1. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 Gilbert A. Churchill, Jr. J. Paul Peter Chapter 3 Global Marketing Challenges Marketing

2. A Process for Deciding Whether to Enter International Markets Slide 3-1 Source: Betty Jane Punnett and David A. Ricks, International Business (Boston: PWS-Kent Publishing Co., 1992) p. 257 Start Must we? Can we? Should we? Concentrate Domestically Improve Capability Identify Specific Opportunities Select Entry Option No Yes Figure 3.1

3. Major Trading Partners of the U.S. Slide 3-2 Figure 3.2 Source: U.S. Department of Commerce, Statistical Abstract of the United States, 115th ed. (Washington Government Printing Office, 1995) pp. 819-822. Canada Japan Mexico Europe U.K. Exports = $53 Exports = $51 Exports = $114 Exports = $27 Exports = $19 Imports = $32 Imports = $25 Imports = $49 Imports = $129 Imports = $119 Imports and Exports in Billions of Dollars

4. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 Environmental Analysis Issues in Global Markets Slide 3-3a Table 3.1 Environment Economic Environment Stage of Development Buying Power of Consumers Type of Currency; exchange rate Political and Legal Environment Analysis Issues Political Stability Laws limiting international trade Laws of host nations General Agreement on Tariffs and Trade (GATT)

5. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 Slide 3-3b Table 3.1 Environment Social Environment Cultural influences on buying behavior Language differences Population sizes and distribution Socioeconomic status Impact on marketing on the culture Ethical considerations such as bribery and human rights Natural Environment Analysis Issues Resources available Impact of resources on natural resources Technological Environment Levels of technological development Available infrastructure Degrees of government involvement in competition Ownership of competitors-local, foreign or government Competitive Environment Environmental Analysis Issues in Global Markets

6. Examples of Cultural Differences that Could Lead to Marketing Problems Slide 3-4 Table 3.2 Body Language Standing with your hands on your hips is a gesture of defiance in Indonesia. Physical Contact Promptness Eating and Cooking Other Social Customs Patting a child on the head is a grave offense in Thailand or Singapore since the head is revered as the location of the soul. In Latin countries, your host or business associate would be surprised if you arrived at the appointed hour. It is rude to leave anything on your plate when eating in Norway, Malaysia or Singapore. In Sweden, nudity and sexual permissiveness are quite all right, but drinking is really frowned on. Source: William J. Stanton, Michael J. Etzel and Bruce J. Walker, Fundamentals of Marketing, 9th ed.. (New York: McGraw-Hill, 1991), p. 536. ©1991 by the McGraw-Hill Companies, Inc., and reproduced by permission of the publisher.

7. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 Exporting Slide 3-5 definition: a mode of entry involving production of a product in one country and shipping it to another country for sale. Risk High LowHigh Control Exporting

8. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 Licensing Slide 3-6 definition: an agreement in which an organization grants another organization the right to use a trademark, a patented product or a process. Risk High LowHigh Control Exporting Licensing

9. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 Joint Ventures Slide 3-7 definition: a business agreement in which two or more organizations share management of an enterprise. Risk High LowHigh Control Exporting Licensing Joint Ventures

10. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 Direct Ownership Slide 3-8 definition: a mode of entry involving an organization setting up new facilities or acquiring a foreign firm in the same line of business. Risk High LowHigh Control Exporting Licensing Joint Ventures Direct Ownership

11. Mechanisms for Serving Global Markets: Some Pros and Cons Slide 3-9 Mechanism Exporting Simple; minimal financial risk Licensing AdvantagesDisadvantages Joint Venture Direct Ownership May be less profitable than other mechanisms Minimal capital outlay; useful for serving countries with export restrictions Difficult to control licensee; when licensing agreement ends, licensee may become a competitor; may be less profitable than other mechanisms Share control with venture partner; partner may learn technology or secrets that it uses to compete with the organization Risk limited to the organization’s share in the venture; foreign partner contributes expertise the organization lacks; useful when the host country limits foreign ownership Maximum control over foreign operations; ability to be close to customers Expensive to set up; requires extensive knowledge of foreign markets and contacts overseas Source: Based in part on information in Philip R. Cateora, International Marketing, 9th ed. (Burr Ridge, Ill: Irwin, 1996) chapter 10. Table 3.3

12. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 Globalization vs Customization Slide 3-10 Globalized Product Customized Product