1. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-1 The Importance of International/Global Marketing n “The Earth is one country” means the breakdown of boundaries and limitations that restrict world commerce: >Geographic >National >Political and legal >Communications »language, information, and conversation >Culture n The Opportunity >95% of world’s population lives outside U.S. >2/3 of world’s purchasing power outside U.S. >83% of world’s population live below middle class.

2. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-2 Canada 30.7 Venezuela 23.2 Brazil 161.8 Uruguay 3.2 Paraguay 5.2 United States 270.3 Mexico 95.8 Colombia 37.7 Ecuador 12.2 Peru 24.8 Argentina 36.1 Chile 14.8 Bolivia 8.0

3. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-3 Ireland 3.6 United Kingdom 58.9 Germany 82.1 France 58.6 Portugal 10.0 Spain 39.3 Switzerland 7.1 Norway 4.4 Finland 5.1 Sweden 8.9 Luxembourg 0.4 Austria 8.0 Greece 10.5 Italy 57.7 Belgium 10.2 Netherlands 15.6 Denmark 5.3 Iceland 0.3

4. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-4 Japan 126.4 South Korea 46.5 Taiwan 21.8 Hong Kong 6.7 Philippines 73.1 Brunei 0.3 Papua New Guinea 4.6 Australia 18.7 Maldives 0.3 Sri Lanka 18.7 Malaysia 22.1 China 1,243 Nepal 22.0 Pakistan 141.9 Bangladesh 127.6 Bhutan 0.6 India 984 Singapore 3.2 Vietnam 76.2 Indonesia 199.7 New Zealand 3.8 Thailand 61.2

5. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-5 Table 3-3 - Direct Foreign Investment by U.S. Firms Country U.S. Foreign Direct Investment (FDI) United Kingdom139 (Billion U.S.$) Canada 99 Netherlands 65 Germany 44 Brazil 36 Japan 36 Switzerland 35 Bermuda 33 Mexico 25 Singapore 17 China 5 S ource: U.S. Bureau of the Census, Statistical Abstract of the United States: 1998 (118th edition), Washington, D.C., 1998.

6. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-6 Table 3-1 - Exports as a Percent of GDP in Selected Countries Country Exports as a % of GDP United States11% United Kingdom28 France27 Germany25 Japan11 Canada41 Mexico30 S. Korea38 Source: International Financial Statistics, International Monetary Fund

7. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-7 Trade agreements both encourage and inhibit international commerce. n General Agreement on Tariffs and Trade (GATT) - now called the World Trade Organization (WTO) n The European Union (EU) n North American Free Trade Agreement (NAFTA) n The Asia-Pacific Economic Cooperation forum (APEC) is a trade pact with 19 member nations that account for 45 percent of world trade. n The Association of Southeast Asian Nations (ASEAN), established in 1967, is a free-trade zone comprising six nations. n Common Market of the South (MERCOSUR)

8. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-8 The Importance of International/Global Marketing (continued) n Companies with more than half their sales and profits generated abroad: >Kodak, Goodyear, H.J. Heinz, Ford, IBM, Gillette, Coke, Nestles, Lever Bros., Sony, Heineken, Pierre, Toyota n So. California, “The New Rome” >The most diverse population in the world. >The largest combined ports (L.A. and L.B.) >4 international airports >World Trade Center >Makes the largest U.S. export, its culture

9. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-9 What is the difference between International and Global Marketing? n Global Strategy - the same marketing mix is employed throughout the world. Coca-Cola is the firm most often associated with a globalized strategy. n International Strategy - different marketing mixes adjusting to the unique differences between countries and regions. n Biggest Mistake - assuming that the rest of the world’s needs, wants, expectations, and behavior are the same as yours.

10. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-10 Strategic International/Global Marketing Considerations n Economic Environment >Infrastructure (roads, buildings, phones lines, credit cards, PC ownership) >Economic development and condition n Political and Legal Forces n Trade Barriers >Tariff, import quota, local-content laws, boycott or embargo n Type of product n Socio-Cultural (religion, customs, education levels) n Question: Do you invest in people, infrastructure, or jobs?

11. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-11 Designing the International Marketing Mix n Marketing Research >Statistical data are scarce and often not reliable. n Product Planning decisions include: >Product extension. >Product adaptation. >Invention. >Branding and labeling. n Pricing issues include: >Dumping. >Foreign exchange rates. >Countertrade or barter.

12. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-12 Designing the International Marketing Mix (Con’t.) n Distribution systems: >Often not very sophisticated. >Bribes, kickbacks, and extortion payments are common in many international distribution systems. >Gray marketing (unauthorized intermediaries) n Promotion focuses on: >Standardization? >Adapting media strategy and message details.

13. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-13 Organization Structures for International Markets n Exporting, through: >An export merchant in the manufacturer's country that buys goods and exports them. >An export agent located either in the manufacturer's country or in the destination country that finds buyers for a commission. >A company’s sales branches in the destination country. n Contracting, via: >Licensing, granting another producer the right to use one’s production process, patents, trademarks, or other assets. >Franchising. >Contract manufacturing.

14. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-14 n Direct investment, including: >Joint venture or partnership with a foreign company. >Strategic alliance. >Wholly-owned subsidiaries. n Multinational/World Enterprise corporation, in which the foreign and domestic operations are integrated and are not separately identified. Organization Structures for International Markets (Con’t.)

15. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-15 n Samir F. Gibara, President and CEO, Goodyear Tire & Rubber. Worked abroad (France, Belgium, Morocco, Canada) for 27 of his 30 years there. n Raymong G. Viault, Vice Chairman, General Mills. Previously was president and CEO of Kraft Jacobs Suchard in Switzerland. n Michael Hawley, President and COO, Gillette. Spent 20 of his 30 years there outside the U.S. (United Kingdom, Hong Kong, Canada, Colombia, Australia). n Harry Bowman, Chairman, President and CEO, Outboard Motor. Ran Whirlpool’s European business for two years as part of his 24-year career there. n Lucio A. Noto, Chairman and CEO, Mobil. Worked abroad (Italy, Japan, Saudi Arabia) for 17 of his 34 years. n Jean-Pierre Rosso, President and CEO, Case Corp. Spent 12 years at Honeywell in France and Belgium. International Business Experience is Important to a Career