1. Slide 6-1 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

2. Slide 6-2 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. BUILDING A BILLION DOLLAR BUSINESS IN INDIA THE DELL INC. WAY Dell India Web site

3. Slide 6-3 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. MARKETING IN A BORDERLESS ECONOMIC WORLD TREND 1—DECLINE OF ECONOMIC PROTECTIONISM LO 6-1  Protectionism Protectionism  Tariffs Tariffs  Quota Quota  World Trade Organization (WTO) World Trade Organization (WTO)  General Agreement on Tariffs and Trade (GATT) World Trade Organization

4. Slide 6-4 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. FIGURE 6-1 FIGURE 6-1 Protectionism hinders world trade when countries raise prices and limit supply through tariff and quota policies

5. Slide 6-5 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Figure 8.1 - Top U.S. Trading Partners—Total Trade Including Exports and Imports 5

6. Slide 6-6 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Table 8.1 - World’s Ten Largest Marketers (Ranked by Annual Sales) 6

7. Slide 6-7 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. International Economic Environment Factors that determine a nation’s prospects as a host for international business expansion –Size –Per-capita income –Stage of economic development 7

8. Slide 6-8 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. International Economic Environment Infrastructure is an important economic factor to consider when planning to enter a foreign market Changes in exchange rates can complicate international marketing –Exchange rate - Price of one nation’s currency in terms of another country’s currency 8

9. Slide 6-9 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Exchange Rates $1 = ¥240 $100 million = ¥2.4 billion $1 = ¥300 $100 million = ¥ 3.0 billion $1 = ¥200 $100 million = ¥ 2.0 billion

10. Slide 6-10 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Exchange Rates – JAL/Boeing $1 =¥185 $ 1 =¥ 240 (1985) $ 1 = ¥ 120 (1992) $ 1 = ¥ 99 (1994)

11. Slide 6-11 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. International Social-Cultural Environment To be effective, marketers must understand a nation’s culture Language plays an important role in global marketing 11

12. Slide 6-12 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

13. Slide 6-13 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. International Technological Environment The Internet transcends political, economic, and cultural barriers to reach every corner of the globe Technology presents challenges for global marketers that extend beyond the Internet and other telecommunication innovations 13

14. Slide 6-14 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. International Political-Legal Environment Global marketers must stay abreast of laws and trade regulations in each country in which they compete Firms set up internal political risk assessment units The political environment involves labor conditions in different countries 14

15. Slide 6-15 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. North American Free Trade Agreement (NAFTA) Accord removing trade barriers among Canada, Mexico, and the United States Particularly important to U.S. marketers because Canada and Mexico are two of its largest trading partners 15

16. Slide 6-16 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. The Free Trade Area of the Americas and CAFTA-DR Proposed free trade area stretching the length of the entire Western hemisphere Designed to extend free trade benefits to additional nations in North, Central, and South America –Central American Free Trade Agreement–DR (CAFTA-DR) - Trade agreement among the United States, Central American nations, and the Dominican Republic 16

17. Slide 6-17 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. European Union (EU) Customs union that is moving in the direction of an economic union by: –Adopting a common currency –Removing trade restrictions –Permitting free flow of goods and workers throughout the member nations Goal is to remove all barriers to free trade among its members 17

18. Slide 6-18 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. FIGURE 6-2 FIGURE 6-2 The European Union in early 2015 consists of 28 countries with more than 500 million consumers European Union countries

19. Slide 6-19 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Figure 8.3 - Levels of Involvement in Global Marketing 19

20. Slide 6-20 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. FIGURE 6-3 FIGURE 6-3 Alternative global market-entry strategies

21. Slide 6-21 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. The Starbucks’ Story The Starbucks’ globalization route is as follows: –U.S. – Company operated stores/Some licensing (Target, Lipscomb University) –Japan (1995) – Joint Venture to Licensing –Britain (1998) – Acquisition (Seattle Coffee) –Asia (2000) – Licensing to Joint Ventures to acquisition –Switzerland – Joint Venture

22. Slide 6-22 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Stages in the internationalization process Domestic firm International firm Multinational firm (MNC) Global corporation Transnational corporation ▮ Russell Peters Comedy on Chinese-Indian Relationships Russell Peters Comedy on Chinese-Indian Relationships 22

23. Slide 6-23 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. FIGURE 6-A FIGURE 6-A Global companies and marketing strategy