 5 and 6. Chapter 5 (“The International Market Selection Process”) compares SMEs and LSEs with respect to their international market selection processes. A model for international market selection is presented that incorporates firm and environment characteristics. Subsequently, market expansion strategies are analyzed from incremental entry versus simultaneous entry and concentration versus diversification perspectives. A discussion of building the global product-market portfolio concludes this chapter. Chapter 6 (“The International Environment”) focuses on how political/legal, economic, and sociocultural factors affect the attractiveness of a potential market. A model showing the macro environmental influence on market factors and buyer behavior is suggested. Selection of market entry strategies is the common theme of the next five chapters, which make up Part III. In Chapter 7 (“Some Approaches to the Choice of Entry Mode”), a comprehensive model incorporates internal factors (firm size, international experience, and product), external factors
Book Reviews
121
(sociocultural distance, country risk/demand uncertainty, market size and growth, trade barriers, intensity of competition, and distribution system), desired mode characteristics (risk averseness, control, and flexibility), and transactionspecific factors. Chapter 8 (“Export Modes”) focuses on indirect, direct, and cooperative export modes. Five indirect entry modes are discussed: export buying agent, broker, export management company, trading company, and piggyback. Direct exporting modes include export through foreign-based agents and distributors. Cooperative export modes are discussed in the context of SMEs, which are usually in a position to form export marketing groups. Finally, the advantages and disadvantages of these three core export modes are laid out. In Chapter 9 (“Intermediate Entry Modes”), various arrangements (such as contract manufacturing, licensing, franchising, and joint ventures/strategic alliances) are described. The motivations for engaging in these different intermediate entry modes and advantages and disadvantages of each are discussed. Chapter 10 (“Hierarchical Modes”) focuses on the entry modes characterized by ownership and control. The hierarchical entry modes include domestic-based sales representatives, resident sales representatives/sales subsidiary/sales branch, sales and production subsidiary, and region centers. These usually involve capital investments that range from acquisitions to greenfield operations. Another issue discussed is foreign divestment. Factors that can lead to withdrawal from a foreign market are laid out. Chapter 11 (“International Sourcing Decisions and the Role of the Subsuppliers”) concludes Part III of the book. Outsourcing decisions are critical for the firm, and the relationship between the buyer (main contractor) and the seller (subsupplier or subcontractor) is examined within the framework suggested by Turnbull and Valla (1986). Next, four different routes for the internationalization of subcontractors are presented. The chapter ends with a section about project exporting (turnkey contracts), which significantly differs from subcontracting in bureaucratic and financial aspects. The design of the global marketing mix is the focus of Part IV, which consists of four chapters all framed within the controversial standardization versus adaptation model. In Chapter 12 (“Product Decisions”), conceptual approaches such as product life cycle concept and branding strategies at the production level are discussed. Total quality management and ISO 9000 are also addressed. Finally, green marketing strategies that incorporate environmental concerns into decision making are presented with their value chain implications.
122
Book Reviews
Chapter 13 (“Pricing Decisions and Terms of Doing Business”) covers issues related to international pricing strategies. After the internal and external factors that influence international pricing decisions are examined, strategies such as skimming, market pricing, price changes, experience curve pricing, product line pricing, price standardization/adaptation, transfer pricing, and currency management are discussed. A section about export financing concludes the chapter. Chapter 14 (“Distribution Decisions”) focuses on the management of international distribution channels and logistics. Channel decisions are related to the structure of the channel (e.g., channel length) as well as management and control (e.g., distributor agreements). Logistic decisions, in contrast, aim for effective coordination of materials management and physical distribution of finished products. Two special issues are addressed in this chapter: international retailing and gray marketing (parallel importing). Part IV ends with Chapter 15, “Communication Decisions (Promotion Strategies),” which concentrates on the communication process targeted at customers. Advertising, public relations, sales promotion, direct marketing (with emphasis on the use of the Internet), personal selling, trade fairs, and exhibitions are discussed. Chapters 16 and 17 make up Part V. In Chapter 16 (“International Sales Negotiations”), the main focus is cross-cultural negotiations issues. National culture, business/industry culture, company culture, and individual behavior (which are all nested into one another) make up the cultural factor. International business ethics is another important topic addressed in the chapter. The section about sales negotiations in China provides a particularly useful example that shows the necessity of knowing about different cultures in global marketing. Chapter 17 (“Organization and Control of the Global Programme”) is the last chapter in the book. As the firm passes through different stages of internationalization, its organizational structure and its systems of coordination and control mechanisms must change. Various organizational structures (functional, international divisional, product, geographic, and matrix) are explained. Next, the design of control systems that employ financial (output control) as well as nonfinancial (behavioral control) measures is discussed. Feedforward control is suggested as a proactive system that uncovers problems. The appendix (“Global Marketing Research/Decision Support System”) concludes the book. Two detailed sections are presented on primary and secondary data collection. The list of the Internet addresses of various institutions is useful to students, researchers, and practitioners.
Book Reviews
123
Overall, Global Marketing: A Market-Responsive Approach is a well-organized and comprehensive book that would appeal to undergraduate and graduate students as well as to practitioners. The book has several special features, such as the focus on SMEs as global subcontractors, the wide variety of cases and examples, and extensive Internet sources. In summary, this book is highly recommended for everyone interested in global marketing. —Elif Sonmez Michigan State University
REFERENCES
Burton, John (1995), “Composite Strategy: The Combination of Collaboration and Competition,” Journal of General Management, 21 (Autumn), 1–23. Johanson, Jan and Lars Gunnar Mattson (1988), “Internalization in Industrial Systems,” in Strategies in Global Competition, Neil Hood and Jan-Erik Vahlne, eds. Beckenham, UK: Croom Helm, 287–314. Kanter, Rosabeth Moss (1994), “Collaborative Advantage: The Art of Alliances,” Harvard Business Review, 72 (July/August), 96–108. Peters, Thomas J. and Robert H. Waterman (1982), In Search of Excellence: Lessons from America’s Best-Run Companies. New York: Harper and Row. Porter, Michael E. (1980), Competitive Strategy. New York: The Free Press. ——— (1986), “Competition in Global Industries: A Conceptual Framework,” in Competition in Global Industries, Michael E. Porter, ed. Boston: Harvard Business School Press. ——— (1990), The Competitive Advantage of Nations. New York: The Free Press. Solberg, Carl A. (1997), “A Framework for Analysis of Strategy Development in Globalizing Markets,” Journal of International Marketing, 5 (1), 9–30. Turnbull, Peter W. and Jean-Paul Valla (1986), Strategies for International Industrial Marketing: The Management of Customer Relationships in European Industrial Markets. London: Croom Helm.
124
Book Reviews
It is well known today that global marketing management is a complex task. Managers are challenged to design marketing programs and strategies that will work well across many countries with different economic, political, social, and cultural characteristics. Svend Hollensen, associate professor of international marketing at Southern Denmark Business School, The Netherlands, provides an analytical framework for the development and implementation of global marketing programs in his book Global Marketing: A Market Responsive Approach. His academic background and practical experiences are well reflected in his work. The book is logically organized into five parts that correspond to decision-making steps. Part I is “The Decision Whether to Internationalize.” It is followed by Part II, “Deciding Which Markets to Enter,” and Part III, “Market Entry Strategies.” Part IV is titled “Designing the Global Marketing Programme.” Part V is “Implementing and Coordinating the Global Marketing Programme.” The book ends with an appendix titled “Global Marketing Research/Decision Support Systems.” At the end of each part, several illustrative cases are presented. The questions at the end of these cases provide the opportunity to apply chapter knowledge. Moreover, the cases themselves are inherently interesting, particularly because they cover a wide range of industries in a variety of countries. Each chapter starts with learning objectives that lay out what to expect in the coming pages. The comprehensibility of chapters is greatly enhanced through excellent use of visual tools such as tables, charts, diagrams, graphs, exhibits, and maps. The examples of global marketing practices by companies are particularly useful in helping readers digest the text material. The first four chapters of the book constitute Part I. Chapter 1 (“Global Marketing in the Firm”) starts with Solberg’s (1997) contingency framework, which describes the strategic choices involved in the internationalization decision. The characterization and comparison of the management styles of small and medium-sized enterprises (SMEs) and large-scale enterprises (LSEs) are given in the next section. Subsequently, the role of global marketing in the firm is described from a holistic point of view by means of Peters and Waterman’s (1982) 7-S (structure, systems, style, staff, skills, strategy, and shared values) model. Finally, the concept of the value chain (Porter 1986) and its usefulness as a framework for identifying international competitive advantage are explained.
120
Book Reviews
Chapter 2 (“Initiation of Internationalization”) analyzes the reasons for going international (initiating exporting) and distinguishes between proactive and reactive motives. Next, the external and internal triggers of export initiation are explained. A description of different factors that hinder export initiation is followed by a discussion of critical barriers in the process of exporting. Chapter 3 (“Export Behavior Theories”) concentrates on three central theories that explain companies’ internationalization process. These are the Uppsala internationalization model, transaction cost theory, and the network model. In addition, four cases of internationalization (early starter, lonely international, late starter, and international) are identified on the basis of the degree of the firm’s and the market’s internationalization (Johanson and Mattson 1988). Chapter 4 (“Development of the Firm’s International Competitiveness”), the last chapter of Part I, focuses on how the firm creates and develops competitive advantage in the international market. Porter’s (1990) diamond framework is used to analyze the competitiveness issue from a macro perspective. Next, competitiveness at the industry level is explained in terms of Porter’s (1980) five forces model (competitors, supplies, buyers, substitutes, and new entrants). Subsequently, another framework (the five sources model; Burton 1995), which focuses on the assessment of collaborative (Kanter 1994) rather than competitive advantage, is presented. Value chain analysis is discussed. At the end of the chapter, a model for the development of core competencies is presented. Part II consists of Chapters 5 and 6. Chapter 5 (“The International Market Selection Process”) compares SMEs and LSEs with respect to their international market selection processes. A model for international market selection is presented that incorporates firm and environment characteristics. Subsequently, market expansion strategies are analyzed from incremental entry versus simultaneous entry and concentration versus diversification perspectives. A discussion of building the global product-market portfolio concludes this chapter. Chapter 6 (“The International Environment”) focuses on how political/legal, economic, and sociocultural factors affect the attractiveness of a potential market. A model showing the macro environmental influence on market factors and buyer behavior is suggested. Selection of market entry strategies is the common theme of the next five chapters, which make up Part III. In Chapter 7 (“Some Approaches to the Choice of Entry Mode”), a comprehensive model incorporates internal factors (firm size, international experience, and product), external factors
Book Reviews
121
(sociocultural distance, country risk/demand uncertainty, market size and growth, trade barriers, intensity of competition, and distribution system), desired mode characteristics (risk averseness, control, and flexibility), and transactionspecific factors. Chapter 8 (“Export Modes”) focuses on indirect, direct, and cooperative export modes. Five indirect entry modes are discussed: export buying agent, broker, export management company, trading company, and piggyback. Direct exporting modes include export through foreign-based agents and distributors. Cooperative export modes are discussed in the context of SMEs, which are usually in a position to form export marketing groups. Finally, the advantages and disadvantages of these three core export modes are laid out. In Chapter 9 (“Intermediate Entry Modes”), various arrangements (such as contract manufacturing, licensing, franchising, and joint ventures/strategic alliances) are described. The motivations for engaging in these different intermediate entry modes and advantages and disadvantages of each are discussed. Chapter 10 (“Hierarchical Modes”) focuses on the entry modes characterized by ownership and control. The hierarchical entry modes include domestic-based sales representatives, resident sales representatives/sales subsidiary/sales branch, sales and production subsidiary, and region centers. These usually involve capital investments that range from acquisitions to greenfield operations. Another issue discussed is foreign divestment. Factors that can lead to withdrawal from a foreign market are laid out. Chapter 11 (“International Sourcing Decisions and the Role of the Subsuppliers”) concludes Part III of the book. Outsourcing decisions are critical for the firm, and the relationship between the buyer (main contractor) and the seller (subsupplier or subcontractor) is examined within the framework suggested by Turnbull and Valla (1986). Next, four different routes for the internationalization of subcontractors are presented. The chapter ends with a section about project exporting (turnkey contracts), which significantly differs from subcontracting in bureaucratic and financial aspects. The design of the global marketing mix is the focus of Part IV, which consists of four chapters all framed within the controversial standardization versus adaptation model. In Chapter 12 (“Product Decisions”), conceptual approaches such as product life cycle concept and branding strategies at the production level are discussed. Total quality management and ISO 9000 are also addressed. Finally, green marketing strategies that incorporate environmental concerns into decision making are presented with their value chain implications.
122
Book Reviews
Chapter 13 (“Pricing Decisions and Terms of Doing Business”) covers issues related to international pricing strategies. After the internal and external factors that influence international pricing decisions are examined, strategies such as skimming, market pricing, price changes, experience curve pricing, product line pricing, price standardization/adaptation, transfer pricing, and currency management are discussed. A section about export financing concludes the chapter. Chapter 14 (“Distribution Decisions”) focuses on the management of international distribution channels and logistics. Channel decisions are related to the structure of the channel (e.g., channel length) as well as management and control (e.g., distributor agreements). Logistic decisions, in contrast, aim for effective coordination of materials management and physical distribution of finished products. Two special issues are addressed in this chapter: international retailing and gray marketing (parallel importing). Part IV ends with Chapter 15, “Communication Decisions (Promotion Strategies),” which concentrates on the communication process targeted at customers. Advertising, public relations, sales promotion, direct marketing (with emphasis on the use of the Internet), personal selling, trade fairs, and exhibitions are discussed. Chapters 16 and 17 make up Part V. In Chapter 16 (“International Sales Negotiations”), the main focus is cross-cultural negotiations issues. National culture, business/industry culture, company culture, and individual behavior (which are all nested into one another) make up the cultural factor. International business ethics is another important topic addressed in the chapter. The section about sales negotiations in China provides a particularly useful example that shows the necessity of knowing about different cultures in global marketing. Chapter 17 (“Organization and Control of the Global Programme”) is the last chapter in the book. As the firm passes through different stages of internationalization, its organizational structure and its systems of coordination and control mechanisms must change. Various organizational structures (functional, international divisional, product, geographic, and matrix) are explained. Next, the design of control systems that employ financial (output control) as well as nonfinancial (behavioral control) measures is discussed. Feedforward control is suggested as a proactive system that uncovers problems. The appendix (“Global Marketing Research/Decision Support System”) concludes the book. Two detailed sections are presented on primary and secondary data collection. The list of the Internet addresses of various institutions is useful to students, researchers, and practitioners.
Book Reviews
123
Overall, Global Marketing: A Market-Responsive Approach is a well-organized and comprehensive book that would appeal to undergraduate and graduate students as well as to practitioners. The book has several special features, such as the focus on SMEs as global subcontractors, the wide variety of cases and examples, and extensive Internet sources. In summary, this book is highly recommended for everyone interested in global marketing. —Elif Sonmez Michigan State University
REFERENCES
Burton, John (1995), “Composite Strategy: The Combination of Collaboration and Competition,” Journal of General Management, 21 (Autumn), 1–23. Johanson, Jan and Lars Gunnar Mattson (1988), “Internalization in Industrial Systems,” in Strategies in Global Competition, Neil Hood and Jan-Erik Vahlne, eds. Beckenham, UK: Croom Helm, 287–314. Kanter, Rosabeth Moss (1994), “Collaborative Advantage: The Art of Alliances,” Harvard Business Review, 72 (July/August), 96–108. Peters, Thomas J. and Robert H. Waterman (1982), In Search of Excellence: Lessons from America’s Best-Run Companies. New York: Harper and Row. Porter, Michael E. (1980), Competitive Strategy. New York: The Free Press. ——— (1986), “Competition in Global Industries: A Conceptual Framework,” in Competition in Global Industries, Michael E. Porter, ed. Boston: Harvard Business School Press. ——— (1990), The Competitive Advantage of Nations. New York: The Free Press. Solberg, Carl A. (1997), “A Framework for Analysis of Strategy Development in Globalizing Markets,” Journal of International Marketing, 5 (1), 9–30. Turnbull, Peter W. and Jean-Paul Valla (1986), Strategies for International Industrial Marketing: The Management of Customer Relationships in European Industrial Markets. London: Croom Helm.
124
Book Reviews
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