1. Developing a Global Vision
Lamb, Hair, McDaniel
Chapter 5 Developing a Global Vision
CHAPTER 5
Developing a Global Vision
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2. Chapter 4 Developing a Global Vision
OPINION QUESTION Moore Electronics sells automated lighting for airport runways. The government of an eastern European country has offered Moore a contract to provide equipment for the 15 major airports in the country. The official in charge of awarding the contract, however, is demanding a 5 percent kickback. He told Moore to build this into the contract price so that there would be no cost to Moore. Without the kickback, Moore loses the contract. Such kickbacks are considered a normal way of doing business in this country. Should Moore incorporate this kickback into his bid?
Yes, since it is a normal way of doing business in this European country
No, since it is not a universally accepted practice.

3. Rewards of Global Marketing
Chapter 5 Developing a Global Vision
Rewards of Global Marketing
Having a global vision means…
Recognizing and reacting to international marketing opportunities
Using effective global marketing strategies
Being aware of threats from foreign competitors
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4. Importance of Global Marketing to the U. S.
Chapter 5 Developing a Global Vision
Importance of Global Marketing to the U. S.
Derives 13 percent of gross domestic product (GDP) from world trade.
27 percent of manufacturing jobs in U.S. are supported by exports.
U.S. businesses export over $1.7 trillion in goods and services annually.
More smaller companies are aggressively pursuing international markets.
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5. The Fear of Trade and Globalization
Chapter 5 Developing a Global Vision
The Fear of Trade and Globalization
Millions of Americans have lost jobs
Millions fear losing jobs
Threat of outsourcing if workers do not accept pay cuts
Vulnerability to operations moving offshore
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6. Benefits of Globalization
Chapter 5 Developing a Global Vision
Benefits of Globalization
Expands economic freedom
Spurs competition
Raises productivity and living standards
Offers access to foreign capital, global export markets, and advanced technology
Promotes higher labor and environmental standards
Acts as a check on government power
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7. Blocking Foreign Investment
Chapter 5 Developing a Global Vision
Blocking Foreign Investment
Many governments, such as China, Russia, and Canada, are blocking foreign purchases of factories, land and companies.
The U.S. could be accused of this as well.
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8. Global Marketing Standardization
Chapter 5 Developing a Global Vision
Global Marketing Standardization
Global Marketing Standardization
Production of uniform products that can be sold the same way all over the world.
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9. External Environment Facing Global Marketers
Chapter 5 Developing a Global Vision
External Environment Facing Global Marketers
Economic and Technological Development
Culture
Political Structure
Natural Resources
Demographic Makeup
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10. Chapter 5 Developing a Global Vision
Culture
Culture
The common set of values shared by its citizens that determine what is socially acceptable.
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11. Chapter 5 Developing a Global Vision
Culture
Factors to keep in mind when dealing with different cultures: 1. Language and cultural idioms 2. Customs and traditions 3. Values and expectations of sales presentations
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12. Economic and Technological Development
Chapter 5 Developing a Global Vision
Economic and Technological Development
Developed Country
Less Developed Country
Complex, sophisticated industries
Basic industries
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13. Economic Development: China and India
Chapter 5 Developing a Global Vision
Economic Development: China and India
China and India have two of the highest growth rates in the world.
Have the world’s two largest populations.
Among highest levels of income disparity.
Great linguistic and cultural diversity.
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14. Political Structure and Actions
Chapter 5 Developing a Global Vision
Political Structure and Actions
No private ownership Minimal individual freedom
Little central government
Maximum personal freedom
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15. Legal Considerations LO3 Tariff Quota Boycott Exchange Control
Chapter 5 Developing a Global Vision
Legal Considerations
Tariff
Quota
Boycott
Exchange Control
Market Grouping
Trade Agreement
A tax levied on goods entering a country
Limit on the amount of a product entering a country
Exclusion of products from a country
Foreign exchange must be sold to a control agency
Common trade alliance
An agreement to stimulate international trade
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16. Political and Legal Considerations
Chapter 5 Developing a Global Vision
Political and Legal Considerations
The Uruguay Round made changes
in world trading practices
Entertainment, pharmaceuticals, integrated circuits, and software
Financial, legal, and accounting services
Agriculture
Textiles and apparel
And created a new trade organization: The World Trade Organization
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17. Doha Round LO3 Began in 2001 Highly contentious from the beginning
Chapter 5 Developing a Global Vision
Doha Round
Began in 2001
Highly contentious from the beginning
Failed in summer, 2008
First multilateral free trade act failure since WWI
Cost of Failure: $100 billion annually
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18. Political and Legal Considerations
Chapter 5 Developing a Global Vision
Political and Legal Considerations
CAFTA
NAFTA
European Union
Agreements and Organizations
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19. Marketing Considerations:
Chapter 5 Developing a Global Vision
Demographic Makeup
Marketing Considerations:
Population density
Urban or rural
Age
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20. Shortages in natural resources create:
Chapter 5 Developing a Global Vision
Shortages in natural resources create:
International dependencies
Shifts of wealth
Inflation and recession
Export opportunities if resources are abundant
Stimulus for military intervention
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21. Why “Go Global”? LO4 Earn additional profits
Chapter 5 Developing a Global Vision
Why “Go Global”?
Earn additional profits
Leverage a unique product or technological advantage
Possess exclusive market information
Saturated domestic markets
Excess capacity
Utilize “economies of scale”
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22. Chapter 5 Developing a Global Vision
Exhibit 5.3 Risk Levels for Five Methods of Entering the Global Marketplace
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23. Entering the Global Marketplace
Chapter 5 Developing a Global Vision
Entering the Global Marketplace
Licensing
Legal process allowing use of manufacturing/patents/knowledge
Contract Manufacturing
Private-label manufacturing
by a foreign country
Joint Venture
Domestic firm buys/joins a foreign company to create new entity
Export
Sell domestically produced products to buyers in other countries
Direct Investment
Active ownership of a foreign company/manufacturing facility
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24. The Global Marketing Mix
Chapter 5 Developing a Global Vision
The Global Marketing Mix
The first step in creating a marketing mix is developing a thorough understanding of the global target market…
HOWEVER
…global marketing research is conducted in vastly different environments.
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25. Product and Promotion LO5 Same One Product Product One Message
Chapter 5 Developing a Global Vision
Product and Promotion
One Product
One Message
Product
Adaptation
Promotion
Invention
Same
Message
Change
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26. Place (Distribution) LO5
Chapter 5 Developing a Global Vision
Place (Distribution)
Adequate distribution is necessary for success in global markets
Lack of distribution infrastructure and cultural differences create problems
Logistics and shipping costs have been a growing challenge for U.S. companies looking to move production overseas.
Global trade has added to strains and charges for all forms of transportation.
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27. Chapter 5 Developing a Global Vision
Pricing
Must consider transportation and insurance costs, taxes and tariffs
Determine what customers will spend
Ensure that foreign buyers will pay price
May need to simplify a product to lower price
Don’t assume that low-income countries are willing to accept lower quality
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28. Exchange Rates Floating Exchange Rates is… LO5
Chapter 5 Developing a Global Vision
Exchange Rates
Exchange
Rates
The price of one’s currency in terms of another country’s currency.
Floating Exchange Rates is…
a system in which prices of different currencies move up and down based on the demand for and the supply of each currency.
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29. Chapter 5 Developing a Global Vision
Dumping
Dumping is…
the sale of an exported product at a price lower than that charged for the same or a like product in the “home” market of the exporter.
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30. Countertrade LO5 Countertrade
Chapter 5 Developing a Global Vision
Countertrade
Countertrade
A form of trade in which all or part of the payment for goods or services is in the form of other goods or services.
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31. The Impact of the Internet
Chapter 5 Developing a Global Vision
The Impact of the Internet
Opening an e-commerce site puts a company in the international marketplace
Internet Economy remains hindered by brick and mortar rules, regulations, and habits
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