1. World Trade
World trade refers to the flow of goods and services among different countries - the value of all the exports and imports of the world’s nations
Trade Balance
Almost 25% world trade is non-cash based

2. Competitive Advantage of Nations
Michael Porter* describes four keys to a nation’s competitive advantage relative to other countries
Demand conditions
Related and supporting industries
Factor conditions
Company strategy, structure, rivalry
* Often referred to as “Porter’s Diamond”

3. Competitive Advantage for Companies
Organizations that are successful in highly competitive home markets should succeed in international markets
Success requires an international plan, resources, marketing mix adaptation
Conflict between “standardization” and “customization”

4. Borders and Roadblocks
Protectionism is a government policy which seeks to provide home companies an advantage over foreign companies by implementing trade barriers
Import quotas
Embargos
Tariffs
Red tape

5. Economic Communities Countries band together to form an alliance
Bi or multilateral trade agreements
Such economic communities coordinate trade policies and ease restrictions on trade across the member borders
EU (European Union)
NAFTA (North American Free Trade Agreement)
ASEAN (Association of Southeast Asian Nations

6. WTO
Objective: “to help trade flow smoothly, freely, fairly, and predictably”
Acts as forum for negotiations among countries, settles trade disputes, and assists developing countries with training programs
General Agreement on Tariffs and Trade (GATT) developed by UN after WW II to moderate trade conflicts, replaced (1995) by WTO

7. Top 15 Wired Countries 1 USA* 2 Japan 3 Germany 4 Canada 5 UK
6 South Korea
7 China
8 Italy
* Singapore exceeds US
9 France
10 Australia
11 Taiwan
12 Netherlands
13 Sweden
14 Spain
15 Russia

8. The Global Marketing Environment
Economic Environment
Political and Legal Environment
Cultural Environment

9. Economic Development Less Developed Countries (LDC)
lowest stage of economic development
Developing Countries
economies shift from agriculture to industry; standards of living, education, and use of technology rise
Developed Countries
economically advanced countries; the G7 countries (U.S., U.K., Canada, France, Italy, Germany, Japan)

10. Political and Legal Environment
Political Issues
economic sanctions
nationalization
expropriation
Regulatory Issues
product requirements
local content rules
taxation
Human Rights Issues

11. Cultural Environment Values
Norms and Customs - handed down from the past & controls basic behaviors
Symbols and Superstitions - colors, numbers, words, food, gestures
Language
Ethnocentricity - preference for local products
Cultural Change - culture shock, globalization

12. Economic Environment Indicators of Economic Health
Demographic Characteristics
Economic Infrastructure
Internet Coverage
Levels of Economic Development

13. Indicators of Economic Health
Gross Domestic Product (GDP) - the dollar value of goods and services a country produces within its borders within one year
Gross National Product (GNP) - the value of all goods and services produced by a country’s individuals or organizations whether in or out of country borders

14. Country Comparisons Total GDP Country $9.963 trillion $3.15 trillion
$113.9 billion
$720.8 billion
Country
USA
Japan
China
Hungary
Spain

15. Economic Indicators Country’s Demographic Characteristics
birth rates
size of different age groups
Economic Infrastructure
quality of a country’s distribution, financial, and communications systems
Internet Coverage
percent of population online

16. Ethnocentrism “Buy American”
The tendency to prefer products or people of one’s own culture over those from other countries
Ethnocentric consumers are likely to feel ethically wrong in buying products from other countries because they want to support their domestic economy

17. Market Entry Strategies
Domestic
Strategy
Exporting
Strategy
Contractual
Agreements
Strategic
Alliances
Direct
Investment
Without equity
With equity
Joint ventures
Direct export
Export merchants
Licensing
Franchising
Subcontracting
Building
Buying
Casual Level of Commitment Significant

18. Standardization versus Localization
Standardization suggests that greater efficiencies and economies of scale are generated when all marketing is the same in each country
Localization recognizes that customer satisfaction will be highest when the marketing mix is tailored to local needs and wants

19. Product Decisions
Sell the same product in the new market (straight extension strategy)
Modify the product for the new market (product adaptation strategy)
Develop a brand new product for that new market (product invention strategy)

20. Promotional Decisions
Will the same promotional message work in the different markets?
Standardized strategies are more likely to work when cultural factors are similar, and when target customers are in cosmopolitan urban areas

21. Price Decisions
Costs associated with transportation, tariffs, insurance, differences in currency exchange rates, and bribes may make a product more expensive in one country than another
Gray marketing - unauthorized (but legal) imports of products and selling for less than authorized “distributors”
Dumping - a company prices its products lower than at home in order to establish a market or to dispose of merchandise