Chapter 7 Reaching Global Markets

7 | 3Copyright © Houghton Mifflin Company. All rights reserved. Objectives Understand global marketing strategy Analyze forces affecting international marketing efforts Understand important trade agreements Identify methods of international market entry Examine forms of global organizational structures Examine use of marketing mix internationally

7 | 4Copyright © Houghton Mifflin Company. All rights reserved. The Nature of Global Marketing Strategy International Marketing –Developing and performing marketing activities across national boundaries.

7 | 5Copyright © Houghton Mifflin Company. All rights reserved. Environmental Forces In Global Markets Competitive Economic Political Legal & Regulatory Technological Sociocultural

7 | 6Copyright © Houghton Mifflin Company. All rights reserved. Competitive Forces Internationally Attend to competitive forces in target countries Identify the interdependence of global competitors Be mindful of global customer

7 | 7Copyright © Houghton Mifflin Company. All rights reserved. The Most Competitive Countries

7 | 8Copyright © Houghton Mifflin Company. All rights reserved. Economic Forces Internationally Import tariff – duty on goods bought outside the country and brought in Quota – limit on amount of goods an importing country will accept Embargo – government suspension of trade Exchange Controls – government restrictions on amount of particular currency

7 | 9Copyright © Houghton Mifflin Company. All rights reserved. Economic Forces Internationally cont’d Balance of Trade – difference in value between nation’s imports and exports Gross Domestic Product (GDP) – measure of overall economic standing based on total output of goods and services

7 | 10Copyright © Houghton Mifflin Company. All rights reserved. Comparative Economic Analysis

7 | 11Copyright © Houghton Mifflin Company. All rights reserved. Political, Legal and Regulatory Forces Internationally Legal and regulatory infrastructure as a direct reflection on the political climate –CIBERs (Centers for International Business Education and Research) –International import barriers –Differing standard of ethics (U.S.’s Foreign Corrupt Practices Act)

7 | 12Copyright © Houghton Mifflin Company. All rights reserved. Sociocultural Forces Internationally Issues – predominant cultural focus of marketing within global market –Language –Symbols –Social norms, values, perceptions –Negotiations and decision-making

7 | 13Copyright © Houghton Mifflin Company. All rights reserved. Cross-Cultural Behavioral Differences

7 | 14Copyright © Houghton Mifflin Company. All rights reserved. Technological Forces Internationally Advances in technology have advanced international marketing

7 | 15Copyright © Houghton Mifflin Company. All rights reserved. Global Ethical and Social Responsibility Issues Dumping – selling products in domestic markets at higher prices than in foreign markets Cultural relativism – defining business practices as right or wrong based on differing moralities within particular cultures

7 | 16Copyright © Houghton Mifflin Company. All rights reserved. Least And Most Corrupt Countries

7 | 17Copyright © Houghton Mifflin Company. All rights reserved. Regional Trade Alliances, Markets, And Agreements North American Free Trade Agreement (NAFTA) – 1994North American Free Trade Agreement (NAFTA) CAFTA-DR – 2005CAFTA-DR European Union (EU) – 1993European Union (EU) Common Market of the Southern Cone (MERCOSUR) – 1991Common Market of the Southern Cone (MERCOSUR) Asia-Pacific Economic Cooperation (APEC) – 1989Asia-Pacific Economic Cooperation (APEC) World Trade Organization (WTO) – 1995World Trade Organization (WTO)

7 | 18Copyright © Houghton Mifflin Company. All rights reserved. Stages Of International Entry Modes 1)No regular export activities 2)Export via independent representatives or agents 3)Establish one/more sales subsidiaries internationally 4)Establish international production or manufacturing facilities

7 | 19Copyright © Houghton Mifflin Company. All rights reserved. Involvement In Global Marketing

7 | 20Copyright © Houghton Mifflin Company. All rights reserved. Importing and Exporting Importing – the purchase of products from a foreign source Exporting – the sale of products to foreign markets

7 | 21Copyright © Houghton Mifflin Company. All rights reserved. Trading Company A company that links buyers and sellers in different countries.

7 | 22Copyright © Houghton Mifflin Company. All rights reserved. Licensing and Franchising Licensing – an alternative to direct investment requiring a license to pay commissions on sales or supplies used in manufacturing Franchising – a form of licensing in which a franchiser grants a franchisee the right to market its product in accordance with the franchiser’s standards.

7 | 23Copyright © Houghton Mifflin Company. All rights reserved. International Franchising- Benefits To Franchiser  Does not have to put up large capital investment  Revenue stream is fairly consistent  Retains control of name and increases global penetration  Agreements ensure standard of behavior from franchisees

7 | 24Copyright © Houghton Mifflin Company. All rights reserved. Contract Manufacturing The practice of hiring a foreign firm to produce a designated volume of the domestic firm’s product or a component of it to specification; the final product carries the domestic firm’s name.

7 | 25Copyright © Houghton Mifflin Company. All rights reserved. Specific Forms of Contract Manufacturing Outsourcing Offshoring Offshore outsourcing

7 | 26Copyright © Houghton Mifflin Company. All rights reserved. Joint Ventures Joint Venture – partnership between domestic and foreign firms Strategic Alliances – partnerships formed to create competitive advantage on a worldwide basis

7 | 27Copyright © Houghton Mifflin Company. All rights reserved. Direct Ownership  Direct ownership – a company owns subsidiaries or other facilities overseas  Multinational enterprise – firm has operations in many countries

7 | 28Copyright © Houghton Mifflin Company. All rights reserved. Ten Largest Global Corporations

7 | 29Copyright © Houghton Mifflin Company. All rights reserved. Global Organizational Structure Organizational Structure – the way in which a firm divides its operations and coordinates its activities.

7 | 30Copyright © Houghton Mifflin Company. All rights reserved. Organizational Architecture

7 | 31Copyright © Houghton Mifflin Company. All rights reserved. Global Organizational Structures cont’d Export Departments International Divisions Internationally Integrated Structures

7 | 32Copyright © Houghton Mifflin Company. All rights reserved. International Marketing Mix Customization vs. Globalization –Customization: customizing marketing strategy to meet different marketing mixes –Globalization: development of marketing strategies that treat the world markets as a single entity

7 | 33Copyright © Houghton Mifflin Company. All rights reserved. Marketing Mix Issues – Product Element

7 | 34Copyright © Houghton Mifflin Company. All rights reserved. Marketing Mix Issues – Distribution Element

7 | 35Copyright © Houghton Mifflin Company. All rights reserved. Marketing Mix Issues – Promotion Element

7 | 36Copyright © Houghton Mifflin Company. All rights reserved. Marketing Mix Issues – Pricing Element

7 | 37Copyright © Houghton Mifflin Company. All rights reserved. Business markets allow for customized global marketing solutions Use of the AT&T print ad is granted uner permission by AT&T Knowledge Ventures