©2003 South-Western Chapter 3 Version 3e1 chapter Developing a Global Vision 3 3 Prepared by Deborah Baker Texas Christian University

©2003 South-Western Chapter 3 Version 3e2 chapter Learning Objectives Discuss the importance of global marketing. 2. Discuss the impact of multinational firms on the world economy. 3. Describe the external environment facing global marketers.

©2003 South-Western Chapter 3 Version 3e3 chapter Learning Objectives (continued) Identify the various ways of entering the global marketplace. 5. List the basic elements involved in developing a global marketing mix. 6. Discover how the Internet is affecting global marketing.

©2003 South-Western Chapter 3 Version 3e4 Learning Objective 1 1 Discuss the importance of global marketing.

©2003 South-Western Chapter 3 Version 3e5 Global Marketing Marketing that targets markets throughout the world. 1 1

©2003 South-Western Chapter 3 Version 3e6 Global Vision 1 1  Recognize and react to international marketing opportunities  Be aware of threats from foreign competitors  Use international distribution networks

©2003 South-Western Chapter 3 Version 3e7 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 1 1

©2003 South-Western Chapter 3 Version 3e8 Importance 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 1 1

©2003 South-Western Chapter 3 Version 3e9 The 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 1 1

©2003 South-Western Chapter 3 Version 3e10 The 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 1 1

©2003 South-Western Chapter 3 Version 3e11 Learning Objective 2 2 Discuss the impact of multinational firms on the world economy.

©2003 South-Western Chapter 3 Version 3e12 Multinational Corporation 2 2 A company that is heavily engaged in international trade, beyond exporting and importing.

©2003 South-Western Chapter 3 Version 3e13 Multinational 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 2 2

©2003 South-Western Chapter 3 Version 3e14 Global Marketing Standardization 2 2 Production of uniform products that can be sold the same way all over the world.

©2003 South-Western Chapter 3 Version 3e15 Global 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 2 2

©2003 South-Western Chapter 3 Version 3e16 Learning Objective Describe the external environment facing global marketers. 3 3

©2003 South-Western Chapter 3 Version 3e17 The External Environment Natural Resources Demographic Makeup Economic and Technological Development Culture Environmental Factors Political Structure 3 3

©2003 South-Western Chapter 3 Version 3e18 Culture The common set of values shared by its citizens that determine what is socially acceptable. 3 3

©2003 South-Western Chapter 3 Version 3e19 Culture 3 3  Language  Religion  Superstitions  Etiquette  Customs  Traditions  Notion of time

©2003 South-Western Chapter 3 Version 3e20 Lessons 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? 3 3

©2003 South-Western Chapter 3 Version 3e21 Economic and Technological Development Type of Society SocietyDescriptionDescription Traditional Pre-Industrial Takeoff Industrializing Agricultural, Little Upward Mobility Social and Economic Change New Industries Spread of Technology Fully Industrial Fully Industrial Exporter, Technology as Driver of New Innovation Exporter, Technology as Driver of New Innovation 3 3

©2003 South-Western Chapter 3 Version 3e22 Political Structure Extremes 3 3 No private ownership Minimal individual freedom Little central government Maximum personal freedom

©2003 South-Western Chapter 3 Version 3e23 Legal Considerations Tariff Quota Boycott Exchange Control Market Grouping Trade Agreement Legal Structures Encourage or Limit Trade 3 3

©2003 South-Western Chapter 3 Version 3e24 Legal Considerations Tariff Quota Boycott Exchange Control Market Grouping Trade Agreement A tax levied on goods entering a country Limit on the amount of a product that 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 stimulate international trade 3 3

©2003 South-Western Chapter 3 Version 3e25 Trade Agreements: Uruguay Round 3 3  Reduces tariffs by one-third world- wide  Patent/copyright protection  Services under international rules  Reduction of farm subsidies

©2003 South-Western Chapter 3 Version 3e26 Political and Legal Considerations Mercosur NAFTA European Union Examples 3 3

©2003 South-Western Chapter 3 Version 3e27 Demographic Makeup Marketing Considerations  Population density  Urban or rural  Personal income  Rise of global middle class  Supply of professionals 3 3

©2003 South-Western Chapter 3 Version 3e28 Natural Resources Differences in natural resources create:  International dependencies  Shifts of wealth  Inflation and recession  Export opportunities if resources are abundant  Stimulus for military intervention 3 3

©2003 South-Western Chapter 3 Version 3e29 Learning Objective Identify the various ways of entering the global marketplace. 4 4

©2003 South-Western Chapter 3 Version 3e30 Global Marketplace Questions 4 4  What are our options in selling abroad?  How difficult is global marketing?  What are the potential risks and returns?

©2003 South-Western Chapter 3 Version 3e31 Why “Go Global”?  Earn additional profits  Leverage a unique product or technological advantage  Possess exclusive market information  Utilize “economies of scale” 4 4

©2003 South-Western Chapter 3 Version 3e32 Risk Levels for Global Entry Lowrisk/lowreturn Highrisk/highreturn Risk Return Export Licensing Contract Manu- facturing Joint Venture Direct Invest- ment 4 4

©2003 South-Western Chapter 3 Version 3e33 Entering the Global Marketplace Licensing Legal process allowing use of manufacturing/patents/knowledge. Contract Manufacturing Private-label manufacturing by a foreign country Joint Venture Domestic firm buys/joins a foreign company to create new entity. Export Sell domestically produced products to buyers in other countries. Direct Investment Active ownership of a foreign company/manufacturing facility. 4 4

©2003 South-Western Chapter 3 Version 3e34 Export Intermediaries 4 4 Buyer for Export Assumes all ownership risks and sells globally for its own account. Export Broker Plays the traditional broker’s role by bringing buyer and seller together. Export Agent Acts like a manufacturer’s agent for the exporter in the foreign market.

©2003 South-Western Chapter 3 Version 3e35 Learning Objective List the basic elements involved in developing a global marketing mix. 5 5

©2003 South-Western Chapter 3 Version 3e36 Product and Promotion One Product One Message One Product One Message Product Adaptation Product Adaptation Message Adaptation Message Adaptation Product Invention Product Invention SameMessageSameProductChangeMessageChangeProduct 5 5

©2003 South-Western Chapter 3 Version 3e37 Pricing 5 5  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

©2003 South-Western Chapter 3 Version 3e38 Dumping 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. 5 5

©2003 South-Western Chapter 3 Version 3e39 Countertrade 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. 5 5

©2003 South-Western Chapter 3 Version 3e40 Distribution 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 5 5

©2003 South-Western Chapter 3 Version 3e41 Learning Objective 6 6 Discover how the Internet is affecting global marketing.

©2003 South-Western Chapter 3 Version 3e42 Going Global 6 6  Internet e-commerce sites  Language translation software  Global shippers