26 International environment Global business Why do global firms exist? Transnational companies Global marketing Global marketing mix

Global business Globalisation of products and services Business world is single trading market (global sales) Export-based industries Standardised product, mass production, brand recognition Economies of scale Example: Intel, Microsoft, Toyota and Nike

Why go global companies exist? Domestic markets too small for growth Production technology creates economies of scale Free trade Communications developments (e.g. online sales and online marketing) Mergers and alliances Changing world politics bring about new markets (e.g. Russia and China)

Transnational companies Transnational companies (TNCs) are also called multinational companies Produce and market products in different countries Create fully owned subsidiaries: Overcome language barrier Benefit from low overheads Benefit from cheap labour costs Example: Poland and China Overcome trading barriers: Japanese cars manufactured in Europe to overcome import restrictions Standardised products are easier to market

Transnational companies Why TNCs are attracted to Ireland? Access to SEM Low taxation Skilled and educated workforce Good infrastructure Benefits of TNCS Create jobs Improve balance of payments (reduce imports and increase exports) Taxes to government Disadvantages of TNCs Social and economic problems if business closes Repatriation of profits Competition for indigenous businesses

Global marketing International marketing Same brand marketed and sold in different countries Standardised products Example: Coca-Cola and McDonald’s Bigger profits and economies of scale Challenges of marketing a global brand: Currency Language Cultural differences Legal differences Costs of adapting marketing plan

Global marketing mix Four Ps: product, price, promotion and place Product: may need to adapt standardised product (e.g. right-hand drive) Price: take local prices into account Promotion: cultural nuances Place: distribution channels