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<title>International marketing relationships</title></titleStmt>

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<p>4. The corpus developers should be informed of all presentations or

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Researchers should acknowledge their use of the corpus using the following

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The recordings and transcriptions used in this study come from the British

Academic Spoken English (BASE) corpus, which was developed at the

Universities of Warwick and Reading under the directorship of Hilary Nesi

(Warwick) and Paul Thompson (Reading). Corpus development was assisted by

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<u who="nf1208"><kinesic desc="overhead projector is on showing transparency" iterated="n"/> we talk about marketing exchange <pause dur="1.1"/> and <pause dur="0.4"/> we start off with the fact that you can trade products or services <pause dur="0.6"/> for money <pause dur="0.3"/> or some other kind of exchange so not all marketing is about commercial things <pause dur="0.7"/> there are for example marketing initiatives of various charities <pause dur="0.5"/> the marketing <pause dur="0.2"/> of various religions the marketing of other institutions <pause dur="0.4"/> and what happens in that case <pause dur="0.5"/> if it's a charity marketing to you <pause dur="0.4"/> the exchange that <pause dur="0.2"/> they are doing is that <pause dur="1.7"/> basically they're receiving money <pause dur="0.2"/> from you for charitable purposes what you get back in that kind of exchange is something different it's a feel-good factor it's <pause dur="0.3"/> feeling that you've supported your your nominated charity or whatever <pause dur="0.4"/> so it's not always just <pause dur="0.3"/> products and services <pause dur="0.3"/> for money <pause dur="0.7"/> although quite often what we're talking about is commercial exchange <pause dur="2.1"/> but when you look at a marketing textbook you quite often see a diagram <kinesic desc="indicates transparency" iterated="n"/> that looks like that <pause dur="0.8"/> and it's got <pause dur="1.4"/> those kind

of arrows but it almost infers that this is a one-off <pause dur="0.6"/> kind of exchange <pause dur="1.0"/> yeah what i've just been talking in market analysis to various people about is the fact that <pause dur="0.4"/> there are very few businesses <pause dur="0.3"/> where we're actually talking about <pause dur="0.4"/> something which can happen only once <pause dur="1.5"/> in fact <pause dur="0.2"/> i don't know if anybody's just been in the the last lecture has anybody think of any example of a business <pause dur="0.5"/> where it <pause dur="0.2"/> only needs to happen once <pause dur="10.2"/><kinesic desc="raises eyebrows" iterated="n"/> right you haven't come up with the one that we we normally get <trunc>sommit</trunc> somebody's just given me the the classic which is <pause dur="0.2"/> funerals <pause dur="1.2"/> which is you know <pause dur="0.3"/> you sell it once and it doesn't matter if the person comes back to you <pause dur="0.4"/> of course the the answer to this is <pause dur="0.4"/> who's the customer <pause dur="1.8"/> you know the the family of of the person who died <pause dur="0.3"/> and hopefully <pause dur="0.6"/> you're not unfortunate enough to loove more lose more than one member of your family but <trunc>i</trunc> but if <pause dur="0.4"/> somebody else dies in the future you've been happy with the funeral director you may go back to them and #

and if not you'd go to somebody else <pause dur="0.3"/> so there's virtually no business when we're talking about one-off exchange <pause dur="0.4"/> almost always <pause dur="0.3"/> we're talking about <pause dur="0.4"/> dealing with somebody repeat business <pause dur="0.6"/> so the firms <pause dur="0.3"/> want to build up an ongoing relationship with you <pause dur="0.4"/> that's what all of branding is about <pause dur="0.4"/> so when we say that you're building up <pause dur="0.2"/> identifiable brands with a set of values that you associate with them and so on it's all about people being able to <pause dur="0.5"/> identify with a set of brand values <pause dur="0.4"/> hopefully that they will become loyal to and will go back to time and time again <pause dur="0.3"/> the reason for that is obviously that the <pause dur="0.4"/> the costs involved in communicating with somebody and persuading them to buy your product the first time <pause dur="0.9"/> are much higher <pause dur="0.3"/> than for repeat business <pause dur="0.5"/> so if you go back to buyer behaviour <pause dur="0.2"/> <trunc>h</trunc> how many of you have done buyer behaviour <pause dur="2.7"/> no oh well you don't go back to buyer behaviour then <pause dur="0.3"/> how many<shift feature="voice" new="laugh"/> have done market <shift feature="voice" new="normal"/>analysis <pause dur="1.1"/> okay you'll have done some buyer

behaviour in there <pause dur="0.2"/> you've done enough for our purposes <pause dur="0.7"/> in buyer behaviour <pause dur="1.2"/> if you remember you've got various types of buying decision <pause dur="0.3"/> you've got habitual ones you've got complex decisions <pause dur="0.5"/> in industrial buying behaviour <pause dur="0.4"/> and this is where a lot of the the marketing relationship stuff comes from <pause dur="0.6"/> you have <pause dur="1.4"/> complex <pause dur="0.2"/> new purchase decisions <pause dur="0.7"/> and you have rebuys <pause dur="0.3"/> you remember you have a straight rebuy and you have a modified rebuy <pause dur="0.3"/> the straight rebuy <trunc>i</trunc> is the simplest of all <pause dur="0.3"/> because once you'd you've <pause dur="0.3"/> got the purchasing in place you've gone through this process of deciding what to buy you've looked at the specifications you've got the purchasing in place <pause dur="0.7"/> the likelihood is <pause dur="0.5"/> that you just go through the process over and over again then to buy it <pause dur="0.8"/> so it becomes much simpler <pause dur="0.6"/> it becomes less expensive for the firm involved to communicate <pause dur="0.4"/> what the benefits of the product are <pause dur="0.4"/> why you should buy it and so on because you've already gone through that process you're just <pause dur="0.4"/> turning the handle

on it again <pause dur="0.6"/> so <pause dur="0.4"/> the repeat <pause dur="0.2"/> part of marketing <pause dur="0.4"/> the continued exchange the continued purchase <pause dur="0.4"/> is actually the one where the firms <pause dur="0.2"/> start to gain back some of the profits some of the benefits <pause dur="0.3"/> of having you persuaded <pause dur="0.4"/> persuaded you to buy their product or service <pause dur="0.8"/> a one-off <pause dur="0.2"/> sale <pause dur="0.9"/> is good to create trial to get you interested to to make you aware of the benefits <pause dur="0.4"/> but actually doesn't deliver as much of the return to the firm <pause dur="1.0"/> but that's how it tends to be depicted in the in the marketing textbooks <pause dur="0.3"/> it looks like we're <trunc>s</trunc> talking about a one-off static exchange <pause dur="0.5"/> and we're not we're largely talking about relationships <pause dur="0.7"/> if you take that a stage further and say <pause dur="0.6"/> let's think about <pause dur="0.3"/> international marketing relationships <pause dur="0.3"/> what does it do for our view of the environment and of those other things that we were talking about last week <pause dur="2.5"/> we find that it all starts to look somewhat different <pause dur="7.6"/><kinesic desc="changes transparency" iterated="y" dur="5"/> in any marketing or

strategy textbook you're going to find a diagram that looks something like this <pause dur="1.7"/> Kotler <pause dur="0.5"/> has come up with this <pause dur="1.3"/> split into macroenvironment <pause dur="0.3"/> proximate environment that's the the middle circle <pause dur="0.4"/> and the inside circle which is the firm and the channel intermediaries <pause dur="1.5"/> that's called the the micro<pause dur="0.2"/>environment <pause dur="1.1"/> Porter's done something similar looking at all the various stakeholders <pause dur="0.5"/> out there in the market who have an influence on the firm <pause dur="0.6"/> typically we use this kind of diagram to say <pause dur="0.3"/> those external things in the outer <pause dur="0.2"/> ring or or square or whatever it is <pause dur="0.3"/> political physical economic legal technological sociocultural <pause dur="0.4"/> the basis of pest analysis <pause dur="0.7"/> which you have you should have come across <pause dur="2.1"/> anybody looking recognizing at this stage yes <pause dur="0.9"/> so you you you monitor the political economic legal technological social <pause dur="0.5"/> changes in the <trunc>en</trunc> in the environment <pause dur="0.4"/> what influences there are <pause dur="0.5"/> those things <pause dur="0.4"/> create the opportunities and threats for the business so those external things create the

opportunities and threats <pause dur="1.5"/> which <pause dur="0.4"/> depending on the microenvironment the firm and its channels <pause dur="0.3"/> and what strengths and weaknesses it has there it may or may not be able to exploit <pause dur="0.3"/> so it may or may not <pause dur="0.3"/> be able to capitalize on an opportunity <pause dur="0.3"/> depending on what the capabilities of the firm are <pause dur="3.9"/> so we start off <pause dur="0.3"/> with the outer ring the the the pest analysis the macro level <pause dur="0.6"/> and quite often in a stakeholder analysis of the firm <pause dur="1.0"/> we tend to view that as being uncontrollable <pause dur="0.2"/> so those are just things out there in the environment which change <pause dur="0.6"/> and which the firm has relatively little control over <pause dur="2.5"/> the middle level <pause dur="2.7"/> according to classic industrial economics Porter's type view <pause dur="1.6"/> the competitors <pause dur="0.5"/> there's some kind of relationship with <pause dur="0.4"/> so a firm may be reacting to what its competitors have done <pause dur="0.3"/> or it may be trying to pre-empt its competitors <pause dur="0.5"/> we spoke last week about firms going into places like Eastern Europe <pause dur="1.0"/> and we looked at Nestlé <pause dur="0.4"/> who were prepared to cut the prices on Nescafé <pause dur="0.3"/> so that

they could actually get into the market faster <pause dur="0.7"/> and gain the best distribution channels get their brand known <pause dur="0.7"/> all of those kind of moves were done to pre-empt their competitors so they wanted to get the first mover advantage <pause dur="1.5"/> you talk of various other firms <pause dur="0.5"/> # i was talking to Rothmans <pause dur="0.2"/> Tobacco <pause dur="0.5"/> about their approach to Eastern Europe <pause dur="0.4"/> and they said well look we've got to accept that we're not as big as some of the players in this market we've got people like <pause dur="0.5"/> Philip Morris we've got <pause dur="0.6"/> # British American Tobacco we've got R-J Reynolds with Camel and Marlboro and so on <pause dur="0.6"/> # <pause dur="0.3"/> those firms are much bigger than us <pause dur="0.3"/> and so whilst they were going into the markets very early on <pause dur="0.6"/> being first movers <pause dur="0.3"/> trying to establish manufacturing joint ventures <pause dur="0.2"/> something like Rothmans much smaller was saying well we're interested <pause dur="0.4"/> we'd like to go into the market <pause dur="0.5"/> but we're not <pause dur="0.7"/> we're not <pause dur="0.4"/> leaders <pause dur="0.2"/> normally we're more cautious than that our approach is normally to react to what our competitors

have done <pause dur="1.5"/> and so <pause dur="0.4"/> we're looking at what they're doing <pause dur="0.4"/> and part of what makes that market attractive to us part of the market research we're taking into account <pause dur="0.3"/> is the fact that if our competitors have found opportunities there <pause dur="0.4"/> if they've decided it's worth manufacturing there <pause dur="0.3"/> that almost increases its attractiveness to us <pause dur="0.4"/> because we add that to the information we've got about the market <pause dur="0.3"/> and we say <pause dur="0.6"/> it's obviously somewhere that's attractive to go because our larger rivals who we know are <pause dur="0.6"/> more inclined to take risks have already done it <pause dur="0.2"/> so it makes it attractive to us <pause dur="0.9"/> so they in a sense were reacting to the competitors <pause dur="0.6"/> but <pause dur="0.3"/> there's some kind of <pause dur="0.3"/> relationship there <pause dur="0.6"/> and according to Porter and Kotler the only thing that the firm can really <pause dur="0.7"/> control <pause dur="1.1"/> is itself <pause dur="0.2"/> is the firm within the firm <pause dur="0.5"/> although Kotler has actually put channels in there as well because he believes the relationship with the channels should be so cooperative <pause dur="0.3"/> that it should be in the the

central part of it <pause dur="1.6"/> so that if you like is the traditional or the classic marketing <pause dur="0.3"/> strategy view of the environment and the stakeholders in it <pause dur="1.7"/> but there are different views <pause dur="0.6"/> which come from different origins <pause dur="0.5"/> because <kinesic desc="indicates transparency" iterated="n"/> that view <pause dur="1.2"/> is one that's based on the economics <pause dur="0.9"/> perspective which says that <pause dur="0.3"/> we're operating in this very competitive environment and it's what we call a zero-sum environment <pause dur="0.5"/> how many people have have come across zero-sum before <pause dur="1.8"/> no <pause dur="1.2"/> zero-sum <pause dur="0.5"/> is basically <pause dur="3.2"/> the view that says <pause dur="0.4"/> you can only gain at somebody's expense <pause dur="1.3"/><kinesic desc="writes on board" iterated="y" dur="1"/> so <pause dur="0.5"/> if our firm is going to gain <pause dur="1.0"/> an advantage in a market <pause dur="1.7"/> say we call that <kinesic desc="writes on board" iterated="y" dur="1"/> plus-one <pause dur="12.9"/> so firm A <pause dur="2.8"/> <kinesic desc="writes on board" iterated="y" dur="2"/> say firm A is is Nestlé we've just been talking about them and firm A decides to go into Poland <pause dur="4.8"/><kinesic desc="writes on board" iterated="y" dur="2"/> and it gains # a first mover advantage over its competitors say firm B is <pause dur="1.3"/><kinesic desc="writes on board" iterated="y" dur="5"/> i don't

know Procter and Gamble or or one of its rival firms <pause dur="0.6"/> it can only do that <pause dur="0.4"/> at the expense of <pause dur="0.2"/> of firm B <pause dur="1.0"/> that's a zero <trunc>f</trunc> sum view because plus-one-minus-one <pause dur="1.3"/><kinesic desc="writes on board" iterated="y" dur="1"/> equals zero <pause dur="0.9"/> so zero-sum <pause dur="0.4"/> one firm can only gain at the expense of the other <pause dur="1.0"/> the opposite view to that <pause dur="1.9"/> and that's zero-sum <pause dur="3.7"/><kinesic desc="writes on board" iterated="y" dur="11"/> is win-win <pause dur="5.5"/> win-win <pause dur="1.6"/> says that both firm A and firm B can gain <pause dur="0.8"/> they can both benefit at the same time <pause dur="0.5"/> under certain circumstances <pause dur="0.6"/> the circumstances in which both firms could gain would be <pause dur="0.6"/> if they have complementary capabilities of some sort <pause dur="0.7"/> so for example <pause dur="1.5"/> in international marketing terms <pause dur="0.4"/> if one of the firms <pause dur="0.3"/> has got <pause dur="0.5"/> access to some kind of scarce resource <pause dur="1.3"/> that the other one hasn't <pause dur="0.5"/> and the scarce resource <pause dur="0.9"/><kinesic desc="makes quotation mark gesture" iterated="n"/> which as the economists call scarce resource <pause dur="0.5"/> in international marketing quite often is local market knowledge and information <pause dur="1.0"/> so you imagine you're going into <pause dur="0.5"/> Poland <pause dur="0.4"/> or you're going into China or you're going into India and it's a market

which is not your home market <pause dur="1.0"/> you have a number of <pause dur="0.3"/> problems that you're going to overcome <pause dur="1.3"/> just knowing where to locate yourself <pause dur="0.3"/> knowing <pause dur="0.2"/> what the customers want knowing what kind of environmental issues there are that you ought to be taking into account what kind of threats there are for you what kind of opportunities exist <pause dur="2.3"/> then the firm <pause dur="0.6"/> going into the market for the first time is relatively unlikely <pause dur="0.3"/> for example to understand the culture to speak the language to have enough people who it could send out to the market to to set up its operation <pause dur="0.6"/> how does it go about doing market research <pause dur="0.4"/> is it going to use a local agency and if so which one <pause dur="0.5"/> # what kind of questions are you going to be asking in the market you may not even have enough information to know where to start <pause dur="0.5"/> if you talk to some of the firms back to Rothmans again <pause dur="0.4"/> about going into Eastern Europe <pause dur="1.1"/> they said when they very first started looking at Eastern Europe they knew that

there was potential <pause dur="0.7"/> because <pause dur="0.5"/> basically they'd started receiving orders <pause dur="0.2"/> so <pause dur="0.2"/> they were being very reactive they got <pause dur="0.2"/> unsolicited orders <pause dur="0.4"/> from Poland for large quantities of cigarettes <pause dur="0.4"/> and they realized that those markets were actually amongst <pause dur="0.6"/> the few remaining attractive markets <pause dur="0.2"/> in the world <pause dur="0.4"/> for tobacco manufacturers <pause dur="0.5"/> because <pause dur="0.2"/> smoking is declining <pause dur="0.3"/> in in most countries <pause dur="0.2"/> but in Eastern Europe <pause dur="0.8"/> not only was there a lot of potential because there weren't that many Western brands there <pause dur="0.4"/> but <trunc>peop</trunc> <pause dur="0.2"/> there were more people <pause dur="0.6"/> smoking as time went on <pause dur="0.5"/> so that for them was was a major opportunity <pause dur="1.0"/> but they didn't know anything about it <pause dur="0.5"/> they had to even go out and buy maps <pause dur="0.5"/> to work out where the new boundary i mean there <trunc>m</trunc> i know that sounds crazy but we're we're talking about <pause dur="0.8"/> nineteen-ninety <pause dur="0.7"/> and in nineteen-ninety nineteen-eighty-nine ninety <pause dur="0.5"/> the geographic map <pause dur="0.5"/> of <pause dur="0.6"/> Eastern and central Europe was changing fairly rapidly <pause dur="0.4"/> in fact i remember that i was trying to <pause dur="0.2"/> print off a

map of where the boundaries were <pause dur="0.3"/> and look at which markets firms were investing in and looking at the opportunities <pause dur="0.3"/> and i couldn't find in any graphics package <pause dur="0.6"/> a map which had the right borders on <pause dur="0.6"/> because most of them had got to the stage <pause dur="0.4"/> <vocal desc="clears throat" iterated="n"/> by about nineteen-ninety-one if you got Harvard Graphics or Freelance or whatever <pause dur="0.4"/> of having <pause dur="0.3"/> central Europe right <pause dur="0.4"/> so they largely had <pause dur="1.5"/> well <pause dur="0.4"/> they had Hungary and Poland right <pause dur="0.4"/> they quite often had Czechoslovakia which since then had split up into Czech and and Slovak Republics <pause dur="0.5"/> they didn't have all of former Soviet Union right if they had it <pause dur="0.6"/> split down at all from from Soviet Union they had it named Commonwealth of Independent States which it was for a brief period of time <pause dur="0.4"/> but they hadn't then broken it down to <pause dur="0.5"/> Ukraine Belarus and all the other states which had come out of of the former Soviet empire <pause dur="1.1"/> so it's very difficult to get any kind of accurate market information <pause dur="0.5"/> firms like Rothmans were looking at the factors in the <kinesic desc="indicates transparency" iterated="n"/>

environment looking at that macroenvironment and saying <pause dur="0.6"/> we don't really know where to start <pause dur="0.3"/> in fact what they did was <pause dur="0.3"/> having <trunc>identi</trunc> i mean they they did something quite straightforward which is to look at <pause dur="0.8"/> location of the countries how far east they were and say well you know if we're going to progress even further east <pause dur="0.4"/> which ones are the <pause dur="0.3"/> stepping stones and which ones are the ultimate targets <pause dur="0.4"/> and let's look at the level of opportunity versus risk in each of the markets <pause dur="0.4"/> and what they did was they said that <pause dur="0.4"/><vocal desc="clears throat" iterated="n"/><pause dur="0.5"/> in terms of how far through the transition to market economy they were <pause dur="0.6"/> it was clear that Czech Republic Hungary and Poland were in the first tier of markets which were <pause dur="0.4"/> transforming <pause dur="0.6"/> that they were privatizing that their <pause dur="0.2"/> inflation rates were coming down and so on <pause dur="1.3"/> that the further east you went <pause dur="0.3"/> if you then went into Ukraine <pause dur="0.3"/> it was a stage further behind <pause dur="0.3"/> and if you then went into Russia <pause dur="0.4"/> it was a stage further behind again not just in terms of the

transformation process <pause dur="0.4"/> but in terms of how much risk there was that that process would ever take place <pause dur="1.0"/> the other side of the coin <pause dur="0.4"/> if you said that <pause dur="0.5"/> it got more uncertain as you went further east <pause dur="0.4"/><vocal desc="clears throat" iterated="n"/> i think i've got a map here to show you <pause dur="3.8"/> show you what the <kinesic desc="changes transparency" iterated="y" dur="6"/> market looked like <pause dur="6.6"/> so if you're going to look at a map of Eastern Europe they started off by saying <pause dur="0.9"/> Czech Republic Poland and Hungary <pause dur="1.1"/> on <kinesic desc="indicates point on transparency" iterated="n"/> this side here were the <pause dur="0.5"/> the the first markets that they may wish to get into <pause dur="1.5"/> because they were in a sense nearer <pause dur="0.2"/> geographically <pause dur="0.6"/> because <pause dur="0.3"/> they were further through the transformation process to market economy <pause dur="0.5"/> the further east you got <pause dur="0.4"/> through Ukraine Belarus <pause dur="0.8"/> and into <pause dur="0.6"/> we we've got it split here into European Russia and Asian Russia <pause dur="0.2"/> because <pause dur="0.4"/> there's some parts of Russia that actually fall in Europe there are some parts like Kazakhstan Azerbaijan which formally form into Asia <pause dur="0.5"/> it's another complication <pause dur="0.8"/>

it was getting <pause dur="0.4"/> less certain <pause dur="0.7"/> but what's the other obvious thing you could say about those countries <pause dur="1.5"/> just looking at that map <pause dur="0.4"/> in terms of the <trunc>opportuni</trunc> opportunity for a consumer firm like a tobacco firm <pause dur="2.2"/> so the risks go up as you get further east <pause dur="1.3"/> what about the size of the markets <pause dur="6.3"/> getting smaller getting bigger </u><pause dur="0.3"/> <u who="sm1209" trans="pause"> bigger </u><pause dur="0.3"/> <u who="nf1208" trans="pause"> bigger <pause dur="0.3"/> a lot bigger <pause dur="0.3"/> massively much bigger <pause dur="0.7"/> so when you start off saying that <pause dur="0.4"/> as a gateway <pause dur="0.2"/> if you're trying to get experience into Eastern Europe <pause dur="2.1"/> you'd start off looking at Hungary <pause dur="0.6"/> and Czechoslovakia which were at the time the most advanced <pause dur="0.4"/> they've got a <pause dur="1.3"/> a population of something like ten-million each <pause dur="0.5"/> Poland with a population of i think thirty-three-million <pause dur="0.6"/> was <pause dur="0.5"/> getting more interesting <pause dur="0.2"/> for the consumer goods firms and for the tobacco firms because we're talking about how many people out of each of those markets <pause dur="0.3"/> would be able to afford their brands anyhow so we're only talking about a proportion of the market <pause dur="0.8"/> Ukraine <pause dur="0.7"/> i think fifty-six

fifty-seven-million <pause dur="0.2"/> if i if i remember rightly <pause dur="0.4"/> Russia <pause dur="0.8"/> three-billion-plus <pause dur="0.9"/> so a lot more <pause dur="0.5"/> so for all the consumer good firms <pause dur="0.5"/> it was Russia that was the eventual target that's where they wanted to be <pause dur="1.0"/> but the level of uncertainty <pause dur="0.3"/> was higher <pause dur="0.6"/> so what they wanted to do was to gain some experience in the markets that <pause dur="0.9"/> were nearer at hand which were further through the process <pause dur="0.3"/> and use that to get into <pause dur="1.0"/> the Ukrainian market and then into the Russian market later <pause dur="2.8"/> under this <pause dur="2.8"/><kinesic desc="changes transparency" iterated="y" dur="4"/> zero-sum <pause dur="0.2"/> view of the world <pause dur="2.8"/> assessing the attractiveness of those markets was going to be about looking at <pause dur="0.3"/> what was happening politically <pause dur="0.6"/> so we've said that the pest analysis they'd be saying <pause dur="0.5"/> # <pause dur="0.9"/> in those cases very high political risk so <pause dur="0.6"/> is this <pause dur="0.7"/> transformation to market economy going to continue or not <pause dur="0.6"/> i mean it looked very likely at various stages that the the the communists might get back into <pause dur="0.5"/>

Russia and still <pause dur="0.2"/> looks possible that that they may do so <pause dur="0.6"/> at one point <pause dur="1.4"/> i'm trying to remember the sequence of years now <pause dur="0.4"/> there was a leftist government voted back into Poland so whilst Poland had been going through the the process very well <pause dur="0.6"/> they actually voted in a government who looked like they were going back more towards communism <pause dur="0.9"/> so there were some question mark against <pause dur="0.5"/> how far through the process Poland were going <pause dur="1.1"/> in <trunc>d</trunc> under physical you'd be looking at things like we've said there <pause dur="0.4"/> the geography of it <pause dur="0.3"/> # <pause dur="0.2"/> where are the main centres of population if you were a consumer goods firm <pause dur="1.4"/> are you going to be <sic corr="aiming">aining</sic> only for the cities or are you going to <trunc>en</trunc> aim for one region of somewhere like Russia i mean trying to get distribution of all of Russia at once is going to be a major task <pause dur="0.3"/> probably you need to start off with some of the main centres of population <pause dur="0.7"/> unless you can get things listed under the state distribution system where <pause dur="0.5"/>

they will then take control of getting it all out to the market because if you're trying to do it physically <pause dur="0.5"/> that's a major thing <pause dur="0.4"/> economic <pause dur="1.8"/> risks threats that we've we've mentioned are for example the inflation rates hyperinflation <pause dur="0.4"/> Ukraine <pause dur="0.4"/> in nineteen-ninety-three to nineteen-ninety-four <pause dur="0.4"/> had an inflation rate of seven-thousand-eight-hundred per cent per annum <pause dur="1.9"/> which meant if you were dealing in a local economy <pause dur="0.3"/> you had to change the prices of your products from one day to the next <pause dur="0.4"/> which also meant <pause dur="0.3"/> that the value of of wages for people in that market were going down in terms of what it actually meant in real terms <pause dur="0.3"/> to the point where <pause dur="0.3"/> a week's wages wouldn't buy you a loaf of bread it certainly wouldn't buy you sort of Western coffee brands <pause dur="0.5"/> or or packets of Western cigarettes <pause dur="1.2"/> legally <pause dur="1.5"/> the laws were changing so rapidly <pause dur="0.2"/> so frequently <pause dur="0.4"/> that they didn't <pause dur="0.8"/> actually formally put out notices <trunc>o</trunc> <pause dur="0.2"/> to businesses any more they just published the new <pause dur="0.4"/> decreases they called them in in the

<trunc>n</trunc> the newspapers <pause dur="1.0"/> and you just had to monitor what was happening in the press oh the law on VAT has changed again today the law on on repatriating profits has changed again today <pause dur="0.4"/> we're no longer allowed to export agricultural produce <pause dur="0.5"/> one of the earliest entrants into Ukraine <pause dur="0.3"/> was I-C-I <pause dur="1.2"/> because of its interest in agrochemicals <pause dur="0.5"/> and it had been very <pause dur="0.3"/> proactive in setting up a joint venture with local <trunc>pe</trunc> Ukraine is very strong on agriculture <pause dur="0.3"/> it was the <pause dur="0.4"/> centre of agricultural production for most of the Soviet Union because it's very fertile <pause dur="0.6"/> # <pause dur="1.0"/> firms like I-C-I had been in fast thinking well agrochemicals and and and Ukraine have got to go together <pause dur="0.4"/> and then the law changed to prevent them from exporting any of the produce out of <pause dur="0.3"/> Ukraine <pause dur="0.5"/> which really reduced the attractiveness of the market but they'd already invested <pause dur="0.8"/> technologically <pause dur="0.4"/> we've talked about that <trunc>v</trunc> very <pause dur="0.4"/> poor <pause dur="0.6"/> development or or expenditure in infrastructure over a period of time meant <pause dur="0.4"/> significant lags <pause dur="0.3"/> but

those are being caught up very fast <pause dur="0.3"/> because the knowledge is there it was just the capital that wasn't <pause dur="0.5"/> socioculturally <pause dur="1.0"/> very ethnically split <pause dur="0.4"/> in a lot of those markets <pause dur="0.4"/> hence some of the problems we've seen with ethnic conflicts <pause dur="1.4"/> once the process of of <pause dur="0.6"/> taking away totalitarian control and breaking up to smaller units has <pause dur="0.2"/> has started <pause dur="1.3"/> it's sort of <pause dur="0.2"/> tempting for each subgroup <trunc>w</trunc> and each religious group to say <pause dur="0.5"/> well actually we don't feel that we're even and this is what happened to Czechoslovakia <pause dur="0.3"/> we don't even feel that we're necessarily one country maybe we feel that we're a Czech republic and a Slovakian republic separately <pause dur="0.5"/> now in that case it was done <pause dur="0.6"/> without <pause dur="0.5"/> any major conflicts but in other markets you say well <pause dur="0.2"/> if you're assessing opportunities and threats <pause dur="1.2"/> has it all finished are we at the end point or are we still somewhere in the process look at what's happening now with <pause dur="0.6"/> with the Kosovan rebels and and so on and Kosovo saying it's separate to Serbia <pause dur="1.2"/>

and you've got to say that <pause dur="0.7"/> if you're looking at opportunities and threats socioculturally there are still quite a lot of <pause dur="0.2"/> issues unresolved in that region <pause dur="1.6"/> so the classic view would say <pause dur="0.3"/> that's a stakeholder analysis and you split it down into opportunities and threats and say <pause dur="0.4"/> do we or don't we go into that market <pause dur="2.7"/> do we want to be in there before our competitors are we prepared to wait and see what they do <pause dur="0.6"/> incidentally <pause dur="0.6"/> when we said <pause dur="0.8"/> reacting to your competitors going into a market <pause dur="0.3"/> and taking into account <pause dur="0.7"/> the fact that they've got into the market and it's obviously viewed as attractive could be part of your market research <pause dur="0.3"/> and it also has a name in economic theory so for anybody who <pause dur="0.4"/> wants to trace this back <pause dur="0.4"/> that's a classic case of oligopolistic reaction theory <pause dur="0.8"/> i know it sounds good <pause dur="0.5"/> you know monopoly is is when you have <pause dur="0.3"/> # it's a game yes <pause dur="0.3"/><vocal desc="laughter" iterated="y" n="ss" dur="1"/> but it's also when you have one firm who dominates a market <pause dur="0.5"/> well oligopoly is when there's <pause dur="0.6"/> a few strong firms who <trunc>dopera</trunc> <pause dur="0.4"/>

dominate a market <pause dur="0.4"/> so in the food industry for example you've got Unilever <pause dur="0.2"/> Procter and Gamble Nestlé <pause dur="0.6"/> in # computing you would have <pause dur="0.7"/> i don't know <pause dur="1.5"/> </u><u who="sm1210" trans="overlap"><gap reason="inaudible" extent="1 sec"/></u><u who="nf1208" trans="overlap"> certainly in the <trunc>ninete</trunc> late nineteen-eighties they've had I-C-I I-C-L Digital <pause dur="0.2"/> <trunc>wor</trunc> so you'd have a few strong players <pause dur="0.4"/> in virtually all of the mature markets that you want to think about <pause dur="0.3"/> there are some dominant players <pause dur="1.1"/> and all of those firms in addition to looking at the <pause dur="0.7"/> opportunities and and threats in the market <pause dur="0.3"/> are also looking at each other <pause dur="0.8"/> and so when we say that they're they're likely to react you know one firm has gone into a market that makes it attractive <pause dur="0.3"/> but it'll also be saying <pause dur="0.4"/> what happens if we don't <pause dur="0.7"/> that's back to one of the questions we posed last week <pause dur="0.5"/> what happens <pause dur="1.0"/> with the then big six accounting firms now big four <pause dur="0.5"/> if <pause dur="0.6"/> you don't enter the market when everybody else does <pause dur="0.8"/> or is it the big four big five <pause dur="2.3"/> 'cause Price Waterhouse Coopers have become one

now <pause dur="2.6"/> that <pause dur="0.7"/> maybe your customers in that market will start trading with somebody else <pause dur="0.4"/> maybe if your brand's not in the market <pause dur="0.3"/> you won't build up share in that <pause dur="0.2"/> in that country <pause dur="1.6"/> an oligopolistic reaction theory says once the market leader <pause dur="0.2"/> once the first firm in any given industry sector <pause dur="0.3"/> with a few strong players in has gone in into the market <pause dur="0.7"/> most of the others are likely to follow in very quickly <pause dur="0.4"/> so there's likely to be one <pause dur="0.5"/> person one firm who enter fast <pause dur="0.6"/> and then the rest come in not long afterwards <pause dur="0.6"/> so there is definitely a clustering effect that's happening in all of the markets <pause dur="4.2"/> the different view <pause dur="0.4"/> of all of this <pause dur="0.4"/> the win-win view <pause dur="0.4"/> says <pause dur="1.5"/> maybe it's not just about reacting to or monitoring what's happening in that outer environment <pause dur="0.3"/> maybe firms can actually strike up relationships <pause dur="0.5"/> relationships <pause dur="0.8"/> with their channels with their competitors with their publics their stakeholders <pause dur="0.5"/> political relationships legal relationships <pause dur="0.4"/> so they can have relationships all around <pause dur="0.4"/>

that diagram <pause dur="0.2"/> that's why there's an arrow <pause dur="0.2"/> drawn on it because i've i've <pause dur="1.6"/> demonstrated this before with the same slide <pause dur="0.5"/> that you could for example <pause dur="1.0"/> and this is based on <pause dur="0.8"/> sociological roots not economic roots <pause dur="0.4"/> say that <pause dur="0.6"/> it's not as hard and fast as that <pause dur="1.0"/> according to this diagram <pause dur="0.4"/><kinesic desc="indicates point on transparency" iterated="n"/> there's a very firm border <pause dur="0.3"/> a solid border round the firm <pause dur="1.3"/> but <trunc>accord</trunc> according to some sociological theories <pause dur="0.4"/> the border round the firm <pause dur="0.5"/> isn't <pause dur="1.0"/><kinesic desc="writes on transparency" iterated="y" dur="3"/> a very definite thing <pause dur="1.0"/> it's a fuzzy thing <pause dur="0.3"/> there's a soft boundary between the firm <pause dur="0.9"/> so that people within the firm the firm's made up with lots of different people <pause dur="0.2"/> who might have lots of different views or lots of different interests <pause dur="1.1"/> that they <pause dur="0.4"/> will strike up different relationships so for example <pause dur="0.6"/> you've got somebody in your warehouse you've got somebody in your marketing department you've got somebody in your production facility <pause dur="0.3"/> who may have <pause dur="0.5"/> very frequent contact <pause dur="0.2"/> with their

opposite numbers and one of your customers or one of your channel intermediaries <pause dur="0.5"/> they <trunc>f</trunc> <pause dur="0.4"/> then formed relationships which exist <kinesic desc="writes on transparency" iterated="y" dur="8"/> across the boundary of the firm <pause dur="0.7"/> it might not just be one relationship it could be a whole lot of relationships which exist there <pause dur="3.0"/> and at that point it becomes <pause dur="0.4"/> very difficult to say where the actual <pause dur="0.4"/> boundary the <trunc>ou</trunc> <pause dur="0.2"/> the outer rim of the firm is what is it that you therefore control <pause dur="0.6"/> according to this diagram you only control the firm <pause dur="0.3"/> so what is it you actually control <pause dur="0.4"/> and what is <pause dur="0.4"/> outside <pause dur="0.2"/> external to the firm <pause dur="1.4"/> what we're saying is <pause dur="0.8"/> or what the normal view is that you only control <pause dur="0.5"/> the <trunc>ac</trunc> the extent of your resources <pause dur="0.9"/> Pfeffer and Salancik nineteen-seventy-eight <pause dur="0.3"/> if you want to go back to it <pause dur="0.4"/> that you have <pause dur="0.4"/> control <pause dur="0.5"/> over the resources of the firm but <pause dur="0.3"/> very little control outside of that <pause dur="0.6"/> but you may have relationships outside of that not control but relationships <pause dur="0.3"/> relationships

with your channel <pause dur="1.0"/> i've just been talking today to to the market analysis groups about <pause dur="0.3"/> having cooperative relationships with your channels <pause dur="0.6"/> cooperation in relationships is one of the key themes <pause dur="0.5"/> of industrial marketing <pause dur="0.6"/> it's one of the key themes of services marketing <pause dur="0.5"/> it's one of the key themes of <pause dur="1.2"/> various parts of strategy literature <pause dur="0.3"/> so when we talked about win-win there <pause dur="0.4"/> win-win has become the major <pause dur="4.3"/><kinesic desc="writes on board" iterated="y" dur="3"/> become the major focus for certain areas of marketing in recent years <pause dur="1.5"/> relationship marketing industrial marketing services marketing <pause dur="1.0"/> and <pause dur="0.5"/> all of the <pause dur="0.4"/> joint ventures strategic alliances literature <pause dur="0.4"/> say that <pause dur="0.4"/> it's not necessarily zero-sum you don't necessarily have to gain something at somebody's expense <pause dur="0.7"/> you may both be able to cooperate together <pause dur="0.3"/> some some people call it collaborate <pause dur="0.4"/> to actually gain access to things that the other player doesn't have <pause dur="0.5"/> so for example <pause dur="0.4"/> the growth of strategic alliances we

pointed to at the end of last week <pause dur="0.4"/> in international markets <pause dur="0.6"/> largely seems to be about the fact that when firms go into these uncertain <pause dur="0.3"/> mega markets <pause dur="0.7"/> that they <pause dur="0.3"/> need to get access to all of that local <pause dur="0.3"/> knowledge <pause dur="0.6"/> people who speak the language people who know how it works people who can help them to understand the market <pause dur="0.7"/> and that is a scarce resource <pause dur="1.2"/> so if you look at it from the side of the <pause dur="0.8"/> partners <pause dur="0.2"/> in that kind of relationship <pause dur="1.1"/> you're finding that <pause dur="1.1"/> the local firm in the market <pause dur="0.4"/> is getting <pause dur="0.5"/> well what are they getting <pause dur="0.3"/> if you've got a Western investing firm who is coming into the market <pause dur="0.8"/> what is the local partner likely to gain from them <pause dur="0.6"/> assuming they're not operating that internationally themselves </u><pause dur="5.1"/> <u who="sm1211" trans="pause"> the knowledge and experience </u><pause dur="0.3"/> <u who="nf1208" trans="pause"> yeah <pause dur="0.7"/> they're going to gain <pause dur="1.3"/> the knowledge of the partner of how to operate

internationally which will benefit them long term if that's their ambition <pause dur="1.1"/> what about resources </u><pause dur="0.3"/> <u who="sf1212" trans="pause"> <gap reason="inaudible" extent="1 sec"/> get # <pause dur="0.2"/> technology is that <gap reason="inaudible" extent="1 sec"/> </u><u who="nf1208" trans="overlap"> yes <pause dur="0.8"/> yes so so they may have <pause dur="1.3"/> i don't know superior production or superior technologies in some way <pause dur="0.2"/> superior <pause dur="0.6"/> research and development capability <pause dur="0.7"/> anything else </u><pause dur="3.4"/> <u who="sm1213" trans="pause"> financing </u> <pause dur="0.2"/> <u who="nf1208" trans="pause"> yeah <pause dur="0.9"/> that's going to be one of the major ones because <pause dur="0.7"/> quite often <pause dur="0.2"/> the ability to expand internationally is constrained by not having <pause dur="0.2"/> the money upfront to be able to do it so if you've got a partner who comes in who's got money <pause dur="1.0"/> then that's opens up your opportunities <pause dur="1.1"/> anything else </u><pause dur="2.0"/> <u who="sm1214" trans="pause"> reputation </u><pause dur="0.8"/> <u who="nf1208" trans="pause"> yes so you can you could gain strong brands <pause dur="1.6"/> which may help you in the market <pause dur="3.7"/> what about the side of the investing firm <pause dur="0.7"/> the firm who's going into the market <pause dur="0.6"/> we've mentioned <pause dur="0.4"/> language

cultural things what else might they gain by linking up with a local partner </u><pause dur="1.2"/> <u who="sf1215" trans="pause"> distribution abroad </u><pause dur="0.4"/> <u who="nf1208" trans="pause"> yes <pause dur="0.3"/> so <pause dur="0.5"/> we we said that the the main problem may be distribution <pause dur="0.6"/> but if the local partner already knows that or already has that established <pause dur="0.8"/> certainly going to cut down the the time that it takes you get into <pause dur="0.2"/> get into the market may improve your effectiveness <pause dur="0.5"/> anything else <pause dur="6.6"/> things like workforce <pause dur="0.3"/> so they may have a set of production facilities already <pause dur="1.0"/> and people who work there <pause dur="0.4"/> and an understanding of what the H-R policies are in the market <pause dur="1.4"/> and whether or not those are and we we talked about technology and brand reputation in there <pause dur="0.3"/> maybe you may need to change some of those things a bit <pause dur="0.3"/> to make sure that you're working to the level that you want to to <pause dur="0.5"/> protect your brand reputation <pause dur="0.3"/> maybe not maybe it's ahead of <pause dur="0.4"/> of where you are <pause dur="0.8"/> # <pause dur="1.3"/> but already <pause dur="0.2"/> those

facilities exist and that's likely to cut down the time of getting into the market <pause dur="1.3"/> so we've sort of got our head around <pause dur="0.2"/> interorganizational relationships as we call them cooperation between <pause dur="0.4"/> two firms who maybe otherwise would be competing <pause dur="0.4"/> but who have complementary capabilities <pause dur="0.4"/> and therefore can work together <pause dur="0.9"/> as i say there's a lot of joint ventures alliances literature around that area <pause dur="0.4"/> and one of the best articles if you want something to to read in that area <pause dur="0.4"/> is <pause dur="0.3"/> Gary Hamel <pause dur="0.4"/> # <pause dur="1.7"/> Hamel Prahalad and Doz nineteen-eighty-nine it's in Harvard Business Review <pause dur="0.2"/> i think it's on your reading list and it's called Collaborate with Your Competitors and Win <pause dur="0.6"/> and it's all about <pause dur="0.6"/> in circumstances where two firms have complementary capabilities <pause dur="0.7"/> then they could work together <pause dur="0.4"/> fairly productively and you can think of all kinds of examples where that might happen <pause dur="0.3"/> you've got a small firm with technological ideas <pause dur="0.2"/> but no money <pause dur="0.7"/> and a larger investing firm may link up with them to get <pause dur="0.3"/> the

ideas <pause dur="0.4"/> # <pause dur="0.3"/> and put money in in return <pause dur="1.0"/> obviously all kinds of issues but there are complementary capabilities <pause dur="2.0"/> we've talked <pause dur="0.7"/> about channel intermediaries and we've talked about <pause dur="1.0"/> being cooperative with your <pause dur="0.9"/> intermediaries it's in both your best interests to get things effectively to the market to sell them effectively to <pause dur="0.4"/> # understand each other's products and to work together well <pause dur="1.0"/> industrial marketing <pause dur="0.6"/> works along similar lines by saying <pause dur="1.3"/> well let well let's go back those of you who've done market analysis what are the characteristics of industrial buyers <pause dur="1.6"/> compared to consumer ones </u><pause dur="2.4"/> <u who="sm1216" trans="pause"> <gap reason="inaudible" extent="1 sec"/> </u><u who="sf1217" trans="overlap"> <gap reason="inaudible" extent="1 sec"/></u><pause dur="0.9"/> <u who="nf1208" trans="pause"> bigger sorry <kinesic desc="indicates member of audience" iterated="n"/> </u><pause dur="0.4"/> <u who="sf1217" trans="pause"> more than one decision maker </u><u who="nf1208" trans="latching"> yeah more than one decision maker larger <pause dur="3.0"/> how many of them </u><pause dur="1.1"/> <u who="sm1218" trans="pause"> fewer </u><pause dur="0.4"/> <u who="nf1208" trans="pause"> so fewer <pause dur="0.7"/> customers likely if you're talking about <pause dur="0.5"/> final consumers you're talking

about a very large number of customers <pause dur="0.3"/> industrial you tend to be talking about <pause dur="0.6"/> fewer <pause dur="0.6"/> you tend to be talking about <pause dur="0.7"/> more professional <pause dur="0.2"/> in that they might often go through a a formal process of <pause dur="0.2"/> specifications and so on <pause dur="0.4"/> as you say more people involved in the decision making unit <pause dur="0.5"/> # <pause dur="0.6"/> quite often more stages <pause dur="0.2"/> involved in the process <pause dur="2.3"/> therefore it's another one of the markets where we actually stress the benefits of long term relationships <pause dur="0.4"/> and we've long said that you could work together quite closely with your industrial customers and develop cooperative relationships <pause dur="1.5"/> i also mentioned relationship marketing <pause dur="1.5"/> how many people have come across relationship marketing <pause dur="2.0"/> no <pause dur="0.5"/> it's one of the <pause dur="0.8"/> latest sort of <pause dur="0.6"/> themes and and and <pause dur="0.9"/> topics that's coming out of the the marketing research <pause dur="0.4"/> and also very much # in interest of of firms <pause dur="0.4"/> because until recently <pause dur="0.4"/> the only way in which you could have relationships that were that close <pause dur="0.2"/> were with for example channels or with

industrial customers <pause dur="0.4"/> where there weren't many of them <pause dur="0.4"/> because the amount of time and the amount of contact it took <pause dur="0.3"/> meant that it wasn't possible to do that <pause dur="0.2"/> for example with the consumer market because there were just too many customers <pause dur="0.5"/> but advances in technology <pause dur="0.6"/> database marketing for example knowing more about your customers through loyalty schemes <pause dur="0.3"/> knowing who they are where they are what their interests are <pause dur="0.5"/> has opened up <pause dur="0.6"/> a whole set of <pause dur="0.6"/> possibilities in terms of relationships which didn't previously exist so relationship marketing <pause dur="0.8"/> means that <pause dur="0.9"/> those benefits of cooperation <pause dur="0.5"/> and building up long term loyalty <pause dur="0.3"/> have actually transferred across from industrial markets and channels <pause dur="0.4"/> to <pause dur="0.3"/> consumer markets via technology <pause dur="1.3"/> and the roots of relationship marketing are also in services marketing <pause dur="0.2"/> which i mentioned <pause dur="0.3"/> because services marketing if you remember the fact that <pause dur="0.4"/> services tend to be <pause dur="0.7"/> well okay that's # that's another blast from the past <pause dur="0.6"/> characteristics of services

marketing compared to products <pause dur="0.5"/> services are </u><pause dur="1.6"/> <u who="sm1219" trans="pause"> you can't store them </u><pause dur="0.2"/> <u who="nf1208" trans="pause"> you can't store them </u><pause dur="1.0"/> <u who="sm1219" trans="pause"> intangible </u><u who="nf1208" trans="latching"> intangible yeah <pause dur="2.3"/> what were the other two <pause dur="0.6"/> <vocal desc="laugh" iterated="n"/></u><u who="sm1219" trans="latching"> <gap reason="inaudible" extent="1 sec"/> <pause dur="0.7"/> # # </u><u who="nf1208" trans="overlap"> heterogeneous yeah </u><u who="sm1219" trans="latching"> <gap reason="inaudible" extent="1 sec"/> </u><u who="nf1208" trans="overlap"> <trunc>var</trunc> variable </u><u who="sm1219" trans="overlap"> <gap reason="inaudible" extent="2 secs"/> </u><pause dur="0.4"/> <u who="nf1208" trans="pause"> that's right that's that's that's the key one really so the <pause dur="0.3"/><vocal desc="sniff" iterated="n"/><pause dur="0.8"/> we've got the fact that they're <pause dur="0.8"/> variable <pause dur="0.5"/> so depending on whether the waiter in your restaurant has had a bad day or not <pause dur="0.4"/> <trunc>m</trunc> the service may be different <pause dur="0.7"/> we've got # <pause dur="4.2"/> perishable <pause dur="0.6"/> if you don't use your service <pause dur="0.2"/> now if you don't sell a seat on your airline <pause dur="0.3"/> today <pause dur="0.3"/> you can't keep it in your warehouse and sell it next week it's a one-off opportunity and it may be gone that's why you get variable pricing of services <pause dur="1.1"/>

we've got <pause dur="0.5"/> # <pause dur="3.0"/> inseparable <pause dur="0.7"/> and inseparable is the one that we're actually trying to get to here inseparable <pause dur="0.9"/> is the fact that the service deliverer <pause dur="1.2"/> is <pause dur="2.0"/> the person who you're going to come into contact with quite often <pause dur="0.4"/> so you can't sort of separate out the good <pause dur="0.6"/> and sell it down through a channel <pause dur="0.8"/> the service is delivered face to face quite often <pause dur="0.7"/> so <pause dur="0.5"/> what your perception of the service is in a restaurant is going to be very much down to # the quality of the waiters <pause dur="0.3"/> waiter or waitresses in that restaurant <pause dur="2.3"/> that becomes relevant <pause dur="0.4"/> when you talk about relationship marketing <pause dur="0.5"/> because <pause dur="2.5"/> a lot of this relationship quality <pause dur="0.3"/> is about <pause dur="0.8"/> delivering value <pause dur="0.7"/> delivering value in services is going to be sort of quite challenging because it is so variable because it is face to face <pause dur="0.4"/> and you've got to come up with ways of delivering <pause dur="0.4"/> the best quality <pause dur="0.4"/> in that relationship in order to develop it long term <pause dur="0.5"/> so the sorts of issues that come out there are <pause dur="0.5"/> well okay <pause dur="0.4"/> # <pause dur="0.7"/> how do you build up long-standing

relationships do you have to prioritize some parts of the service offer if you can't do everything well <pause dur="0.6"/> do firms necessarily want all of the services or do they want to opt into some things or others or do they want to pay for the whole lot <pause dur="0.3"/> so you get into <pause dur="0.4"/> variable service offers <trunc>a</trunc> and all kinds of issues around that </u><gap reason="break in recording" extent="uncertain"/> <u who="nf1208" trans="pause"> the final demonstration of win-win or another demonstration of win-win that we're talking about today is international marketing <pause dur="0.5"/> so we've had international marketing <pause dur="0.9"/> having <pause dur="8.6"/><kinesic desc="changes transparency" iterated="y" dur="5"/> i'll come back to explain some of the issues in here in a moment but let's just <pause dur="0.4"/> go through the slide <pause dur="5.9"/><event desc="covers part of transparency" iterated="n"/> we've had the interorganizational network <pause dur="0.5"/> we've had <pause dur="0.4"/> relationships with <pause dur="1.5"/> other organizations so joint ventures and strategic alliances getting into markets <pause dur="0.3"/> links with other businesses <pause dur="0.6"/> and so for example <pause dur="1.1"/> we've talked about <pause dur="0.5"/> business to

business services so the accounting firms and we've talked about firms going into Eastern Europe <pause dur="0.3"/> and saying that <pause dur="0.4"/> some of the multinational organizations who went in had very strong links to their <pause dur="0.3"/> accounting firms their business suppliers <pause dur="0.7"/> largely because they were so uncertain about what was happening legally and what else was happening in the market <pause dur="1.4"/> interorganizational network could be other international firms therefore <pause dur="0.3"/> it could be <pause dur="0.4"/> firms in the local market <pause dur="0.5"/> so local partners <pause dur="0.4"/> and also <pause dur="0.5"/> from that <pause dur="0.3"/> Porter Kotler diagram we just saw it could be with other stakeholders it doesn't need to be with your competitors <pause dur="0.4"/> it could be with your suppliers <pause dur="0.4"/> or it could be with your channel intermediaries it could be with <pause dur="0.3"/> upstream or downstream firms <pause dur="0.5"/> but relationships between organizations <pause dur="1.6"/> from the sociology <pause dur="0.4"/> literature we've just talked about there <pause dur="2.5"/><kinesic desc="reveals covered part of transparency" iterated="n"/> we have what you call the intra<pause dur="0.3"/>organizational

network <pause dur="0.3"/> so within the organization <pause dur="1.1"/> the last one was between organizations this is within <pause dur="0.9"/> and if we've said that the organization is is comprised of a lot of people who may have relationships across the borders of it <pause dur="0.3"/> may have relationships within the boundaries of the firm <pause dur="0.6"/> you're saying that <pause dur="0.8"/> the firm's not just a black box with a firm boundary the firm is made up of lots of people with lots of different interests <pause dur="0.7"/> some with ability to <pause dur="0.3"/> communicate well with your <pause dur="0.3"/> their counterparts in other organizations some who for whatever reason <pause dur="0.4"/> may not match back to industrial marketing again <pause dur="0.3"/> in terms of their personality their background their characteristics their experience and so on <pause dur="1.8"/> again applying the intraorganizational relationship aspect to it to the <pause dur="0.3"/> Eastern European example we had there <pause dur="2.4"/> intraorganizationally within the organization the type of relationships that have become important or the type of people who have become important <pause dur="0.5"/> are for

example the diaspora <pause dur="0.4"/> diaspora for for those who haven't come across the word <pause dur="0.4"/> are the displaced people <pause dur="0.6"/> so those people who had actually moved out of the Eastern European region <pause dur="1.4"/> over the <pause dur="0.2"/> past however many years of its history where it <pause dur="0.3"/> that they felt that it's not a a a good place to be <pause dur="1.6"/> are now getting opportunities to return there <pause dur="0.2"/> because there's demand of course for people who speak <pause dur="0.3"/> various Eastern European languages <pause dur="0.3"/> various Eastern European languages which <pause dur="0.2"/> had been in the minority <pause dur="0.4"/> so if the Soviet Union said everybody should speak Russian <pause dur="0.6"/> therefore there wasn't a great deal of of demand for example for Ukrainian <pause dur="0.3"/> or Polish or whatever <pause dur="0.3"/> but there is now that they're separate markets because part of the sociocultural opportunity <pause dur="0.4"/> part of the sociocultural <pause dur="0.7"/> difficulty if you like for firms is that those markets are saying <pause dur="0.4"/> you want to do business with us speak to us in our language we don't want you to speak Russian <pause dur="0.5"/> we want you to speak <pause dur="0.6"/> Polish <pause dur="0.2"/> Serbo-Croat Ukrainian <pause dur="0.3"/> and

however many other different variants of languages there are within the region which are a lot <pause dur="1.1"/> so the diaspora <pause dur="0.8"/> are fulfilling quite an important role <pause dur="0.4"/> intraorganizationally <pause dur="0.7"/> and they are forming relationships across the soft boundaries of the firms <pause dur="0.4"/> into the networks in those markets <pause dur="0.3"/> because they speak the right languages <pause dur="1.8"/> there's other Eastern and central European subsidiaries of the firms <pause dur="0.5"/> for example <pause dur="0.5"/> so when we spoke last week of <pause dur="0.7"/> firms looking at <pause dur="0.7"/> east and central Europe and saying <pause dur="0.9"/> which of those markets are the most attractive how do we go in do we enter lots of the countries rapidly <pause dur="0.5"/> or do we gradually build up our expertise in the region <pause dur="0.7"/> you're finding for example that <pause dur="2.4"/> i'll come back to this slide in a moment <pause dur="3.3"/><kinesic desc="changes transparency" iterated="y" dur="4"/> you're finding for example that firms <pause dur="1.4"/> typically <pause dur="1.1"/> this is <pause dur="0.5"/> one of the the big six accounting firms in fact it's Arthur Andersen <pause dur="0.4"/> and Arthur Andersen were <pause dur="1.8"/> sorry it's not Arthur Andersen it's Ernst and Young <pause dur="0.3"/>

Ernst and Young were looking at the Eastern European region <pause dur="0.5"/> and in nineteen-eighty-nine had entered Hungary <pause dur="0.4"/> by nineteen-ninety they'd entered <kinesic desc="indicates point on transparency" iterated="n"/> these <trunc>grees</trunc> <trunc>c</trunc> green regions so Czech and Slovak Republic Poland <pause dur="0.3"/> and European Russia <pause dur="0.6"/> by nineteen-ninety-one they were in virtually all of the rest <pause dur="0.2"/> of the region <pause dur="0.5"/> so actually their their process of entry into the region was very fast <pause dur="1.7"/> what that means is that if you're trying to gain knowledge or understanding of the region <pause dur="0.5"/> you've got some subsidiaries in some countries who are gaining the knowledge on a day to day basis <pause dur="0.4"/> when you come to make a decision about when you invest <pause dur="0.4"/> or whether to invest in the next countries in line <pause dur="0.6"/> you can use the information that you're gathering out of your own other subsidiaries <pause dur="0.3"/> within the region <pause dur="0.7"/> because basically <pause dur="1.1"/> virtually no firms had relevant up to date marketing information <pause dur="0.4"/> about east and central Europe <pause dur="0.8"/> because anybody who did had it under the Soviet Union and is as <pause dur="0.2"/> as that system

broke down <pause dur="0.5"/> the languages may not apply the state distribution didn't apply <pause dur="0.7"/> as one of the firms said to me <pause dur="0.6"/> think it was I-C-L said <pause dur="0.9"/> it was difficult to understand the rules of the former Soviet Union <pause dur="0.3"/> but once you understood them and you knew who to deal with and you knew <pause dur="0.3"/> that you went via Moscow centrally and and they took it from there <pause dur="0.5"/> then it was understandable <pause dur="0.2"/> but once that broke down <pause dur="0.3"/> it was very difficult to know where to go next <pause dur="0.4"/> and all of the firms were suffering from similar problems <pause dur="0.4"/> none of them had <pause dur="0.3"/> much relevant information prior to nineteen-eighty-nine <pause dur="0.2"/> and Soviet Union <pause dur="0.2"/> prior to nineteen-ninety-one <pause dur="0.7"/> and so all of them at this point were were <pause dur="1.4"/> confronting the same sets of issues <pause dur="1.5"/><kinesic desc="changes transparency" iterated="y" dur="8"/> so if you go back to our slide again <pause dur="6.3"/> so that intraorganizationally <pause dur="0.2"/> diaspora are important <pause dur="0.3"/> other east and central European subsidiaries may be important <pause dur="0.8"/> the other thing that may be important is the role and

distance of headquarters <pause dur="0.3"/> so one of the other types of relationships that's significant <pause dur="0.5"/> is <pause dur="1.3"/> how much power exists within those subsidiaries <pause dur="0.2"/> how much control they can make <pause dur="0.4"/> over the decisions <pause dur="0.5"/> so can they decide <pause dur="0.6"/> there is business potential here we want to invest in the market <pause dur="0.5"/> or do they have to go back to headquarters <pause dur="0.2"/> to get that decision signed off <pause dur="0.4"/> and at what point do they have to do so do they have a certain amount of money they can spend <pause dur="0.3"/> and then have to go back <pause dur="0.3"/> or do they have to check everything <pause dur="0.6"/> do they have to <pause dur="1.2"/> promote and and concentrate on a a set of <trunc>blan</trunc> brands globally <pause dur="0.6"/> or do they have reasonable local autonomy to do <pause dur="0.3"/> what's appropriate for the market <pause dur="0.3"/> we mentioned Johnson Wax last week <pause dur="0.8"/> who were early entrants into east and central Europe <pause dur="0.7"/> and they were reverting to product formulations that they hadn't used in in other markets <pause dur="0.4"/> but they still had they still had patents on but they weren't using things like liquid starch <pause dur="2.0"/> now <pause dur="0.6"/> that would be something that

was very specific to <pause dur="0.4"/> a country or a number of countries within the region <pause dur="0.6"/> and the question is whether they can <pause dur="0.4"/> come up with that idea <pause dur="0.3"/> monitoring the environment <pause dur="0.3"/> or whether they need to go back and get that checked and who by <pause dur="0.6"/> and whether it's felt that that's something that they want to be associated or <pause dur="0.2"/> with or not <pause dur="1.3"/> in some cases <pause dur="0.7"/> there can be different views depending on where you are <pause dur="0.8"/> if you're in the market <pause dur="0.6"/> even though it looks very uncertain because if you look at a a sort of <pause dur="0.4"/> assessment of the market <pause dur="0.2"/> you look at the facts and figures and you say seven-thousand-eight-hundred per cent inflation <pause dur="1.7"/> don't know how quickly they're getting through the transformation process <pause dur="1.0"/> seem to be changing the laws every day <pause dur="0.8"/> # stopping us from re-exporting products in certain categories what if ours is next <pause dur="0.4"/> VAT rates going from nought per cent to two-hundred per cent back to <trunc>n</trunc> to you know a hundred per cent next week <pause dur="0.8"/> maybe this isn't a market we ought to be operating

in we could lose a lot of money we could damage our brand reputation <pause dur="0.4"/> what if we have to withdraw from the market <pause dur="2.0"/> that quite often is a view that's taken by the headquarters <pause dur="0.3"/> because at headquarters they're talking about brands and strategic things <pause dur="0.4"/> quite often the local market once people get themselves there <pause dur="0.5"/> they get established into the networks and they begin to understand how things happen particularly if they have a local partner <pause dur="0.3"/> who can gain them access <pause dur="0.9"/> and the risks start to look less <pause dur="0.5"/> to the people who are actually on the ground who understand the market <pause dur="0.6"/> particularly those who have been in other subsidiaries of the firm within the region and are gaining knowledge <pause dur="1.1"/> so <pause dur="0.4"/> you can find that there are decisions <pause dur="0.6"/> whether something is an opportunity and whether to capitalize on it <pause dur="0.3"/> which are viewed very differently by the headquarters and the subsidiary <pause dur="0.5"/> and a classic example of one of the telecommunications firms <pause dur="0.4"/> where he'd been out

prospecting the market for two three years <pause dur="0.6"/> bearing in mind the person prospecting <pause dur="0.3"/> had been round <pause dur="0.4"/> Azerbaijan Kazakhstan various parts of Russia Ukraine <pause dur="0.7"/> and was assessing opportunities and was saying ah i think there's a a great opportunity here for us <pause dur="0.8"/> it will cost <pause dur="0.5"/> i don't know what the amount of money was but <pause dur="0.3"/> a relatively small amount of money i think he was saying something like fifteen-million to invest in this opportunity <pause dur="1.5"/> then when he went back to the organization to # to headquarters to get this sanctioned <pause dur="0.4"/> they looked at the market and said <pause dur="0.7"/> forget it there's there's too much corruption <pause dur="0.3"/> we don't want to be associated with some of the things that are happening i hear that firms are paying bribes <pause dur="0.6"/> # you know <pause dur="0.3"/> we're we're not sure we want to operate in the market the potential damage to our brands could be too great <pause dur="0.4"/> we think in the short term that we should stop looking at that market <pause dur="0.5"/> we were interested longer term in looking at Russia anyhow <pause dur="0.3"/> maybe the

uncertainty levels in Russia are no higher <pause dur="0.2"/> so you should come out of <pause dur="0.7"/> Ukraine it was and go directly to Russia <pause dur="0.3"/> and look at the potential there because really in terms of <pause dur="0.6"/> uncertainty of what's happening in terms of bribery it can't be much worse <pause dur="1.2"/> and he was actually very disenchanted by that because <pause dur="0.4"/> he'd been <trunc>l</trunc> asked to look at what was happening in the market and he'd come up with this <pause dur="0.4"/> idea that he really thought would work <pause dur="0.7"/> so there was actually in that case quite a lot of distance between the <pause dur="0.4"/> headquarters and the subsidiary <pause dur="2.0"/> okay we've <pause dur="1.2"/> also <kinesic desc="reveals covered part of transparency" iterated="n"/> talked about the pest analysis <pause dur="4.0"/> but we've talked about it as a set of unconnected forces in the environment which you monitor <pause dur="0.2"/> but you can't control <pause dur="0.6"/> so the next stage of <pause dur="0.2"/> international marketing relationships <pause dur="0.6"/> is work that says <pause dur="0.5"/> maybe they're not uncontrollable <pause dur="0.4"/> maybe you can have some kind of relationship with those stakeholders as well <pause dur="0.5"/> that influences what

happens to your firm influences your success <pause dur="2.3"/> some work by Philip Kotler <pause dur="0.8"/> # called Mega Marketing <pause dur="0.7"/> and <pause dur="1.2"/> i think the article is nineteen-eighty-three and it's also in Harvard Business Review <pause dur="1.0"/> in addition to the traditional four Ps <pause dur="0.2"/> he identifies another two that he believes people should take into account <pause dur="0.5"/> those are politics <pause dur="1.9"/> and people <pause dur="3.5"/> so if you look <pause dur="4.6"/><kinesic desc="writes on board" iterated="y" dur="14"/> i can't spell <pause dur="0.2"/> politics <pause dur="4.3"/> people has also been <pause dur="5.4"/> referred to variously as public relations <pause dur="0.3"/> because what he's actually saying <pause dur="0.5"/> is that in some markets <pause dur="0.3"/> and he he applies mega marketing to what he calls blocked markets blocked markets are those which <pause dur="1.0"/> have not been opened to the firm <pause dur="0.9"/> previously for various reasons either because of their political systems <pause dur="0.5"/> or because of the level of income of the people in the market <pause dur="0.3"/> that they have not been places that it was easy to get into <pause dur="0.5"/> particularly blocked markets are ones where there has for

whatever reason been a government block on investing firms or on foreign products <pause dur="0.7"/> and therefore he believes that <pause dur="0.9"/> politics <pause dur="2.9"/><kinesic desc="writes on board" iterated="y" dur="3"/> so lobbying appropriate people in the governments of the countries and working out <pause dur="0.4"/> how you could deal how you might get access what the the barriers are <pause dur="0.3"/> becomes quite important <pause dur="1.0"/> now i know <pause dur="1.2"/> it isn't a particularly good example in in <trunc>le</trunc> in terms of its level of success <pause dur="0.3"/> but a few years back you may remember that there was various American <pause dur="0.5"/> trade delegations went over to Japan to talk about <pause dur="0.3"/> # some of the barriers that they believed were in place by MITI <pause dur="0.3"/> which was stopping American and other <pause dur="0.6"/> products from getting into the Japanese market <pause dur="0.4"/> claiming that this was sort of <pause dur="0.8"/> unfortunate because Japanese products were actually <pause dur="0.6"/> coming into other markets quite successfully but they always felt that there were barriers <pause dur="0.5"/> i say it's an unfortunate example because we had people like Chrysler and General Motors

and so on complaining about not getting access <pause dur="0.5"/> and a large part of why they weren't getting access was nothing to do with barriers that were put up <pause dur="0.4"/> it was to do with the quality of the products and whether they were <pause dur="0.8"/> seen to be offering benefits in the market anyhow <pause dur="1.0"/> but that kind of initiative <pause dur="0.5"/> trade delegations <pause dur="0.4"/> and <pause dur="0.2"/> one government <pause dur="1.1"/> having contact with and lobbying another government <pause dur="0.4"/> or firms <pause dur="0.2"/> lobbying their own government suggesting that they ought to take certain actions are becoming an increasing feature <pause dur="0.3"/> of international marketing <pause dur="0.5"/> think of one of the current examples <pause dur="0.6"/> membership of the <pause dur="0.2"/> the single European currency <pause dur="2.1"/> and <pause dur="0.3"/> some of the U-K businesses i've spoken to feel very strongly that the U-K should be in <pause dur="0.7"/> and that <pause dur="0.2"/> there can only be disadvantages to them from not being in <pause dur="0.6"/> that being that if Europe is going to be a region trading in this <pause dur="0.2"/> and the U-K is still going to be subject to exchange rates <pause dur="0.4"/> so it therefore is taking more risk on exchange rates <pause dur="0.8"/> its business is

going to be complicated because it's going to have to start <pause dur="0.2"/> <trunc>trea</trunc> <pause dur="0.6"/> trading in euros anyhow because everybody else within Europe is going to be <pause dur="0.6"/> it's going to have the pressure to do that <pause dur="0.2"/> so it's going to be operating two systems instead of one system <pause dur="1.0"/> you know virtually everybody i speak to in a U-K business says <pause dur="0.8"/> well what's the downside explain to me again why we didn't want to be in this <pause dur="0.6"/> # <pause dur="0.3"/> well some kind of nationalism and and we want to still have pounds and things <pause dur="0.3"/> we're a bit concerned whether the Queen's head's on there or not but <pause dur="0.6"/> i mean <pause dur="0.2"/> economically <pause dur="0.5"/> business sense the euro <pause dur="0.9"/> think i'm getting into my # <pause dur="0.6"/> holding forth on the euro the euro <pause dur="0.2"/> makes a lot of sense <pause dur="0.5"/> and a lot of <pause dur="0.2"/> businesses are concerned at <pause dur="0.5"/> what will happen as a consequence of not being into the euro early <pause dur="0.5"/> therefore are lobbying the British government saying <pause dur="0.6"/> you know can you tell us what policy is when we're going to get into this <pause dur="0.5"/> # what the objections are <pause dur="0.6"/> similarly with the the GATT <pause dur="0.4"/> the General

Agreement on Trade and Tariff the last round in Uruguay <pause dur="1.2"/> there was a big letter to the press <pause dur="0.3"/> from the the C-E-Os of <pause dur="0.6"/> i think it was the <pause dur="0.2"/> the top hundred <pause dur="0.3"/> # <pause dur="0.2"/> multinational firms <pause dur="0.3"/> saying <pause dur="0.3"/> can we press for a favourable outcome to getting rid of some of the trades and tariffs <pause dur="0.4"/> for those who who <pause dur="0.7"/> weren't aware of this the the General Agreement on Trades and Tariffs <pause dur="0.3"/> is to allow free trade between nations <pause dur="0.4"/> and at the seventh round the Uruguay round was the first time that services were included <pause dur="0.5"/> as well as <pause dur="0.5"/> products <pause dur="0.4"/> and there were certain categories which were real stumbling blocks <pause dur="0.5"/> agriculture always has been 'cause every country is protective of its agriculture <pause dur="0.5"/> and its rights to export and to protect people from coming into its market <pause dur="0.7"/> funnily enough <pause dur="0.2"/> films became one of the major ones <pause dur="0.7"/> there was a big concern about <pause dur="0.2"/> in the film industry <pause dur="0.5"/> about <pause dur="0.4"/> having free trade and particularly <pause dur="0.3"/> some of the European countries like France being concerned that Hollywood having free access into

their market <pause dur="1.7"/> and it looked like the whole thing was going to come apart <pause dur="0.5"/> but <pause dur="0.3"/> a lot of the the C-E-Os were very concerned that this shouldn't happen <pause dur="0.2"/> so they started lobbying their governments collectively <pause dur="0.2"/> and if you think of what <pause dur="0.2"/> all the different nationalities of the top hundred multinational firms <pause dur="0.3"/> that's a lot of governments <pause dur="0.9"/> to try and <pause dur="1.5"/> encourage them to press for a favourable outcome to the GATT <pause dur="0.4"/> round which was favourable in the end <pause dur="1.1"/> if we now go back to <pause dur="3.0"/><kinesic desc="changes transparency" iterated="y" dur="6"/> our pest analysis slide that we had <pause dur="2.4"/> that explains the arrow between political and firm <pause dur="0.6"/> concerns because we're not then saying <pause dur="0.8"/> well <pause dur="0.2"/> politics is just something that's out there and we monitor it <pause dur="0.4"/> we're saying <pause dur="0.4"/> that under certain circumstances firms may actually be able to <pause dur="0.5"/> have some kind of influence some kind of relationship with political stakeholders <pause dur="0.3"/> they can lobby <pause dur="0.8"/> they can represent a set of interests <pause dur="0.4"/> they they can

lobby their governments who have relationships with other governments <pause dur="1.8"/> likewise <pause dur="0.3"/> economically <pause dur="0.8"/> some players are big enough to have an influence <pause dur="0.2"/> on economic policy <pause dur="1.2"/> likewise technologically <pause dur="0.4"/> you've got some firms like Microsoft who are clearly at the forefront of what's happening in technology and standards are being set around them <pause dur="0.7"/> so maybe it's not <pause dur="1.3"/> this uncontrollable set of factors in the environment <pause dur="0.3"/> maybe there are even patterns of relationships which exist <pause dur="0.8"/> not just inter and intraorganizationally <pause dur="0.3"/> but in the macroenvironment as well <pause dur="1.1"/> and so the<kinesic desc="changes transparency" iterated="y" dur="6"/> top box on this slide <pause dur="3.7"/> represents that view and says <pause dur="1.0"/> let's understand that the host market <pause dur="0.3"/> country that you're going into's <pause dur="0.4"/> network of relationships too <pause dur="1.1"/> and so basically it's an application of <pause dur="0.3"/> pest analysis <pause dur="0.3"/> to a specific market and say what type of relationships or what issues in relationships in the macroenvironment will be significant <pause dur="0.6"/> talking

about Eastern Europe again because that's <pause dur="0.2"/> just happens to be the example i've applied it to <pause dur="1.1"/> what kind of issues would be important <pause dur="0.7"/> it would be very important that the relationships are turbulent <pause dur="0.5"/> so if you were trying to work out who politically you ought to form relationships with <pause dur="0.6"/> in Ukraine <pause dur="0.6"/> part of the problem would be that it's changing all the time <pause dur="0.8"/> because every time the economic policy doesn't work <pause dur="0.6"/> they elect somebody different <pause dur="0.5"/> or it's very difficult to know who's the figurehead and who really controls the power <pause dur="1.3"/> so it'll be turbulent <pause dur="1.9"/> it'll also be turbulent if you're trying to work out which <pause dur="0.5"/> other firms in that market you ought to <pause dur="0.2"/> collaborate with because <pause dur="0.5"/> sometimes <pause dur="0.3"/> the scarce <pause dur="2.0"/> resources the knowledge that you wish to get out of your intraorganizational <trunc>par</trunc> interorganizational partners <pause dur="0.7"/> may not be as valuable as you would like it to be <pause dur="0.7"/> so if you're going in because you think they understand the market <pause dur="0.3"/> if the whole system is is falling

apart and it's all turbulent <pause dur="0.3"/> they may not understand it much better than you do <pause dur="0.3"/> and that's been one of the classic problems <pause dur="0.6"/> firms going in thinking well <pause dur="0.4"/> the Ukrainian local partner will understand what's happening <pause dur="0.6"/> Ukrainian local partners <pause dur="1.2"/> didn't necessarily know who their customers were <pause dur="0.9"/> sounds hard to explain but i'll <pause dur="1.2"/><kinesic desc="changes transparency" iterated="y" dur="5"/> just explain a little further why <pause dur="8.8"/><event desc="covers part of transparency" iterated="n"/> in a free market exchange <pause dur="3.4"/> and in a marketing channel <pause dur="0.3"/> kind of relationship you have a producer <pause dur="0.4"/> you have a customer you may have intermediaries in the middle as we've said <pause dur="1.1"/> and the government <pause dur="1.7"/> in a pest analysis has been shown to be sort of somewhere in that outer rim it's somewhere in the pest analysis it's an uncontrollable variable <pause dur="0.7"/> now what we're saying is <pause dur="0.4"/> there may be some possibility of having a two-way relationship <pause dur="0.3"/> so there may be some ability to lobby that government <pause dur="0.4"/> so we've got a dotted arrow there we've said <pause dur="0.4"/>

yes maybe there is a relationship <pause dur="0.4"/> it's not a direct one <pause dur="0.5"/> like you have with your customers <pause dur="0.4"/> but there's some kind of relationship which exists <pause dur="1.9"/> but under the <pause dur="2.2"/> centrally planned economies <pause dur="0.2"/> that we were talking about in this example <pause dur="1.7"/> the government <pause dur="0.8"/> played a very <pause dur="0.8"/> controlling role <pause dur="0.3"/> in the previous system <pause dur="0.4"/> the government had direct relationships <pause dur="0.3"/><kinesic desc="reveals covered part of transparency" iterated="n"/> both with the producer <pause dur="0.7"/> and with the customer <pause dur="1.2"/> they dictated what should be made <pause dur="0.2"/> in what quantity <pause dur="0.2"/> where it was going to go <pause dur="1.5"/> what the firms did was produce it to schedule <pause dur="0.9"/><event desc="noise" iterated="y" dur="4"/> largely <pause dur="1.0"/> they <pause dur="1.2"/> sounds good doesn't it <pause dur="0.5"/> they # <pause dur="5.6"/><event desc="noise" iterated="y" dur="3"/><vocal desc="laughter" iterated="y" n="ss" dur="1"/> it's the heating system <pause dur="0.6"/> # <pause dur="0.9"/> high-tech <pause dur="1.2"/> the government and the producer had direct relationships <pause dur="1.7"/> and the customer who got this all through a state system so if it was food stores <pause dur="0.3"/> they were called gastronome <pause dur="0.3"/> and they all stocked exactly the same things <pause dur="0.2"/> in the same location <pause dur="0.2"/> for the same price <pause dur="0.6"/> so the relationship between the producer and the customer <pause dur="0.6"/> wasn't even necessarily a direct one <pause dur="0.5"/> the firms just <pause dur="0.4"/> produced it to schedule it was picked up on lorries <pause dur="0.3"/> taken away delivered to the state outlets <pause dur="0.4"/> and there may not have been in fact there quite often wasn't any direct contact between those two at all

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