Global MarketingGlobal Marketing

Chapter 5Chapter 5

Global MarketingGlobal Marketing

Why do I need to study this?Why do I need to study this?

Why Go Abroad?Why Go Abroad? Increased RevenueIncreased Revenue Economies of ScaleEconomies of Scale Cheap LaborCheap Labor

Why Not Go Abroad?Why Not Go Abroad? Lost JobsLost Jobs

OutsourcingOutsourcing

Global Marketing StrategiesGlobal Marketing Strategies

GlobalGlobal AKA InternationalAKA International Market existing products in the same wayMarket existing products in the same way

Multinational firmsMultinational firms AKA MultidomesticAKA Multidomestic Product variations for each countryProduct variations for each country

Transnational firmsTransnational firms Standardize across similar markets while Standardize across similar markets while

adapting them to specific marketsadapting them to specific markets

Environmental Factors- Environmental Factors- SocialSocial

Cultural diversityCultural diversity ValuesValues CustomsCustoms

Foreign Corrupt Foreign Corrupt Practices ActPractices Act

Nonverbal behaviorNonverbal behavior Cultural symbolsCultural symbols

SemioticsSemiotics LanguageLanguage

Back translationBack translation Cultural ethnocentricityCultural ethnocentricity

Consumer Consumer ethnocentrismethnocentrism

Source: http://www. facts-about-japan.com

Environmental Factors- Environmental Factors- EconomicEconomic

Stage of developmentStage of development Developed v. DevelopingDeveloped v. Developing

Gross domestic productGross domestic product Economic infrastructureEconomic infrastructure

Communications, transportation, financial, and Communications, transportation, financial, and distribution systemsdistribution systems

Consumer income and purchasing powerConsumer income and purchasing power Government subsidiesGovernment subsidies

Currency Exchange RatesCurrency Exchange Rates

Environmental Factors- Environmental Factors- Political-Regulatory ClimatePolitical-Regulatory Climate

ProtectionismProtectionism Why?Why? MethodsMethods

TariffsTariffs QuotasQuotas

Reducing ProtectionismReducing Protectionism General Agreement on Tariffs & Trade (1948)General Agreement on Tariffs & Trade (1948) World Trade Organization (1995)World Trade Organization (1995)

Chicken WarChicken War Trade blocs and International OrganizationsTrade blocs and International Organizations

Trade BlocsTrade Blocs

NAFTANAFTA 19941994 Three membersThree members PurposePurpose

CAFTACAFTA 20052005 EffectsEffects

Union of South American NationsUnion of South American Nations Mercosur + Andean Community Mercosur + Andean Community

ASEANASEAN

Trade BlocsTrade Blocs

European UnionEuropean Union 27 members27 members 500 million people500 million people $2 trillion $2 trillion

investmentinvestment EffectsEffects

International OrganizationsInternational Organizations

World BankWorld Bank Loans to developing Loans to developing

countriescountries International International

Monetary FundMonetary Fund Emergency loansEmergency loans

Group of 20 (G-20)Group of 20 (G-20) 20 largest 20 largest

economieseconomies

Source: http://www.topnews.in/

Source: http://www.topnews.in/

Environmental Factors- Environmental Factors- Political-Regulatory ClimatePolitical-Regulatory Climate

Natural ResourcesNatural Resources Oil-producing countriesOil-producing countries

Saudi ArabiaSaudi Arabia JapanJapan AfricaAfrica

Global Market-Entry Global Market-Entry StrategiesStrategies

Four strategiesFour strategies ExportingExporting LicensingLicensing Joint ventureJoint venture Direct investmentDirect investment

ExportingExporting

Indirect exportingIndirect exporting Use an intermediaryUse an intermediary Least profitLeast profit

Direct exportingDirect exporting Sell directly to foreign countrySell directly to foreign country

60 percent of U.S. firms using this 60 percent of U.S. firms using this strategy have less than 100 employeesstrategy have less than 100 employees

LicensingLicensing

AdvantagesAdvantages DisadvantagesDisadvantages Three typesThree types

Contract manufacturingContract manufacturing Contract assemblyContract assembly FranchisingFranchising

Joint VentureJoint Venture

Two companies (one foreign, one Two companies (one foreign, one local) go together to enter marketlocal) go together to enter market

AdvantagesAdvantages DisadvantagesDisadvantages

Direct InvestmentDirect Investment

Biggest commitmentBiggest commitment AdvantagesAdvantages DisadvantagesDisadvantages

Porter’s Competitive Porter’s Competitive Advantage of NationsAdvantage of Nations

Factor conditionsFactor conditions Demand conditionsDemand conditions Related and supporting industriesRelated and supporting industries Company strategy, structure, and rivalryCompany strategy, structure, and rivalry

Economic Espionage ActEconomic Espionage Act

Global Marketing MixGlobal Marketing Mix

ProductsProducts Product inventionProduct invention Product adaptationProduct adaptation

PromotionPromotion LanguageLanguage Source: http://www.cbsnews.com

Global Marketing MixGlobal Marketing Mix

PlacePlace ReebokReebok CokeCoke

PricingPricing Exchange ratesExchange rates DumpingDumping CountertradeCountertrade

BarteringBarteringSource: http://www.worldchanging.com