©2003 South-Western Chapter 3 Version 3e1 chapter Developing a Global Vision 3 3 Prepared by...

Chapter 3 Version 3e 1©2003 South-Western

chapter

Developing a Global VisionDeveloping a Global Vision

33

Prepared byPrepared byDeborah BakerDeborah Baker

Texas Christian UniversityTexas Christian University


chapter

Learning ObjectivesLearning Objectives

33

1.1. Discuss the importance of global Discuss the importance of global marketing.marketing.

2. Discuss the impact of multinational firms2. Discuss the impact of multinational firmson the world economy.on the world economy.

3. Describe the external environment facing 3. Describe the external environment facing global marketers.global marketers.


chapter

Learning Objectives (continued)Learning Objectives (continued)

33

4. Identify the various ways of entering the4. Identify the various ways of entering theglobal marketplace.global marketplace.

5. List the basic elements involved in 5. List the basic elements involved in developing a global marketing mix.developing a global marketing mix.

6. Discover how the Internet is affecting6. Discover how the Internet is affectingglobal marketing.global marketing.


Learning Objective Learning Objective 11

Discuss the importance of global marketing.


Global MarketingGlobal Marketing

Marketing that targets

markets throughout

the world.

11


Global VisionGlobal Vision11

Recognize and react to internationalmarketing opportunities

Be aware of threats from foreign competitors

Use international distribution networks


Importance of Global Marketing Importance of Global Marketing

U.S. exports a fifth of industrial production and one-third of its farm products

One of every sixteen jobs in U.S. is supported by exports

11


Importance of Global MarketingImportance of Global Marketing

A third of U.S. corporate profits is from international trade and investment

Exports accounted for 20% of growth in economic activity (1999)

U.S. is world’s leading exporter of grain

11


The Negatives of Global TradeThe Negatives of Global Trade

Millions of Americans have lost jobs

Millions fear losing jobs

Workers face pay-cut demands

Service and white-collar jobs are vulnerable to operations move

11


The Advantages of Global TradeThe Advantages of Global Trade

Rise from poverty for foreign nations

Per capita income increases

Productivity and living standard increase

Inflation not as threatening

Open economy spurs innovation

Export jobs may pay more

11



Discuss the impact of Discuss the impact of multinational firmsmultinational firms

on the world economy.on the world economy.


Multinational CorporationMultinational Corporation22

A company that is heavily

engaged in international

trade, beyond exporting

and importing.


Multinational AdvantageMultinational Advantage

Overcome trade problems

Sidestep regulatory problems

Shift production from one plant to another

Tap new technology from around the world

Save in labor costs

22


Global Marketing StandardizationGlobal Marketing Standardization22

Production of uniform

products that can be

sold the same way

all over the world.


Global Marketing StandardizationGlobal Marketing Standardization

World markets are becoming more alike

Standardized products can be sold the same way worldwide

Successful companies may vary products for global markets

22


Learning Objective Learning Objective

Describe the external environmentDescribe the external environmentfacing global marketers.facing global marketers.

33


The External EnvironmentThe External Environment

Natural Resources

Natural Resources

Demographic Makeup

Demographic Makeup

Economic and Technological Development

Economic and Technological Development

CultureCulture

Environmental Factors

Environmental Factors

Political StructurePolitical Structure

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CultureCulture

The common set of values

shared by its citizens

that determine what is

socially acceptable.

33


CultureCulture33

Language Religion Superstitions Etiquette Customs

Traditions Notion of time


Lessons About the Notion of TimeLessons About the Notion of Time

1. Know appropriate arrival time.

2. Understand the line between work time and social time.

3. Study the rules of the waiting game.

4. Learn to reinterpret “doing nothing.”

5. Ask about accepted sequences.

6. Are people on clock time or event time?

33


Economic and Economic and Technological DevelopmentTechnological Development

Type of Type of SocietySociety

Type of Type of SocietySociety DescriptionDescriptionDescriptionDescription

TraditionalTraditional

Pre-IndustrialPre-Industrial

TakeoffTakeoff

IndustrializingIndustrializing

Agricultural, Little Upward MobilityAgricultural, Little Upward Mobility

Social and Economic ChangeSocial and Economic Change

New IndustriesNew Industries

Spread of TechnologySpread of Technology

FullyIndustrial

FullyIndustrial

Exporter, Technology as Driverof New Innovation

Exporter, Technology as Driverof New Innovation

33


Political Structure ExtremesPolitical Structure Extremes33

No private ownershipMinimal individual freedom

Little central governmentMaximum personal freedom


Legal ConsiderationsLegal Considerations

TariffTariff

QuotaQuota

BoycottBoycott

Exchange ControlExchange Control

Market GroupingMarket Grouping

Trade AgreementTrade Agreement

Legal Structures Legal Structures Encourage or Encourage or

Limit TradeLimit Trade

Legal Structures Legal Structures Encourage or Encourage or

Limit TradeLimit Trade

33


Legal ConsiderationsLegal Considerations

Tariff

Quota

Boycott

Exchange Control

Market Grouping

Trade Agreement

A tax levied on goods entering a country

Limit on the amount of a productthat can enter a country

Exclusion of products from a country

Foreign exchange must be sold to a control agency

Common trade alliance

An agreement to stimulateinternational trade

33


Trade Agreements: Uruguay RoundTrade Agreements: Uruguay Round33

Reduces tariffs by one-third world-wide

Patent/copyright protection

Services under international rules

Reduction of farm subsidies


Political and Legal ConsiderationsPolitical and Legal Considerations

MercosurMercosur

NAFTANAFTA

European UnionEuropean Union

Examples Examples

33


Demographic MakeupDemographic Makeup

Marketing Considerations

Marketing Considerations

Population density

Urban or rural

Personal income

Rise of global middle class

Supply of professionals

33


Natural ResourcesNatural ResourcesDifferences in natural resources create:

International dependencies Shifts of wealth Inflation and recession Export opportunities if resources

are abundant Stimulus for military intervention

33



Identify the various ways of entering Identify the various ways of entering the global marketplace.the global marketplace.

44


Global Marketplace QuestionsGlobal Marketplace Questions44

What are our options in selling abroad?

How difficult is global marketing?

What are the potential risks and returns?


Why “Go Global”?Why “Go Global”?

Earn additional profits

Leverage a unique product or technological advantage

Possess exclusive market information

Utilize “economies of scale”

44


Risk Levels for Global EntryRisk Levels for Global Entry

LowLowrisk/risk/lowlowreturnreturn

HighHighrisk/risk/highhighreturnreturn

RiskRisk

ReturnReturn

Export Licensing

ContractManu-

facturing

JointVenture

DirectInvest-ment

44


Entering the Global MarketplaceEntering the Global Marketplace

LicensingLicensing Legal process allowing use of manufacturing/patents/knowledge.

Legal process allowing use of manufacturing/patents/knowledge.

ContractManufacturing

ContractManufacturing

Private-label manufacturing by a foreign country

Private-label manufacturing by a foreign country

Joint VentureJoint Venture Domestic firm buys/joins a foreign company to create new entity.

Domestic firm buys/joins a foreign company to create new entity.

ExportExport Sell domestically produced products to buyers in other countries.

Sell domestically produced products to buyers in other countries.

Direct Investment

Direct Investment

Active ownership of a foreign company/manufacturing facility.Active ownership of a foreign

company/manufacturing facility.

44


Export IntermediariesExport Intermediaries44

Buyer for ExportBuyer for Export Assumes all ownership risks and sells globally for its own account.

Assumes all ownership risks and sells globally for its own account.

Export BrokerExport Broker Plays the traditional broker’s role by bringing buyer and seller together. Plays the traditional broker’s role

by bringing buyer and seller together.

Export AgentExport Agent Acts like a manufacturer’s agent for the exporter in the foreign market.

Acts like a manufacturer’s agent for the exporter in the foreign market.



List the basic elements involved in List the basic elements involved in developing a global marketing mix.developing a global marketing mix.

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Product and PromotionProduct and Promotion

One ProductOne MessageOne ProductOne Message

Product AdaptationProduct

Adaptation

MessageAdaptationMessage

AdaptationProduct InventionProduct Invention

SameSameMessageMessage

SameSameProductProduct

ChangeChangeMessageMessage

ChangeChangeProductProduct

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PricingPricing55

Must consider transportation and insurance costs, taxes and tariffs

Determine what customers will spend

Ensure that foreign buyers will pay them

May need to simplify a product to lower price


DumpingDumping

The sale of an exported product

at a price lower than that charged

for the same or a like product

in the exporter’s

“home” market.

55


CountertradeCountertrade

A form of trade in which

all or part of the payment for

goods or services

is in the form of other goods or

services.

55


Distribution ChallengesDistribution Challenges

Japanese distribution system is the most complicated in the world

Retail institutions may differ from company’s domestic market

Distribution channels and physical infrastructure may be inadequate

55



Discover how the Internet is Discover how the Internet is affecting global marketing.affecting global marketing.


Going GlobalGoing Global66

Internet e-commerce sites

Language translation software

Global shippers

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