GLOBAL MARKETING MANAGEMENT by MASAAKI KOTABE and KRISTIAAN HELSEN John Wiley & Sons, Inc. 1998

GLOBALIZATION IMPERATIVE Chapter One John Wiley & Sons, c 1998

Globalization Imperative Chapter One Overview 1. Why Global Marketing is Imperative 2. Globalization of Markets and Competition 3. Evolution of Global Marketing 4. Appendix John Wiley & Sons, c 1998

Overview of Globalization Imperative John Wiley & Sons, c 1998

1. Why Global Marketing is Imperative Exhibit 1-1 “Change in the World’s 100 Largest Companies” global vs international vs multinational John Wiley & Sons, c 1998

2. Globalization of Markets and Competition Exhibit 1-2 “ US Balance of Goods, Services and Income over 20 Year Period” International Trade (IT) and International Business (IB) IT = exports/imports IB = includes IT and foreign production export of products investment in foreign production contract or manufacture in foreign country foreign production is larger than IT John Wiley & Sons, c 1998

2. Globalization of Markets and Competition (cont) Global Reach United States 3:1 ratio of foreign products to exports 6:1 ration of US/European production to exports 5:1 ratio of European owned US located subsidiaries Japan 2.5:1 ratio of Japanese subsidiaries to Japanese exports John Wiley & Sons, c 1998

2. Globalization of Markets and Competition (cont) Who Manages International Trade? intra-firm trade transfers to affiliates overseas 30% of US exports 30% of exports by Japan and Britain John Wiley & Sons, c 1998

3. Evolution Of Global Marketing What is Marketing? satisfies customers needs anticipates and creates their future needs at a profit reactively and proactively Domestic Marketing exhibit 1-3 ethnocentric John Wiley & Sons, c 1998

3. Evolution of Global Marketing (cont) Export Marketing ethnocentric International Marketing polycentric multidomestic marketing Multinational Marketing regiocentric John Wiley & Sons, c 1998

3. Evolution of Global Marketing (cont) geocentrism reduction of cost inefficiencies and duplication of efforts opportunities to transfer products, brands and ideas across subsidiaries emergence of global customers improved linkages … leading to global market infrastructure John Wiley & Sons, c 1998

4. APPENDIX Comparative Advantage Theory International Product Cycle Theory Internalization / Transaction Cost Theory John Wiley & Sons, c 1998

COMPARATIVE ADVANTAGE THEORY Exhibit 1-4 “Comparative Advantage at Work” absolute advantage vs comparative advantage commodity terms of trade principles of international trade 1. countries benefit from international trade 2. international trade increases worldwide production by specialization 3. exchange rates are primarily determined by traded goods John Wiley & Sons, c 1998

INTERNATIONAL PRODUCT CYCLE THEORY Exhibit 1-5 “International Product Cycle” first economies of scale economies of scope second technological gap monopoly power third preference similarity (consumption power) John Wiley & Sons, c 1998

INTERNALIZATION/ TRANSACTION COST THEORY multinational companies appropriability regime dominant design manufacturing and marketing ability John Wiley & Sons, c 1998