Ppt Lecture One(1)(1)

7/30/2019 Ppt Lecture One(1)(1)

http://slidepdf.com/reader/full/ppt-lecture-one11 1/27

INTRODUCTION

HBM223/HBM/HBI223NTransnational Marketing/International

Marketing

Chamila Perera

[email protected]



Lesson Plan

Teaching team 05min

Introduction to the unit of study 20min

Assessment requirements 10min

Readings 05min

Some ground rules 05min

Q & A 10min

Lecture no. one

Introduction to International Marketing 10min

Discuss the evolution of global marketing 10min

Discuss the growth of Asian markets and 15min

the implication for global trade and international marketing

Quick break ~

internationalisation theories 20min

Lecture summary ~ min



Learning objectives

Discuss the evolution of global marketing

Describe the growth of Asian markets and the

implication for global trade and international

marketingUnderstand the comparative advantage, international

product cycle and internalization theories in relation

to international trade and investment



Come along the silk road

The Mogao Caves are a reminder of the Silk Road

A network of trade routes across Asiancontinent which connected Asia with

Mediterranean world, Africa and Europe.

The term was coined in 1877. A symbolic

term of international commerce which also

recognises the networkof economic and cultural exchange

occurring across the Eurasian continent

since about 2000 BCE.

Picture Source:http://www.powerhousemuseum.com/

http://www.powerhousemuseum.com/walkingthewall/wp-content/uploads/2006/06/IMG_1845.jpg



International trade versus

international business

International trade The process of exporting and importing goods

between a nation and other countries in the

world

International business A combination of international trade and foreign

production of goods for sale

exporting

Invest inforeign

productio

n

Invest in

Other entry

modes



Why we need to study international

Marketing

Growing economic interdependence amongcountries

‘When America sneezes, the rest of the world

catches a cold’ (p.4)

Not only MNCs, but firms which operatesdomestically can no longer avoid competitive

pressure from around the world

Therefore, any marketing manager needs to

understand the nature of and the changes withinglobal environment



Recent developments in internationalisation: The

Asian century

Historically for most of the 20th

century the triad regions have

dominated world trade

North America, Western Europe

and Japan

Increasingly, it is the Big

Emerging Markets (BEMs) which

are now having an impact

CEA, India, South Korea, Mexico, Brazil, Argentina, South Africa, Poland, Turkey

& ASEAN

second-tier emerging markets (referred

to as the Next 11), such as Indonesia,

Turkey, Egypt, Nigeria, Mexico, the

Philippines andVietnam

http://www.google.co.uk/imgres?q=the+big+emerging+markets&hl=en&sa=X&rlz=1T4SKPB_enAU367AU368&biw=1280&bih=556&tbm=isch&prmd=ivns&tbnid=v8l0C5MiOlhjuM:&imgrefurl=http://www.tradesmarter.com/binary-options/emerging-markets-in-focus-special/&docid=AKrb3im-rw9cxM&w=339&h=300&ei=CNI4ToeSNJHPmAW35OnBBw&zoom=1



The Asian century

Increasing amount of competition coming fromthe BEMs

There is a desire for modernity in these

markets which fuels their competitiveness and

growth

Infrastructure and energy needs will prove to

be problematic as they grow

Prof. Hans Rosling (TED talks)

http://www.youtube.com/watch?v=hVimVzgtD

6w

http://www.youtube.com/watch?v=hVimVzgtD6w






Why understanding international

marketing is imperative?

1. Saturation of domestic markets forces companies tolook elsewhere

2. The nature of competition has changed Market share, country source and global reach

MNCs have to revisit their existing international marketingstrategies due to changes in global markets

They have to develop new initiatives to stimulate andcapture demand in their traditional markets (developedcountries and global or regional market segments)

They must formulate new strategies to target the widerange of growth opportunities in other countriesthroughout the world





3. International competition also brings about

global cooperation

partnerships between Toshiba and Sony, from

Japan with US computer manufacturer IBM

4. The impact that the internet and

e-business has made on the global business

landscape (modern silk road)





5. Changing nature of the world economy

Shift in the world’s largest companies

Less US and Japanese centric

Consider the make up of the largest100 companies in the world

6. Domestic companies cannot avoid

competitive pressure from globally oriented

firms



Class activity 1 :

Why it is important for marketing managers to beaware of international market changes?

Saturation of domestic markets

Changing nature of competition

Global partnership

Online businesses

Changing nature of the world economy

Competitive pressure



In search of international business: Examples

Reckitt Benckiser has managed to increase its overall revenue,

despite a decline in Europe,

because it has moved aggressively

into developing markets (Carolan 2010).

(class activity: Company without boarders)

General Motors sales in the United States have declined, but the

growth opportunities have arisen elsewhere. Emerging markets are an

important avenue for growth: Currently, General Motors sells more cars

in China than it does in the United States (Barboza and Bunkley 2010).

http://www.google.com.au/imgres?q=reckitt+benckiser&hl=en&sa=X&rlz=1R2SKPB_enAU367&biw=1280&bih=556&tbm=isch&prmd=ivns&tbnid=4UTOrcIuC_TnMM:&imgrefurl=http://www.h2w.com.br/site/main.asp%3FidClient%3D17%26idPage%3D256&docid=IyEyFz6HrVCD4M&w=400&h=199&ei=jLo4TtTUN-3nmAXRx7C6Bw&zoom=1

http://www.google.com.au/imgres?q=reckitt+benckiser&hl=en&sa=X&rlz=1R2SKPB_enAU367&biw=1280&bih=556&tbm=isch&prmd=ivns&tbnid=exCwgL8vnGTp2M:&imgrefurl=http://insidevoidmain.blogspot.com/2008_10_10_archive.html&docid=HfPkIQlBVU2k3M&w=300&h=203&ei=jLo4TtTUN-3nmAXRx7C6Bw&zoom=1



http://www.google.com.au/imgres?q=reckitt+benckiser&hl=en&sa=X&rlz=1R2SKPB_enAU367&biw=1280&bih=556&tbm=isch&prmd=ivns&tbnid=4UTOrcIuC_TnMM:&imgrefurl=http://www.h2w.com.br/site/main.asp%3FidClient%3D17%26idPage%3D256&docid=IyEyFz6HrVCD4M&w=400&h=199&ei=jLo4TtTUN-3nmAXRx7C6Bw&zoom=1



The global economic crisis and FDI

flows to emerging markets

The global economic and financial crisis has had amajor impact on FDI flows.

Emerging markets will attract considerable FDI and

probably more than developed countries. Just under 60% of companies expect to derive more than 20%

of their total revenue in emerging markets in five

years' time – almost double the present proportion of

31%.

The rapid growth of global FDI—which has grown

faster than world GDP—reflects major underlying

policy changes toward FDI in host and homeMore readings: Kekic, L.(2011).The global economic crisis and FDI flows to emerging markets.FDI PERSPECTIVES,2.



A new geography of innovation – China and India

rising : ‘iron cage of the triad’ starting to open

Until the end of the 1990s, the geography of (business) innovation was largely congruent with the

triad of developed world regions: North America,

Europe and Japan.

Developing countries played a subsidiary role, either primarily supplying talent (brain drain) or functioning

as sector specialists in smaller newly industrializing

economies such as Taiwan Province of China,

Singapore and Israel Upward move of Indian and Chinese vendors and

contract research organizations (CROs) from

providing routine services to knowledge process and

R&D offshoringMore readings: Kekic, L.(2011).The global economic crisis and FDI flows to emerging markets.FDI PERSPECTIVES,2.



Evolution of international

and global marketing

Shift in management

paradigms

Traditional paradigm

rooted in US

management theory

More of a ‘global

approach’ now

Marketing strategies are

based on an

organisation’s degree of

experience and nature of

operations in international

markets

Organisations do, however,

evolve over time



Evolution of international and global

marketing

Five Stages

1. Domestic marketing

2. Export marketing

3. International (country-by-country)marketing

4. Multinational (region-by-region) marketing

5. Global marketing

E v ol u t i o

n ar y pr o c

e s s



volution of global marketing



Evolution of international and global

marketing

Global marketing – key concerns

Impact of environmental factors on global marketing

Impact of the Internet on global marketingThe internet adds a new dimension to global

marketing changing the marketing paradigm.

Assignments!



THEORIES OF INTERNATIONAL TRADEThese theories provide a number of fundamental principles that help us to

understand as to why international trade and investment occur and to design

effective strategies for anticipating changes in the international market in the

future.

Comparative

advantagetheory

• A theory that states that a country can gainfrom engaging in trade even if it has an

absolute advantage or disadvantage

Internationalproduct cycle

theory

• A theory developed to explain a realistic,dynamic change in internationalcompetition over time and place

Internalisation/

transaction theory

• A theory that focuses on internal cost of economic exchanges within MNCs



Comparative advantage theory (David Ricardo) :

Ricardian Theory

A country can gain from engaging in trade even if it

has an absolute advantage or disadvantage (relative

efficiency)

= Assumptions

Two countries : Australia and China and two products PCs and desksOnly labour , all other costs are zero



Country

AUS 15 30

CHINA 10 15 Absolute

advantage

• A desk in Aus costs the same amount to produce as 2 units of PCs. Production

of an extra desk means foregoing production of 2 units of PCs (i.e., the

opportunity cost of a desk is 2 units of PCs).

•In China , a desk costs 1.5 units of PCs to produce (i.e., the opportunity cost of

a desk is 1.5 units of PCs in China).

•China is relatively better at producing desks than PCs (15/10=1.5) : so China

is said to have a COMPARATIVE ADVANTAGE in the production of deskshence should be specialised in desk production.

• Aus is relatively better at producing PCs than desks (15/30=0.5) : so Aus is

said to have a COMPARATIVE ADVANTAGE in the production of PCs hence

should be specialised in PCs production.

Lower unit

labour than any

other region



Factor endowment theory: A refined argument of

comparative advantage

Nothing is produced with manual labour alone

Countries possess different amounts of land, labour, capital (i.e. factors of

production) that determine a their comparative advantage.

Australia has more abundant capital relative to labour than China does. Therefore,

Australia should specialise in industries that require a large amount of capital.

This is referred to as capital-labour endowment ratio: determines what type of a

industry a country tends to specialise in.

Export products in which a country has an advantage in production and import

products in which the country has a disadvantage in production.

International product cycle theory: beyond



International product cycle theory: beyond

comparative advantage theory

Why and how does competition tend to evolve over timeand across national boundaries in the same industry?

How does an organisation develop its marketing

strategy in the presence of both domestic and overseas

competitors?

Nestle can enjoy economies of scale by considering

European,US and Japanese markets together as its

primary market



Source : http://www.provenmodels.com/583/international-product-life-cycle/raymond-vernon/

http://www.google.co.uk/imgres?q=microwave+oven&hl=en&sa=X&rlz=1T4SKPB_enAU367AU368&biw=1280&bih=556&tbm=isch&prmd=ivnsr&tbnid=G9Fc99tP8lZvPM:&imgrefurl=http://www.appliancist.com/microwave_ovens/%3Fstart%3D15&docid=LOzAAiEgNFX4mM&w=465&h=300&ei=UOs4TseNHujHmAXRzOG3Bw&zoom=1



Internalisation/transaction cost theory

• A theory that focuses on internal cost of economic exchanges within MNCs.

•MNCs are the organisations that have established plants in various countries.

•Differentiating from IPL (reactive approach) , this theory explains proactive

reasons for MNCs to invest overseas.

Newproduct

Product

design

Production

technique

Brandimage

Economic value of

Unique expertise

Not letting it to be

a public good

Appropriability

regime

Manufacturin

g and

marketing

ability

Dominant

design

According to the internalisation

approach multinational companies tendto internalise transactions for which the

transaction cost in the market is high.

One way to reduce the transaction costs

is to carry out these transactions within

one and the same company rather than

between independent companies.Three routes to gain competitive Advantage



Summary

You should now have an understanding of: The growth of Asian markets and

the implication for global trade and internationalmarketing

The aspects of the internationaltrade and business environment that havemade understanding international marketingimperative

The evolution of global marketing The role of comparative advantage, international

product cycle and internalization theories in relationto international trade and investment

Ppt Lecture One(1)(1)

Documents

Transcript of Ppt Lecture One(1)(1)