Jan Surya Jan Surya SharmaSharma

International International MarketingMarketing

ManagementManagement

ObjectiveTo Understand:• Growth Factors - Internationalism &

Globalization • Major Concepts & Themes – Intl. Mkting • Planning for Intl. Marketing.

For Developing & Enhancing:For Developing & Enhancing: Critical Skills for effective Intl. Mkting Strategies

Global Perspective on Intl. Mkting Problems Unique to India

Capability for Handling Intl. Mketing Mgmt. Tasks

Course Details …

S.No.S.No. ChapterChapter

1. Concept of Intl. Marketing2. Decision Making Process - Intl. Mkts3. Intl. Markets Entry4. Product Strategy for Intl. Mkts5. Pricing Decisions for Intl. Mkts.6. Distribution Decisions for Intl. Mkts.7. Promotional Decisions for Intl. Mkts.8. Branding for Intl. Mkts.

Concept of Intl. Marketing

• History - Pre WW-II - Post WW-II - Recent

• Definition & Facets of Intl. Marketing• Significance of International Marketing • Reasons for Entering Intl. Markets• Domestic vs. Intl. Marketing• Problems of Intl. Marketing• Barriers of Intl. Marketing• Intl. Marketing Environment• Evolution Process of Global Markets - EPRG Concept

– Born Global Concept– SRC – Adaptation the Critical Factor

• Theories of International Trade• Globalization

Ancient International BusinessV. Gordon Childe -“Man Makes Himself”

6000 – 4000 BC6000 – 4000 BC Animal imports from Asia by Animal imports from Asia by Sahara People Sahara People

3000 BC –3000 BC – Trade between India, Trade between India, Mesopotamia & EgyptMesopotamia & Egypt

55thth BC BC - - Indian merchants Colony in Egypt Indian merchants Colony in Egypt & SE Asia& SE Asia

100 BC -100 BC - Silk Route - - Xian to RomeXian to RomeExports: Food Items, Craft Work,

Pepper & SpicesImports: Luxury items, Exotic stones

etc.

SILK ROUTE – XIAN TO ROME

Era of Liberal Trade - Negligible Trade Barriers

• 18 & 19th AD – Industrialisation – Europe, US & Japan - Colonisation - UK, Spain, France, Japan,

Portugal, Germany for Markets, Resources & Manpower

Market Textile, Coffee, Tea, Sugar, Machines, RM Cotton, Metals, Sugarcane, Tea leaves & Coffee beans etc.

Labour Agriculture, Mining, Construction, Shipping etc.• 1911 – Outbreak of WW- I • 1917 – Russian Revolution & Emergence 1st Socialist State -USSR• 1930s- Great Depression – a big threat to world capitalism• 1939 – 1945 : World War II - Fight for Political & Economic

Supremacy, Markets, RM & Labour

Pre WW-II DevelopmentsPre WW-II Developments

Post WW II DevelopmentsPost WW II Developments

-- 1945 1945 WB WB (IBRD+IDA) 186 countries(IBRD+IDA) 186 countries

- - 19451945 UN UN 192 members192 members

- - 19451945 IMF IMF 186 member countries186 member countries

- - 1947 1947 GATT GATT now WTO 153 membersnow WTO 153 members

Change in attitudes – Reconstruction & Self- relianceChange in attitudes – Reconstruction & Self- relianceBi-polarisation of GeopoliticsBi-polarisation of Geopolitics

Creation of Trade Barriers – tariff & non-tariffsCreation of Trade Barriers – tariff & non-tariffs1944 1944 - - Britton Woods Agreements & Need for Britton Woods Agreements & Need for

Multilateral Org. for revival & growth of trade Multilateral Org. for revival & growth of trade

19801980 - - Disintegration of USSR/End of Cold WarDisintegration of USSR/End of Cold War

More recently…

- L P G - Sustained World Peace & Growing Terrorism- Pace of ICT- Globe Shrunk (Time-Distance-Cost)- New Business Forms (E-business/ E-commerce)- Standardisation, Customisation & Customerisation- Emergence of RTAs (ASEAN, EU, NAFTA, APEC etc.)

- Varying Degree of loss of Sovereignty- Emergence of New Economies & Mkts. - Ethics & Ecological Concerns

1992 1992 -- Emergence of ECEmergence of EC

1995 1995 -- WTO , EC Transforms to EUWTO , EC Transforms to EU

2008-09 -2008-09 - Global Meltdown & Financial CrisisGlobal Meltdown & Financial Crisis

Reasons of Recent International Growth

Rapid Increase in TechnologyRapid Increase in Technology

Liberalization, Privatization & GlobalizationLiberalization, Privatization & Globalization

Development of Institutions Development of Institutions supporting supporting & facilitating International & facilitating International TradeTradeConsumers/Customers Consumers/Customers

PressurePressureIncreased Global CompetitivenessIncreased Global Competitiveness

Other Drivers

• Convergence of consumer tastes• Emergence of global niche

markets• Self Reliance to Interdependence• Economies of Scale• Standardisation• Consumerism• LPG

What is Marketing?Marketing:Marketing:

Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably. (Chartered Inst. Marketing)

Marketing in a Changing World:Marketing in a Changing World: Process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.

(AMA)

More SimplyMore SimplyCreating & delivering Customer Value & Satisfaction at profit.

International Marketing - Definition““The definition of International Marketing is different from The definition of International Marketing is different from the general definition of Marketing only in that goods and the general definition of Marketing only in that goods and services are marketed across political boundaries.” services are marketed across political boundaries.” (Albaum)(Albaum)

“ “International Marketing is the performance of International Marketing is the performance of business activitiesbusiness activities that direct the flow of a company’s goods and that direct the flow of a company’s goods and services to services to consumers or users in more than one nation for consumers or users in more than one nation for profit.” (Cateora)profit.” (Cateora)Thus Intl. Marketing revolves around:Thus Intl. Marketing revolves around:

- Identifying needs & wants of Diverse Intl. Identifying needs & wants of Diverse Intl. MarketsMarkets- Marketing Mix Decisions & Strategies in Marketing Mix Decisions & Strategies in relation to Diverse & Dynamic Intl. Mkts.relation to Diverse & Dynamic Intl. Mkts.- Choosing the right Intl. Mkt. entry Choosing the right Intl. Mkt. entry mode/modesmode/modes- Decisions in line with dynamic Intl. Mkting Decisions in line with dynamic Intl. Mkting EnvironmentEnvironment

Terms In International Marketing

• Made up of many facets based on levels of involvement

– Domestic Marketing– Export Marketing – International Marketing

• Multi National Marketing • Global Marketing

Domestic Marketing

• One set of Competitors

• One Economy

• One set of Market Pressures

• One set of Customers

Marketing mix and plan for domestic mkts.

Export Marketing

• Where the company markets its goods/services across national or political boundaries

• Usually a reactive situation

• Emphasis on product modification, if required.

• Most traditional and least complicated form of international marketing.

International Marketing

• Entire marketing strategy will need to be adapted.

• Understanding of different environments becomes essential.

• Several markets• Differing controllable variables across markets• Differing uncontrollable variables across

markets

• Giving– Differing infrastructures– Differing advertising/promotions– Differing complexity of market

Multinational Marketing

• Where similar activities apply to more than one country

• Some limited control on the market place variables

• Markets may be independent profit centres• Marketing strategy can be tailored to local

market, individual strategy per location, can have many and varied strategies.

PAN-REGIONAL MARKETING

• Marketing strategies for regions rather than countries.

e.g. Asia, fastest growing market for West’s top brands at lower costs. (GM Motors, Honda, Toyota, Dior, Rolex, Cartier, Gucci)

Global Marketing

• The whole organisation exploits one strategy on a worldwide basis

• No individual country influence, although often some form of local modification necessary.

• One strategy fitsOne strategy fits all– Efficiencies of scaleEfficiencies of scale– Needs significant market segmentssignificant market segments with

similar demand world oversimilar demand world over– Might need marketing mix tweakedmarketing mix tweaked per

region?

Significance of International MarketingSignificance of International Marketing

• Provides new markets

• Presents opportunities for growth, expansion & income

• Allows for the flow of ideas, services & capital

• Increases the speed of innovation

• Allows for better usage of human capital

• Allows greater access to financing

• Gives consumers more choice

• Several trends highlight the importance of Several trends highlight the importance of international businessinternational business– The continued expansion of international tradeThe continued expansion of international trade– The changing composition of tradeThe changing composition of trade– The growing interdependence of economiesThe growing interdependence of economies– The increasing size and power of TNE’sThe increasing size and power of TNE’s– GlobalizationGlobalization

Objectives of Going International Objectives of Going International

Development, Growth & Development, Growth & EmploymentEmployment

Defense NeedsDefense Needs

Balance of Payment Balance of Payment

Control Inflation & RecessionControl Inflation & Recession

Growth & ProfitabilityGrowth & ProfitabilityEconomies of ScaleEconomies of ScaleMinimizing Risk Minimizing Risk Acquiring Inputs, Resources & Acquiring Inputs, Resources & TechnologyTechnologyUniqueness Providing Uniqueness Providing Opportunities Opportunities Opportunities Arising out of PLCOpportunities Arising out of PLCR&D Cost SpreadR&D Cost Spread

Why is Intl. Marketing Why is Intl. Marketing Different?Different?

• Culture Diverse, Multi-cultured

• Markets Widespread, Fragmented,different

• Data Difficult to get, expensive

• Politics Varying stability and attitudes

• Governments Attitudes towards foreign trade

• Competitors Varying levels

• Economies Varying levels & Systems

• Finance Varying systems & regulatory bodies

• Currencies Varying & Fluctuating

• Businesses Cross Cultural Influences

• Control Remote & Difficult

Problems of Intl. Marketing

• DebtDebt

• Unstable countriesUnstable countries

• Protection of intellectual rightsProtection of intellectual rights

• Tariff regulationsTariff regulations

• Instability in Foreign Exchange marketsInstability in Foreign Exchange markets

• Non tariff barriers, e.g. specifications, Non tariff barriers, e.g. specifications, quotas,quotas,

Barriers to Intl Barriers to Intl MarketingMarketing

• Control• Language• Red tape• Cash flow• Logistics• Lack of trained staff• Tariff & Non-Tariff Barriers

Manipulate a series of Manipulate a series of VariablesVariables

– Controllable by business (Internal)Controllable by business (Internal)• PricePrice• PromotionPromotion• DistributionDistribution• ProductProduct

• Uncontrollable by business Uncontrollable by business (External)(External)

Economic structureEconomic structure

CompetitorsCompetitors

CulturalCultural

LegalLegal

INTL. MKETING ENV.

SLEPT Factors

(Framework to analyse macro environment)• S ocial & cultural values

• L egislation affecting trade

• E conomic conditions

• P olitical systems & attitudes

• T echnological level & infrastructure, & Competition within the market

EPRG CONCEPT – Howard

Perlmutter Orientation: International Marketing Organization

ETHNOCENTRICETHNOCENTRICConsiders own culture as superior–same Mkting strategyConsiders own culture as superior–same Mkting strategyIgnore environmental differencesIgnore environmental differencesDomestic or extension to export marketingDomestic or extension to export marketing

POLYCENTRICPOLYCENTRIC

Treats region as a uniform mkt. SegmentTreats region as a uniform mkt. SegmentAdapts similar mkting strategy within region but Adapts similar mkting strategy within region but

across the regionacross the region

REGIOCENTRICREGIOCENTRIC

GEOCENTRICGEOCENTRIC

Highly Market OrientedHighly Market OrientedConsiders each mkt. UniqueConsiders each mkt. UniqueDecentralization on marketing activitiesDecentralization on marketing activitiesNeeds corporate resourcesNeeds corporate resources

Whole world a single marketWhole world a single marketFormulate integrated marketing strategiesFormulate integrated marketing strategiesEconomies of scaleEconomies of scale

Evolutionary Process- Global Evolutionary Process- Global MarketingMarketing

.

Stages Marketing Market Focus Orientation Marketing Mix Decisions

IDomestic Domestic

Ethnocentric SMEs

Domestic Customer Focussed

II Export Overseas

Ethnocentric Food products,

Jewelleries,

-Mainly Domestic customers -Overseas mkt. only an Extn.

of domestic marketing- Decisions made at HQ

IIIInternational

Differentiation by developing

products & brands

PolycentricCorporate

sector

Product development upon Country needs. Decisions by

individual subsidiaries

IV Multinational

Consolidation of operations

on regional basis.

Gains from Economies of Scale

RegiocentricProduct standardization

within regions but not across them.i.e., Regional basis

V GlobalConsolidation on

global basisGeocentricIBM, SONY

Globalisation of marketing mix decisions with local variations

Jt. Decision making across globe

Stages of Domestic to Stages of Domestic to GlobalGlobal

MGMT. MGMT. EMPHASISEMPHASIS

FOCUSFOCUS

Marketing Marketing StrategyStrategy

Structure Structure

Management Management StyleStyle

Manufacturing Manufacturing StanceStance

Investment Investment PolicyPolicy

Performance Performance EvaluationEvaluation

STAGE - ISTAGE - I DOMESTICDOMESTIC

Domestic

Domestic

Domestic

Domestic

Mainly Domestic

Domestic

DomesticMarket Area

STAGE - IISTAGE - II INTL.INTL.

Ethnocentric

Extension

International

Centralized Top Down

Mainly Domestic

Domestic used Worldwide

Against homeCountry

Mkt. Share

STAGE – IIISTAGE – III MULTINATIONALMULTINATIONAL

Polycentric

Adaptation

Worldwide Area

Decentralized Bottom Up

Host Country

Mainly in Each Host Country

Each Host Country Mkt. Share

STAGE - IVSTAGE - IV GLOBALGLOBAL

Geocentric

Extension

Adaptation creation

matrix/mixed

Integrated

Lowest Cost Worldwide

Cross Subsidization

Worldwide

Process Of Internationalization

GLOCAL GLOCAL MARKETINGMARKETING

Strategic advantage as positive stimulus:– Gains in terms of increased profits,– Increased market share, – Economies of scale, – Competition in domestic or in other

international operated mkt.

High degree of marketing complexity

Evolution from Domestic to Exports,

Exports to International Markets,

Intl. Markets to Multinational Markets,

Multinational to Global Markets, and

Global approach with Local Global approach with Local orientationorientation

BORN GLOBALSBORN GLOBALS

International new venture of business organization, International new venture of business organization, which right from its inception, seeks to derive which right from its inception, seeks to derive significant competitive advantage by using significant competitive advantage by using resources & marketing of outputs in multiple resources & marketing of outputs in multiple countries. countries.

Their start-ups is international, by significant Their start-ups is international, by significant commitments of resources (material, people, commitments of resources (material, people, financing, time) in more than one nation.financing, time) in more than one nation.

Coined by McKinsey Consultants, the concept has 2 phenomena:

1. Small is beautiful 2. Gradual

internationalization is old

-High-tech firms, some use well-known technology-Higher growth rates than other industries -Larger growth in export than home-market sales-Management’s commitment to internationalization-Ability to standardize production, marketing, etc.

ADAPTATION !ADAPTATION ! THE CRITICAL SUCCESS THE CRITICAL SUCCESS

FACTORFACTORSRC(SELF REFERENCE CRITERIA)SRC(SELF REFERENCE CRITERIA):: Unconscious reference to one’s own cultural

values,experiences & knowledge as basis for decision

makingIsolate the influences of SRC – 4 steps 1. Define business problem or goal in terms of the home-

country traits, habits, or norms 2. Define business problem or goal in terms of foreign

country cultural traits, habits, or norms. Make no value judgments

3. Isolate the SRC influence in the problem and examine it carefully to see how it complicates the problem

4. Redefine the problem w/o the SRC influence and solve for optimum business goals

MNC vs. TNC• International Companies: Importers & Exporters-

No investment outside their home country.

• Multinational: Investment in other countries, but do not have coordinated product offerings in each country. More focused on adapting their products and service to each individual local market.

• Global: Investment & Presence in many countries. Market their products using same coordinated image/brand in all markets. Generally one corporate office responsible for global strategy. Emphasis on volume, cost management and efficiency.

• Transnational: More complex organizations with investment in foreign operations, having central corporate facility with decision-making, R&D and marketing powers to each individual foreign market.

Intl. Trade & Investment Theories

Comparative advantage of Nations

Nations can gain & sustain economic superiority for global competition – derived from either national endowments or from national policies

Competitive advantage of Firms

Individual firms can gain & sustain distinctive competencies from: cost, size, resources control or innovation edge over competitors.

NationLevel

FirmLevel

Why do Nations trade?

How nations enhance Competitive advantage?

Why & how do Firms Internationalize?

How Internationalizing Firms gain & sustain

Competitive Advantage?

International Trade &

Investments

Classical Theories ExplanationClassical Theories Explanation-Mercantilism-Absolute Advantage-Comparative Advantage-Factor Endowment-Intl. Product Cycle

Contemporary Theories ExplanationContemporary Theories Explanation-Competitive Advantage of Nations-Michael porter’s Diamond Model-National Industrial Policy-New Trade Theory

Firm Internationalization ExplanationFirm Internationalization Explanation-Internationalization Process-Born Global & Intl. Entrepreneurship

FDI-based ExplanationsFDI-based Explanations-Monopolistic Advantage Theory-Internationalization Theory-Dunning Eclectic Paradigm

Non-FDI Based ExplanationsNon-FDI Based Explanations-International Collaborative Ventures-Networks & Relative Assets

Why Nations Trade: Classical TheoriesMercantilism: national prosperity comes from a positive balance

of trade – maximize exports and minimize imports.Absolute Advantage Theory: a country produces those products

in which it has absolute advantage to other countryComparative Advantage Theory: it is beneficial for two countries

to trade even if one has absolute advantage in both products’ production by specializing in what they produce best & trade for the rest using scarce resources more efficiently on the basis of relative efficiency.

Factor Proportions (endowments) Theory: country to produce & export products by intensively using relatively abundant factors, & import goods that intensively use relatively scarce factors of production.

Leontief paradox suggested that that international trade is complex and countries can be successful even if it require a less abundant resource (e.g., the U.S. with its labor-intensive exports).

International product cycle theory: each product and its associated manufacturing technologies go through three stages of evolution: introduction, growth, and maturity

How Nations Enhance Competitive Advantage

contemporary view

• Govts. Policies : proactively enhance nation’s competitive advantage by stimulating innovation, targeting industries for development, providing low-cost capital, and through other incentives

• Porter’s Diamond Model: Factor Conditions, Demand Conditions, Related Support Industries and Firm’s strategy structure and rivalry.

• New Trade Theory: economies of scale an important factor for superior international performance – even without any clear comparative advantage possessed by the nation.

PORTER’S DIAMOND MODEL

Competitive Advantage of Nations ( Diamond Porter)Competitive Advantage of Nations ( Diamond Porter)

CHANCECHANCE

GovernmentGovernment

FACTOR FACTOR CONDITIONSCONDITIONS

DEMAND DEMAND CONDITIONSCONDITIONS

Firm Strategy, Firm Strategy, Structure, Structure, and Rivalryand Rivalry

Related and Related and Supporting Supporting IndustriesIndustries

FactorFactor ConditionsConditions

-Country creates its own skilled resources & technological base- Stock of factors needs to be upgraded and deployed - Disadvantages in factors force innovation

DemandDemand ConditionsConditions

- Local demanding market leads to national advantage- Trend-setting strong local market supports local firms anticipate global trends

Related & Related &

Supporting Supporting

IndustriesIndustries

- Firms having local supporting competitive industries, enjoy more cost effective & innovative inputs- This effect is strengthened when the suppliers themselves are strong global competitors

Firm Firm Strategy, Strategy, Structure Structure

& & RivalryRivalry

- Local conditions affect firm strategy:

. German companies tend to be hierarchical

. Italian cos. tend to be small & run more like extended families

- Such strategy & structure helps to determine in which types

of industries a nation's firms will excel.

- While at a single point in time a firm prefers less rivalry,

over the long run more local rivalry is better because

it puts pressure on firms to innovate and improve.

- In fact, high local rivalry results in less global rivalry.

Why and How Firms Internationalize?

• Evolutionary Process: EPRG Approach: suggests a gradual, evolutionary path to internationalization: stages: domestic focus, pre-export stage, experimental involvement, active involvement, and committed involvement.

• Born Global & International Entrepreneurship: many firms, even young or without experience, take bold steps to internationalize indicating on the emergence of Born Global companies in today’s fast-paced, interconnected economy.

Theories of INTL. Theories of INTL. TradeTrade• Theory of Mercantilism:Theory of Mercantilism: create trade surplus, accumulate wealth at another trading

partner’s cost (zero-sum game), restrict import & promote exports, exploitation & colonial mkts for finished goods & RM

• Theory of Absolute Advantage:Theory of Absolute Advantage:Adam Smith – A nation exports goods which it produces more efficiently & enables it to acquire more goods by imports

• Theory of Comparative Advantage:Theory of Comparative Advantage: David Ricardo- country benefits from Intl. Trade even it is less efficient in one product but specialize in other.

• Factor Endowment Theory:Factor Endowment Theory: H.O. - relative commodity prices and comparative advantage between two nations. Land-Labour relationship, technological complexities.

• Theory of Intl PLC:Theory of Intl PLC: Raymond Vernon - shifting of mkts, cyclical pattern, to achieve cost-efficiency,

• Theory of Competitive Advantage:Theory of Competitive Advantage: Michael Porter Diamond Model

-> Factor Input conditions (efficiency, quality, technology infrastructure & natural resources),

->Demand Conditions ( natural demand, size & growth patterns, upgrade product & services),

->Related support industry, ->Firm strategy, structure & Rivalry,

->Chance & -> Govt.

PORTER’S DIAMOND MODEL

Competitive Advantage of Nations (aka Diamond Porter)Competitive Advantage of Nations (aka Diamond Porter)

CHANCECHANCE

GovernmentGovernment

FACTOR FACTOR CONDITIONSCONDITIONS

DEMAND DEMAND CONDITIONSCONDITIONS

Firm Strategy, Firm Strategy, Structure, Structure, and Rivalryand Rivalry

Related and Related and Supporting Supporting IndustriesIndustries

FactorFactor ConditionsConditions

-Country creates its own skilled resources & technological base-Country creates its own skilled resources & technological base- Stock of factors needs to be upgraded and deployed - Stock of factors needs to be upgraded and deployed - Disadvantages in factors force innovation- Disadvantages in factors force innovation

DemandDemand ConditionsConditions

- Local demanding market leads to national advantage- Local demanding market leads to national advantage

- Trend-setting strong local market supports local firms - Trend-setting strong local market supports local firms

anticipate global trendsanticipate global trends

Related & Related &

Supporting Supporting

IndustriesIndustries

- Firms having local supporting competitive industries, enjoy - Firms having local supporting competitive industries, enjoy

more cost effective & innovative inputsmore cost effective & innovative inputs

- This effect is strengthened when the suppliers themselves - This effect is strengthened when the suppliers themselves

are strong global competitorsare strong global competitors

Firm Firm Strategy, Strategy, Structure Structure

& & RivalryRivalry

- Local conditions affect firm strategy:- Local conditions affect firm strategy:

. German companies tend to be hierarchical. German companies tend to be hierarchical

. Italian cos. tend to be small & run more like extended families. Italian cos. tend to be small & run more like extended families

- Such strategy & structure helps to determine in which types - Such strategy & structure helps to determine in which types

of industries a nation's firms will excel.of industries a nation's firms will excel.

- While at a single point in time a firm prefers less rivalry, - While at a single point in time a firm prefers less rivalry,

over the long run more local rivalry is better because over the long run more local rivalry is better because

it puts pressure on firms to innovate and improve.it puts pressure on firms to innovate and improve.

- In fact, high local rivalry results in less global rivalry.- In fact, high local rivalry results in less global rivalry.

To Gain & Sustain Intl. Competitive Advantage

• FDI: MNE traditionally been the major player in international business by FDI to control over resources & capabilities in the foreign market.

• Monopolistic Advantage: include proprietary knowledge, patents, unique know-how and skills, and sole ownership of other assets.

• Internationalization Theory: Firms acquire & retain one or more value-chain activities for effective control over foreign operations & avoiding the disadvantages of dealing with external partners against arm’s-length entry strategies.

• Dunning’s Eclectic Paradigm: 3 advantages

- Ownership-specific - Location-specific - Internalization

Non-FDI Based Explanations

INTERNATIONAL COLLABORATIVE VENTURES: partners share risk of their joint efforts for pool resources & capabilities to create synergy to gain access to partner’s know-how, capital, distribution channels, and marketing assets, and overcome government imposed obstacles.

1. Equity-based joint ventures: In contrast to the wholly-owned FDI, the firm collaborates with local partner(s) to reduce risk and commitment of capital.

2. Project-based alliances: Do not require equity commitment from the partners but simply a willingness to cooperate in R&D, manufacturing, design, or any other value-adding activity.

FII/PORTFOLIO INVESTMENTS: Investments in equity or portfolios & funds with no interest on operations and control of the organizations.

““It has been said that arguing against globalization It has been said that arguing against globalization is like arguing against the law of gravity.” is like arguing against the law of gravity.”

General Kofi Annan, - UN Secretary

Globalization

• Global characteristicsGlobal characteristics- Customer needs are similar Customer needs are similar

internationallyinternationally- Compete in globalized industriesCompete in globalized industries- Locate value-adding activities in places Locate value-adding activities in places

world-wide where competitive advantage world-wide where competitive advantage can be gainedcan be gained

- Integrate & coordinate intl. activities Integrate & coordinate intl. activities between countriesbetween countries

Globalization: Opportunity or Threat?

• Promotes free trade• More goods & services are available at lower cost to wider people• Globalized capital markets attract money to economies for growth

and allow for greater returns for investors• Creates jobs and economic growth• Creates a common culture, allowing people around the world to

understand each other more easily • Breaks down isolation

• Favors wealthy, industrialized countriesFavors wealthy, industrialized countries• Occurs at the expense of workers in poorer Occurs at the expense of workers in poorer

countriescountries• Rapid movement out of countries can cause Rapid movement out of countries can cause

political, economic and social problemspolitical, economic and social problems• Exploits cheap labor and natural resources where Exploits cheap labor and natural resources where

laws don’t adequately provide protectionlaws don’t adequately provide protection• Undermines traditional culture, language and Undermines traditional culture, language and

valuesvalues

Future of Intl. Business & Future of Intl. Business & Globalization Globalization

Globalization is inevitable

Intl. Business to grow along

Regional lines than Global lines.

Anti-Globalization & Anti Intl. Business Forces

to slow down.

Expansion of International TradeVolume of Intl. trade up from $200 bn to $10 tr. in past 30 yrs.

World GDP Growth

Volume of World Merchandise Exports & GDP, 2000 - 2007

Source: International Trade Statistics (WTO)

The Composition of Trade

• Between the 1960’s and the 1990’s the importance of manufactured goods increased while the role of primary commodities (i.e. rubber or mining) had decreased.

• More recently, there has been a shift of manufacturing to countries with emerging economies.

• There has been an increase in the area of services trade in recent years, although it remains less than 19% of all trade.

Recent Changes in International Trade Recent Changes in International Trade

• Trade slowed in 2007 on weakening demand from developed economies

• Agricultural products experienced the greatest value growth in 2007, due to higher prices

• Brazil, India and China continue to show growth trends in trade, but in terms of global exports Brazil and India only have 1%, while China has nearly 10%

• The value of trade in commercial services increased at a faster rate (18%) than the trade in goods

The Powerful MNEs• Modern MNE’s are larger economies than some nations

• Measuring company sales against GDP, half of the top 100 economies in the world are companies

– Mitsubishi is larger than Indonesia– Ford is bigger than Turkey– Wal-Mart is bigger than Israel

Coca-ColaCoca-Cola

• 80% of operating income is derived outside the U.S.

• Distributes its products in more than 200 countries

• Employs more than 71,000 worldwide

General Electric General Electric CorporationCorporation

• In 2005, 61% of General Electric’s assets were foreign assets

• GE had 155,000 foreign employees

• Foreign sales accounted for 1/3 of GE’s total sales (source: www.unctad.org)

Thanks!

Group Assignment – 5 students in each group.

• Find the motivating factors of any Indian Firm entering Intl. Mkts.

• Find the motivating factors of any Multinational Co. entering Intl. Mkts.

• Find the motivating factors of any GLOCAL Co. entering Intl. Mkts.

• BROWSE Internet & Identify 2 companies that have different orientations towards International Marketing as per EPRG & BORN GLOBAL. Find their key reasons of success.

Thanks!Thanks!