ever, it offers a chance to start faster, with less risk and with the opportunity to form
a partnership or buy out the local manufacturer later.
Finally, a company can enter a foreign market through franchising, which is a more
complete form of licensing. The franchiser offers a complete brand concept and op-
erating system. In return, the franchisee invests in and pays certain fees to the fran-
chiser. McDonald’s, KFC, and Avis have entered scores of countries by franchising
their retail concepts.
Along with McDonald’s, Kentucky Fried Chicken (KFC) was one of the first fast-
food franchises to break into the semiclosed market of Japan.
■ KFC Corporation Although the initial reception in Japan was great, KFC still
had a number of obstacles to overcome. The Japanese were uncomfortable
with the idea of fast food and franchising. They saw fast food as artificial,
made by mechanical means, and unhealthy. KFC’s ad agency in Japan,
McCann-Erickson Japan, knew that it had to build trust in the KFC brand
and flew to Kentucky to do it. There it filmed the most authentic version of
Colonel Sanders’s beginnings possible. To show the philosophy of KFC—the
southern hospitality, old American tradition, and authentic home cooking—
the agency first created the quintessential southern mother. With “My Old
Kentucky Home” by Stephen Foster playing in the background, the com-
mercial showed Colonel Sanders’ mother making and feeding her grandchil-
dren KFC chicken made with 11 secret spices. It conjured up scenes of good
home cookin’ from the deep American South delivered straight to the Japan-
ese people. In the end, the Japanese people could not get enough of this spe-
cial American chicken made with 11 spices. The campaign was hugely
successful, and in less than 8 years KFC expanded its presence from 400 lo-
cations to more than 1,000. Many Japanese now know “My Old Kentucky
Home” by heart.^16
JOINT VENTURES
Foreign investors may join with local investors to create a joint venture company in
which they share ownership and control. For instance:^17
■ Coca-Cola and Nestlé joined forces to develop the international market for
“ready to drink” tea and coffee, which currently sell in significant amounts only
in Japan.
■ Procter & Gamble formed a joint venture with its Italian arch-rival Fater to cover
babies’ bottoms in the United Kingdom and Italy.
■ Whirlpool took a 53 percent stake in the Dutch electronics group Philips’s white-
goods business to leapfrog into the European market.
Forming a joint venture may be necessary or desirable for economic or politi-
cal reasons. The foreign firm might lack the financial, physical, or managerial re-
sources to undertake the venture alone. Or the foreign government might require
joint ownership as a condition for entry. Even corporate giants need joint ventures
to crack the toughest markets. When it wanted to enter China’s ice cream market,
Unilever joined forces with Sumstar, a state-owned Chinese investment company.
The venture’s general manager says Sumstar’s help with the formidable Chinese bu-
reaucracy was crucial in getting a high-tech ice cream plant up and running in just
12 months.^18
Joint ownership has certain drawbacks. The partners might disagree over invest-
ment, marketing, or other policies. One partner might want to reinvest earnings for
growth, and the other partner might want to declare more dividends. The failure of
the joint venture between AT&T and Olivetti was due to the companies’ inability to
agree on strategy. Furthermore, joint ownership can prevent a multinational company
from carrying out specific manufacturing and marketing policies on a worldwide
basis.
chapter 12
Designing
Global Market
Offerings^377(continued)
companies, don’t forget to include size
conversion tables so overseas cus-
tomers can figure out sizes.
■ Avoid alphanumeric fields in forms, and
make address fields internationally
meaningful:It sounds like a tiny detail,
but people do get annoyed when reg-
istration or order forms refuse to rec-
ognize punctuation such as accents.
Also, address fields should accommo-
date international postal codes. Most
countries don’t have a postal counter-
part to a state, so don’t require every
visitor to the site to specify one.■ Provide enough information about your
company, and make contact informa-
tion prominent:The portion of a Web
site that provides company informa-
tion is typically one of the most fre-
quently visited areas. Providing as
much detail as possible about your
company’s strengths is a good way to
establish credibility, which is particu-
larly critical for a small business that is
unknown overseas. Also, don’t bury
contact information—names, tele-
phone numbers, or fax numbers—
deep within the site. Make it as clear
and visible as possible.■ Don’t leave site development to the
technicians:Involve your marketing
people so you can ensure that your
site is consistent with the image you
want to project. You may even want to
have your Web site vetted by an over-
seas rep or supplier to make sure it
appeals to the foreign market you
wish to reach.
Sources:Eric J. Adams,“Electronic Commerce Goes
Global,”World Trade,April 1998, pp. 90–92;
Roberta Maynard, “Creating an Export-Friendly
Site,”Nation’s Business,December 1997, p. 51; J. D.
Mosely-Matchett,“Remember; It’s the WorldWide
Web, ”Marketing News,January 20, 1997, p. 16.