INTERNATIONAL MARKETING CHAPTER 1 THE SCOPE AND CHALLENGE OF INTERNATIONAL MAKRKETING

Events and Trends Affecting Global Business The rapid growth of the World Trade Organization (WTO) and NAFTA and EU The trend toward the acceptance of the free market system among developing countries in Latin America, Asia, and Eastern Europe The burgeoning impact of the Internet, mobile phones, and other global media on the dissolution of national borders The mandate to properly manage the resources and global environment for the generations to come

Internationalization of U.S. Business Foreign companies are here to stay in the U.S. and compete with U. S. companies The great worldwide acquisitions both by U. S. and foreign companies Global markets are a necessity –Foreign earnings a higher percentage of profits –Multinationals outperform domestic firms –Global value increased through global diversification –Intensifying domestic competition

Exhibit 1.2 Selected U.S. Companies and Their International Sales Source: Compied from annual reports of listed firms,

Internationalization of U.S. Business Current interest in international marketing can be explained by changing competitive and demand situations in markets worldwide. For example, McDonald’s is pulling out of international markets in Latin America and the Middle East due to poor economies, increasing competition and anti-Americanism. We have foreign competition in our own county. Many foreign companies have acquired American interests. Also, a significant proportion of all CD players, computers, apparel, and dinnerware sold in the US is foreign made. (Sony, Laura Ashley, Norelco, Samsung, Toyota, Nescafe). Some foreign interests have built manufacturing plants here (Fuji Photo, Honda, Mercedes). We also buy foreign interests as well (Ford bought Jaguar, PacifiCorp bought Energy Group). US Multinationals abroad are nothing new. They have been out there since the end of WWII.

The Internationalization of U.S. Businesses Exhibit 1.1 Foreign Acquisitions of U.S. Companies, Sources: Compiled from annual reports of listed forms,

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Definition of International Marketing The performance of business activities designed to plan, price, promote, and direct the flow of a company’s goods and services to consumers or users in more than one nation for a profit. The major difference between international and domestic marketing is that domestic marketing occurs in one country.

The International Marketing Task The major issue in international vs domestic marketing is that in international marketing, there are additional layers of uncontrollable elements to deal with. Additional Layers of Uncontrollable Events Controllable Events Uncontrollable Events

The International Marketing Task Continued o Price Product Place Promotion Research Competitive Economic Political/Legal Domestic Foreign Economic Competitive Technology Distribution Geography and Infrastructure Culture Political/Legal

The International Marketing Task Continued To adjust and adapt a marketing program to foreign markets, marketers must be able to effectively interpret the influence and impact of each of the uncontrollable environmental elements on the marketing plan for each foreign market in which they hope to do business. This is hard since we do not know the culture. We take our culture for granted. How do we overcome this ethnocentric view of the world?

The Self-Reference Criterion The primary obstacles to success in international marketing are a person’s self-reference criterion. The SRC is an unconscious reference to one’s own cultural values, experience and knowledge as a basis for everyday decision making. We can encounter problems if we do not understand the SRC of other countries (animal treatment in Fiji, the way biscuits should be packaged in Japan, the acceptable distance between two people).

How to Avoid Errors in International Business Decisions Define the business problem or goal in home- country cultural traits, habits, or norms. Define the business problem or goal in foreign- country cultural traits, habits, norms through consultation with natives of the target country. Make no value judgments. Isolate the SRC influence in the problem and examine it carefully to see how it complicates the problem. Redefine the problem without the SRC influence and solve for the optimum business goal situation.

Global Awareness Tolerance for cultural differences Knowledge of cultures, history, world market potential, and global economic, social, and political trends.

What Degree of International Marketing Involvement? No direct foreign marketing. Infrequent foreign marketing. Regular foreign marketing. International marketing. Global marketing.