Leverage allows a company to conserve resources when pursuing opportunities in new geographical markets. What are the four types of leverage that exist? Four important types of leverage exist: Experience Transfers – A global company can leverage its experience in any market in the world by drawing on management practices, strategies, products, advertising appeals, or sales or promotional ideas that have been market-tested in one country and applied to another. Scale Economies – The global company can take advantage of its greater manufacturing volume to obtain traditional scale advantages. Finished products can be manufactured by combining components manufactured in scale-efficient plants in different countries. Resource Utilization – A global company has the ability to scan the entire world to identify people, money, and raw materials that will enable it to compete most effectively in world markets. Global Strategy – The global company’s greatest advantage is its global strategy. A global strategy is built on an information system that scans the world business environment to identify opportunities, trends, threats, and resources. A global strategy is a design to create a winning strategy on a global scale. Note: A global strategy is NO guarantee of ongoing organizational success. (Consider InBev’s acquisition of Anheuser-Bush, Daimler-Chrysler, and Deutsche Post’s DHL unit.) Restraining Factors Despite the impact of the driving forces previously discussed, several restraining forces may slow a company’s efforts to engage in global marketing. Luckily, in today’s world the driving forces predominate over the restraining forces. That is why the importance of global marketing is steadily growing. Describe the most important restraining factors. Important restraining forces include: Management Myopia and Organizational Culture – Management may simply ignore opportunities to pursue global marketing. A company that is ethnocentric (or “nearsighted”) will not expand geographically. Myopia is a recipe for market disaster if headquarters attempts to dictate when it should listen. Successful global marketing requires a strong local team “on the ground” to provide information about local markets. National Controls – Every country protects the commercial interests of local businesses by maintaining control over market access and entry in both low- and high-tech industries. Today, tariff barriers have been largely removed in countries. Still, nontariff barriers (NTBs), such as “Buy American” campaigns, make it difficult for companies to gain access to local markets. Opposition to Globalization – To many people, globalization represents a threat. Globaphobia is used to describe an attitude of hostility toward trade agreements
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