Insert Chapter Picture Here Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 1 Designed by Eric Brengle B-books, Ltd. CHAPTER 4 Developing a Global Vision Prepared by Deborah Baker Texas Christian University Marketing Lamb, Hair, McDaniel 9

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 2 Learning Outcomes Discuss the importance of global marketing Discuss the impact of multinational firms on the world economy Describe the external environment facing global marketers LO I LO 2 LO 3

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 3 Learning Outcomes Identify the various ways of entering the global marketplace List the basic elements involved in developing a global marketing mix Discover how the Internet is affecting global marketing LO 5 LO 6 LO 4

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 4 Discuss the importance of global marketing Rewards of Global Marketing LO I

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 5 LO I Global Marketing Marketing that targets markets throughout the world. Rewards of Global Marketing

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 6 LO I Rewards of Global Marketing  Recognizing and reacting to international marketing opportunities  Using effective global marketing strategies  Being aware of threats from foreign competitors Having a global vision means…

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 7 LO I Emerging-Market Companies COMPANYCOUNTRYINDUSTRY América MóvilMexicoTelecom services CemexMexicoBuilding materials China MobileChinaTelecom services CNOOCChinaOil and gas CVRDBrazilMining EmbraerBrazilAerospace GazpromRussiaOil and gas HaierChinaHome appliances HisenseChinaElectronics, appliances Huawei TechnologiesChinaTelecom equipment Adapted from “Emerging Giants,” Business Week, July 31, 2006.

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 8 Importance of Global Marketing to the U. S. LO I  U.S. exports a fifth of industrial production.  One of every 10 jobs in U.S. is supported by exports.  U.S. businesses export over $800 billion in goods.  Exports account for 25 percent of U.S. economic growth.  U.S. is world’s leading exporter of farm products.

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 9 The Fear of Trade and Globalization LO I  Millions of Americans have lost jobs  Millions fear losing jobs  Threat of outsourcing if workers do not accept pay cuts  Vulnerability to operations moving offshore

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 10 LO I Benefits of Globalization  Expands economic freedom  Spurs competition  Raises productivity and living standards  Offers access to foreign capital, global export markets, and advanced technology  Promotes higher labor and environmental standards  Acts as a check on government power

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 11 REVIEW LEARNING OUTCOME The Importance of Global Marketing LO I Identify global marketing opportunities Compete against foreign competition in domestic markets Understand global distribution networks Understand global distribution networks Globally-minded marketing managers: Fears Benefits Know global marketing is important because of economic interdependencies

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 12 Discuss the impact of multinational firms on the world economy Multinational Firms LO 2

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 13 LO 2 Stages of Global Business Development Companies operate in one country and sell into others Set up foreign subsidiaries to handle sales Virtual operation Operate an entire line of business in another country

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 14 LO 2 Global Marketing Standardization Production of uniform products that can be sold the same way all over the world. Global Marketing Standardization

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 15 REVIEW LEARNING OUTCOME Impact of Multinational Firms LO 2 Growth Revenue Profits Global Marketing Global Marketing MNC Human Resources Physical Resources Financial Resources

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 16 Describe the external environment facing global marketers External Environment Facing Global Marketers LO 3

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 17 LO 3 External Environment Facing Global Marketers Natural Resources Demographic Makeup Economic and Technological Development Culture Political Structure

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 18 LO 3 Culture The common set of values shared by its citizens that determine what is socially acceptable.

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 Biz Flix Lost in Translation 19 LO 3

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 20 LO 3 Economic and Technological Development Developed Country Less Developed Country Complex, sophisticated industries Basic industries

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 21 LO 3 Political Structure and Actions No private ownership Minimal individual freedom Little central government Maximum personal freedom

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 22 LO 3 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 entering 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

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 23 LO 3 Political and Legal Considerations The Uruguay Round made changes in world trading practices Entertainment, pharmaceuticals, integrated circuits, and software Financial, legal, and accounting services Agriculture Textiles and apparel And created a new trade organization: The World Trade Organization

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 24 LO 3 Political and Legal Considerations CAFTA NAFTA European Union Agreements and Organizations Online

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 25 LO 3 Marketing Considerations:  Population density  Urban or rural  Personal income  Age Demographic Makeup

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 26 LO 3 Create…  International dependencies  Shifts of wealth  Inflation and recession  Export opportunities if resources are abundant  Stimulus for military intervention Shortages in Natural Resources

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 27 LO 3 Natural Resources  Petroleum  Foodstuffs  Precious metal  Timber  Water

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 28 REVIEW LEARNING OUTCOME External Environment Facing Global Marketers LO 3

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 29 Identify the various ways of entering the global marketplace Global Marketing by the Individual Firm LO 4

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 30 LO 4 Global Marketing Questions  What are our options in selling abroad?  How difficult is global marketing?  What are the potential risks and returns? Online

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 31 LO 4 Why “Go Global”?  Earn additional profits  Leverage a unique product or technological advantage  Possess exclusive market information  Saturated domestic markets  Excess capacity  Utilize “economies of scale”

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 32 LO 4 Risk Levels for Global Entry Low risk/ low return High risk/ high return Risk Return Export Licensing Contract Manu- facturing Joint Venture Direct Invest- ment

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 33 LO 4 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

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 34 LO 4 Export Intermediaries 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.

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 35 REVIEW LEARNING OUTCOME Entering the Global Marketplace LO 4

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 36 List the basic elements involved in developing a global marketing mix The Global Marketing Mix LO 5

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 37 LO 5 Product and Promotion One Product One Message Product Adaptation Message Adaptation Product InventionSameProductSameMessage ChangeMessageChangeProduct Online

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 38 LO 5 Place (Distribution)  Adequate distribution is necessary for success in global markets –Some countries have complicated systems –Lack of distribution infrastructure and cultural differences create problems  Innovative distribution systems can create competitive advantage

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 39 LO 5 Pricing  Must consider transportation and insurance costs, taxes and tariffs  Determine what customers will spend  Ensure that foreign buyers will pay price  May need to simplify a product to lower price  Don’t assume that low-income countries are willing to accept lower quality

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 40 LO 5 Exchange Rates The price of one’s currency in terms of another country’s currency.

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 41 LO 5 1.Trying to increase an overseas market share 2.Temporarily distributing products to overseas markets to offset slack demand at home 3.Lowering unit costs by exploiting large-scale production 4.Attempting to maintain stable prices during periods of exchange rate fluctuations Dumping

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 42 LO 5 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. Countertrade

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 43 REVIEW LEARNING OUTCOME Developing a Global Marketing Mix PROMOTION One Product, One Message Product Invention Product Adaptation Message Adaptation LO 5 PLACE Channel Choice Channel Structure Country Infrastructure PRICE Dumping Countertrade Exchange Rates Purchasing Power

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 44 Discover how the Internet is affecting global marketing The Impact of the Internet LO 6

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 45 REVIEW LEARNING OUTCOME The Impact of the Internet LO 6