Chap-01 Introduction' 2007

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Chap-01 Introduction' 2007

Transcript of Chap-01 Introduction' 2007

  • Chapter 1

    The Scope and Challenge of International MarketingPowerPoint byShaikh Rafiqul IslamM.Com (DU),MBA (Australia) Associate ProfessorDepartment of Marketing Jagannath University

  • The Trends Affecting Global Business TodayRapid growth of WTO & regional free trade areas such as NAFTA, EU etcFree market system among developing countries in Latin America, Asia, & Eastern EuropeImpact of Internet & other global media on the dissolution of national bordersThe mandate to manage resources & global environment for the generations to come

    -As a result, most business activities, like technology, research, capital investment, production, marketing, distribution & communications networks are global in scope*S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • New and Future Multinational Market Groups or Trading Blocks of the 21st CenturyEuropean Union

    European Economic Area (EC and EFTA)

    North American Free Trade Area

    Southern Cone-Mercosur

    Asian Free Trade Area (AFTA)

    Commonwealth of Independent States (CIS)

    Central European Free Trade Area (CEFTA)

    *S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • New and Future Multinational Market Groups or Trading Blocks of the 21st CenturyWestern Hemisphere Free Trade Areas (WHFTA) Canada to ArgentinaAsia-Pacific Economic Cooperation (APEC) Pacific Rim Countries including U.S.U.S./ Canada/Mexico/JapanSouth American Free Trade Area (SAFTA) Andean Pact and MercosurChinese Economic Area (CEA) Hong Kong, Taiwan, Coastal Provinces of So. ChinaU.S./European UnionMany possibilities of Republics of Russia, Baltic StatesPossible Regional Trade Groups*S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • Why internationalization?Saturation of U.S. marketsHigher ROI in foreign marketsNeed to establish early position in world marketsUS firms exporting, importing and/or manufacturing abroadForeign-based firms operating in U.S. marketsGrowth of regional trade areasRapid growth of world markets*S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • Why internationalization?

    Increasing number of competitors for global marketsU.S. multinationals increasingly face competition for lucrative markets from companies from developing countries Political and economic changes in Latin America, Asia, Eastern Europe and the former Soviet Union, India etc. Growth of new markets*S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • International Marketing DefinedThe performance of business activities designed to plan, price, promote, & direct the flow of a companys goods & services to consumers/users in more than one nation for a profit

    The only difference in the definitions of DM and IM is.... in more than one nation

    This minor difference accounts for complexity & diversity in IMMarketing concepts, processes, & principles are universally applicable & the marketers task is the same in anywhere

    Businesss goal is to make a profit by promoting, pricing and distributing products for which there is a market.

    *S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • The difference lies with the environment within which marketing plans/strategies must be implementedThe uniqueness of IM comes from the range of unfamiliar problems and the variety of strategies necessary to cope with different level of uncertaintyMarketing consists of controllables & uncontrollablesInternational Marketing Defined-Natural question is whats the difference between IM and DM?*S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • Molding the controllables within the framework of uncontrollables of the marketplace to achieve marketing objectives is more interesting

    Complexity of IM task depends on the number of countries in which a marketer operates

    Every country adds a set of unique problems

    Every solution is unique and can not fit to othersThe International Marketing Task*S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • 7Political/legalforcesEconomicforces12Environmentaluncontrollablescountry market AEnvironmentaluncontrollablescountrymarket BEnvironmentaluncontrollablescountrymarket CCompetitivestructureCompetitiveForces Level of TechnologyPriceProductPromotionChannels of distributionGeography &InfrastructureForeign environment(uncontrollable)Structure ofdistributionEconomic climateCultural forces34567Political/legalforcesDomestic environment(uncontrollable)(controllable)The International Marketing Task*S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • The International Marketing TaskMarketing decision factors-Product-Price -Place-PromotionAspects of the domestic environment-Political/legal forces-Competitive structure-Economic climate*S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • The International Marketing TaskAspects of the foreign environment-Political/legal forces-Cultural forces-Geography and infrastructure-Structure of distribution-Level of technology-Competitive forces-Economic forces

    *S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • The International Marketing Task

    Marketing decision factors Construct a marketing program with 4 Ps for optimal adjustment to uncontrollables assuming corporate resources and constraints

    Controllables can be altered to adjust to changing market conditions, consumer tastes, or corporate objectives.

    Uncontrollables must be evaluated & marketing program must be adapted to them .

    Success depends on the amount of successful adaptation of marketing mix to these uncontrollables *S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • The International Marketing Task

    Domestic Uncontrollables

    Any political decision involving domestic foreign policy has a direct effect on IM- positive or negative-Impact of U.S. governments ban on trade with South Africa to protest apartheid and then the withdrawal of apartheid

    Domestic economic climate has farreaching effects on IM -Capacity to invest in plants and facilities in either market depends on domestic economic vitalityCompetition within home country affects a company's domestic as well as international plans.

    -Eastman Kodak dominated US film market and competitive structure changed when Fuji Photo Film became formidable by cutting prices*S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • The International Marketing TaskForeign Uncontrollables

    Assessing foreign uncontrollables involves substantial doses of cultural, political, & economic shock

    Polar extremes in political stability, class structure, & economic climate exist

    Some dynamic upheavals create the problems of dramatic change in cultural, political, & economic climates -China moved from a communist legal system to free market economyThese are major sources of uncertainty to which cope with*S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • The International Marketing TaskForeign Uncontrollables

    Political shifts may result in expropriation/confiscation/ domestication /imposing restrictions and need close attentionDifferent strategies are needed due to differences in political climate, stages of economic development, level of technologyPolitical details and ramifications are less transparentSometimes corruptions prevail and marketers may receive unfair treatment and law may be different*S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • The International Marketing TaskForeign Uncontrollables

    Alien status increases the difficulty of assessing & forecasting business climate because:-foreigners control the business-culture of the host country is alien to management-For example, Indian govt gave CocaCola the choice of either revealing its secret formula or leaving the country

    *S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • The International Marketing TaskForeign Uncontrollables

    Level of technology and expertise is a problem due differences in economic developmentCultural conditioning is like an icebergAll other factors also pose lots of uncertaintyInfluencing factors are:

    -Geography and infrastructure-Structure of distribution-Level of technology-Competitive forces-Economic forces*S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • Environmental Adaptation NeededInterpret the influence of uncontrollables on marketing planThe task of adjustment is most challengingIn domestic market marketers response is automatic based on inherited (acquired) frame of reference (FOR)-A Frenchman knows how to behave and operate in FranceFOR, a highly persistent aspect, can be a serious constraint when operating abroad

    *S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • Environmental Adaptation NeededAdjust marketing efforts to cultures to which one is not attuned-A westerner must learn that white is a symbol of mourning in some parts of Asia not bridal gowns-Circle with thumb and forefinger: OK in USA, Zero or worthless in France, Money in Japan, Sexual insult in Greece Cultural conditioning is like an iceberg of which 9/10 is unknown

    *S.R.Islam, Assoc. Prof, JnU

    S.R.Islam, Assoc. Prof, JnU

  • SRC and Ethnocentrism: Major Obstacles

    The key to success in IM is adaptation-Adaptation is a conscious effort to anticipate the influences of foreign and domestic uncontrollables on marketing mix and then to adjust marketing mix The primary obstacle to this is SRC and Ethnocentrism-SRC- an unconscious reference to ones own cultural values