1. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 1 MKTG Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian University Lamb, Hair, McDaniel 2007-2008 4 CHAPTER Developing a Global Vision

2. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 2 Learning Outcomes Discuss the importance of global marketing Discuss the impact of multinational firms on the world economy Describe the external environment facing global marketers LO 1 LO 2 LO 3

3. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 3 Learning Outcomes Identify the various ways of entering the global marketplace List the basic elements involved in developing a global marketing mix Discover how the Internet is affecting global marketing LO 4 LO 5 LO 6

4. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 4 Discuss the importance of global marketing Rewards of Global Marketing Rewards of Global Marketing LO 1

5. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 5 LO 1 Rewards of Global Marketing Marketing that targets markets throughout the world. Global Marketing Global Marketing

6. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 6 LO 1 Rewards of Global Marketing  Recognizing and reacting to international marketing opportunities  Using effective global marketing strategies  Being aware of threats from foreign competitors Having a global vision means…

7. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 7 LO 1 Beyond the Book Emerging-Market Companies Adapted from “Emerging Giants,” Business Week, July 31, 2006. COMPANYCOUNTRYINDUSTRY América MóvilMexicoTelecom services CemexMexicoBuilding materials China MobileChinaTelecom services CNOOCChinaOil and gas CVRDBrazilMining EmbraerBrazilAerospace GazpromRussiaOil and gas HaierChinaHome appliances HisenseChinaElectronics, appliances Huawei TechnologiesChinaTelecom equipment

8. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 8 LO 1 Importance of Global Marketing to the U. S.  U.S. exports a fifth of industrial production.  One of every 10 jobs in U.S. is supported by exports.  U.S. businesses export over $800 billion in goods.  Exports account for 25 percent of U.S. economic growth.  U.S. is world’s leading exporter of farm products.

9. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 9 LO 1 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

10. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 10 LO 1 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

11. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 11 REVIEW LEARNING OUTCOME LO 1 The Importance of Global Marketing Identify global marketing opportunities Compete against foreign competition in domestic markets Understand global distribution networks Understand global distribution networks Globally-minded marketing managers: Fears Benefits Know global marketing is important because of economic interdependencies

12. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 12 Discuss the impact of multinational firms on the world economy Multinational Firms LO 2

13. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 13 Stages of Global Business Development LO 2 1 1 2 2 4 4 3 3 Companies operate in one country and sell into others Set up foreign subsidiaries to handle sales Virtual operation Operate an entire line of business in another country

14. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 14 Global Marketing Standardization LO 2 Production of uniform products that can be sold the same way all over the world. Global Marketing Standardization

15. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 15 REVIEW LEARNING OUTCOME LO 2 Impact of Multinational Firms Growth Revenue Profits Global Marketing Global Marketing MNC Human Resources Physical Resources Financial Resources

16. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 16 Describe the external environment facing global marketers External Environment Facing Global Marketers External Environment Facing Global Marketers LO 3

17. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 17 External Environment Facing Global Marketers LO 3 Natural Resources Demographic Makeup Economic and Technological Development Culture Political Structure

18. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 18 Culture LO 3 Culture The common set of values shared by its citizens that determine what is socially acceptable.

19. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 19 Economic and Technological Development LO 3 Developed Country Less Developed Country Complex, sophisticated industries Basic industries

20. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 20 Political Structure and Actions LO 3 No private ownership Minimal individual freedom Little central government Maximum personal freedom

21. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 21 Legal Considerations LO 3 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

22. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 22 Political and Legal Considerations LO 3 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

23. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 23 Political and Legal Considerations LO 3 CAFTA NAFTA European Union Agreements and Organizations http://www.wto.org Online

24. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 24 Demographic Makeup LO 3 Marketing Considerations:  Population density  Urban or rural  Personal income  Age

25. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 25 Shortages in Natural Resources LO 3 Create…  International dependencies  Shifts of wealth  Inflation and recession  Export opportunities if resources are abundant  Stimulus for military intervention

26. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 26 Natural Resources LO 3  Petroleum  Foodstuffs  Precious metal  Timber  Water

27. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 27 REVIEW LEARNING OUTCOME LO 3 External Environment Facing Global Marketers

28. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 28 Identify the various ways of entering the global marketplace Global Marketing by the Individual Firm LO 4

29. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 29 LO 4 Global Marketing Questions http://www.cat.com Online  What are our options in selling abroad?  How difficult is global marketing?  What are the potential risks and returns?

30. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 30 LO 4 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”

31. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 31 LO 4 Risk Levels for Global Entry Low risk/low return High risk/ high return Risk Return Export Licensing Contract Manu- facturing Joint Venture Direct Invest- ment

32. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 32 LO 4 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

33. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 33 LO 4 Export Intermediaries Buyer for Export Assumes all ownership risks and sells globally for its own account. Export Broker Plays the traditional broker’s role by bringing buyer and seller together. Export Agent Acts like a manufacturer’s agent for the exporter in the foreign market.

34. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 34 REVIEW LEARNING OUTCOME LO 4 Entering the Global Marketplace

35. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 35 List the basic elements involved in developing a global marketing mix The Global Marketing Mix LO 5

36. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 36 Product and Promotion LO 5 One Product One Message Product Adaptation Message Adaptation Product InventionSameProductSameMessage ChangeMessageChangeProduct http://www.disney.go.com Online

37. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 37 Place (Distribution) LO 5  Adequate distribution is necessary for success in global markets –Some countries have complicated systems –Lack of distribution infrastructure and cultural differences create problems  Innovative distribution systems can create competitive advantage

38. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 38 Pricing LO 5  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

39. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 39 Exchange Rates LO 5 The price of one’s currency in terms of another country’s currency. Exchange Rates Exchange Rates

40. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 40 Dumping LO 5 1.Trying to increase an overseas market share 2.Temporarily distributing products to overseas markets to offset slack demand at home 3.Lowering unit costs by exploiting large-scale production 4.Attempting to maintain stable prices during periods of exchange rate fluctuations

41. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 41 Countertrade LO 5 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. Countertrade

42. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 42 REVIEW LEARNING OUTCOME LO 5 Developing a Global Marketing Mix PROMOTION One Product, One Message Product Invention Product Adaptation Message Adaptation PLACE Channel Choice Channel Structure Country Infrastructure PRICE Dumping Countertrade Exchange Rates Purchasing Power

43. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 43 Discover how the Internet is affecting global marketing The Impact of the Internet The Impact of the Internet LO 6

44. Chapter 4Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 44 REVIEW LEARNING OUTCOME LO 6 The Impact of the Internet