INTERNATIONAL MARKETINGLBSIM, New Delhi

**

MANAGEMENT CHALLENGES OF 21ST CENTURY No institution whether a business , a university , or hospital can hope to survive let alone to succeed unless it measures up to the standards setup by leaders in its field any place in the world. ---- Peter F Drucker

**

INTERNATIONAL TRADE It refers to performance of trade and investment activities by firms across national borders .Most important thing is crossing the border.Firms involve in organising , sourcing, manufacturing, marketing, and other value addition in business on international level. They seek foreign customers , engage in collaborative relationship .Firms and nations exchange many physical and intellectual assets . **

GLOBALISATION OF MARKETS On going economic integration and growing interdependency.Internationalisation means tendency of firms to go for systematically increase the international dimension.Globalisation means compression of time and space.It leads to substantial increase in volume and variety of goods ,services, capital flows. Also it leads to rapid diffusion of products , technology, knowledge regardless of origin . **

COS. , GLOBAL REV(BILLIONS), % OF BUSINESS FROM OUTSIDE US**

Walmart$401 24.6%Ford Motor$146.3 51.9 %General Electric $182.5 53.7 %CitiGroup $52.8 74.8 %Hewlett-Packard $118.4 68.2 %Boeing $60.9 38.9 %Intel$37.6 85.4%Coca-Cola $31.977.0%Apple$36.546%Starbucks$10.420.8%

WORLD AT A GLANCE **

WORLD 1980199020002005200920102014GDP (current prices) USD Billions10669221373214845514578436169372689Investment of GDP%24.7224.1122.5722.4821.5922.5822.11Inflation %17.2327.694.553.742.453.672.76Exports USD Billions22954172789212889157451833321916

INDIA AT A GLANCE (MARCH 2014) **

INDIA 2013-14

GDP USD Trillion 1.841GDP USD Trillion ( PPP) 4.793GDP Growth5.6%%GDP Per Capita USD1124 , 3176 (PPP)GDP % Contributors Service 57, Ind 28, Agri 15Inflation9% plusExports( USD Billion)305Imports (USD Billion) 489FDI in India (USD Billion) 2000-2014309FDI by India ( USD Billion) 2000-2014 90

INTERNATIONAL TRADE & ITS IMPACTGrowth in world trade in benefitting consumers.It is mainstay of many emerging countries.Bolstered the GDP growth in such countries.For example, Indian Pharma companies led by Ranbaxy is a live example of international trade.Apollo tyres and CEAT were primarily domestic co. till they set up plants in Sri Lanka & Africa.World exports have grown by 100 times in last half century.

**

WHY DO FIRMS PURSUE INTERNATIONALIZATION STRATEGIES ?Seek opportunities for growthEarn higher margins & profitsGain new ideas about products & servicesBetter serve key customers Capacity utilisation Gain access to lower cost or better value factors of productionGrow in competitionRisk mitigationBetter relationship abroad**

IMPORTANCE OF INTERNATIONAL MKTGCompetitive edgeWorldwide integration of economies & Continued lowering of barriersTechnology edge and infrastructural development.Improvement in logisticsDevelopment of new goods/servicesMajor advances in communication, e commerceCompanies are highly linked, interdependentCapital markets are regulated but becoming globalExcess capacity exists in wide no. of countriesDemand is shifting in new economies Rapid growth in world trade Experience transfers and benchmarking.

**

GLOBAL PERSPECTIVE Global commerce thrives during peace time.In a way global trade enhances global peace.All the activities of development, production , marketing requires millions of people & their coordinated efforts.All the interaction brings in the mutual gains , business relationship, personal relationship & mutual understanding.

**

INTERNATIONAL MARKETING IM is the performance of business activities designed to plan , price , promote & direct the flow of a companys goods and services to consumers or users in more than one nation for a profit.**

INTERNATIONAL MARKETING It is defined as process of focusing firms resources on international marketing opportunities whether while competing within the domestic market against international companies or even when the firm goes beyond national frontiers to market goods and services . **

INTERNATIONAL MARKETING IM is the performance of business activities that direct the flow of goods and services to consumers and user in more than one countries.

It offers an opportunity to a firm to prepare itself to meet the challenges of catering to different needs , wants , behavioral patterns and perceptions of the consumers and users in various countries , only when it markets the products under its own brand umbrella.**

NATURE OF INTERNATIONAL MARKETINGThings never go in a planned way in IMPowerful economic ,technological , industrial, political , demographical factors affect IMGlobal terrorism, armed conflict do change the scenario.Recessionary trends change the face of IM drastically.

**

INTERNATIONAL MARKETING International firm not only has to satisfy its corporate objectives but it also has to bring about customer satisfaction through coordinated efforts. International marketing is simply an attitude of mind , the approach of a company with a truly global outlook, seeking its profits impartially around the world , home market included , on a planned and systematic basis.

**

INTERNATIONAL MARKETING When a company decides to go international , it must Go beyond the comfort zone of known marketGM, Mitsubishi , Microsoft, Exxon, Sony have done it.They should be ready to face the uncertain scenario .

**

FACTORS AFFECTING GLOBAL BUSINESS The rapid growth of WTO & regional trade organizations like NAFTA & EU.Free market system acceptance in BRIC countries, Latin America, East Asian countries, & Eastern Europe including CIS countries.Impact of internetMandate to properly manage the resources and global environment.

**

STAGES OF IM INVOLVEMENT Domestic Company to a Global Company No Direct Foreign Marketing Infrequent Foreign Marketing Regular Foreign MarketingInternational MarketingGlobal Marketing

**

Stages of International Marketing InvolvementIn general, firms go through five different phases in going international:

FACTORS INFLUENCING INT. MARKETER**

The International Marketing Task73. EconomyEnvironmentaluncontrollablescountry market AEnvironmentaluncontrollablescountrymarket BEnvironmentaluncontrollablescountrymarket C1. Competition1. Competition2. TechnologyPriceProductPromotionPlace orDistribution6. Geography andInfrastructure Foreign Environment(Uncontrollables)7. Structure ofDistribution3. Economy5. Political-LegalDomestic environment(Uncontrollables)(Controllables)2 .Technology4. Culture5. Political-Legal4. CultureTarget Market

IM VS DOMESTIC MARKETING **

INTERNATIONAL MKTG & GLOBAL MKTGInternationalization may thought as 1) Process 2) An end result 3) A way of ThinkingA company becomes more involved and committed to serve markets outside home country.A multinational company treats each foreign market as separate and distinct ,developing differentiated products and marketing specifically for each of the markets.The global companies operate as if entire world , or a major region of the world , were a single entity .Such companies would sell the same product(s) in the same way everywhere. **

IS A COMPANY READY TO ENTER FOREIGN MKT?Competitive capabilities in the domestic marketsMotivation for going internationalCommitment for owners & top managementSkills, knowledge and resourcesExperience and training

**

MAJOR OBSTACLES SRC : Self reference criterion : It is unconscious reference to ones own cultural values, experiences, knowledge as the basis for decisions.Ethnocentrism is the notion that ones own culture or company knows best how to do things.

**

STEPS TO CHECK SRC & ETHNOCENTRICISM Define the business problem or a goal in home country cultural traits , habits or normsDefine the business problem or goal in foreign country cultural traits , habits or norms thru consultation with natives of target country . Make no value judgments.Isolate SRC influence in the problem & examine it carefully to see how it complicates the problems.Redefine the problem without the SRC influence and solve for the optimum business goal situation.**

DEVELOPING GLOBAL AWARENESS Tolerance towards cultural differenceKnowledge of culture, history, world market potential,Knowledge of global economic, social and political trends

**

EPRG FRAMEWORK Ethnocentric ApproachPolycentric ApproachRegiocentric Approach Geocentric Approach

**

Strategic Orientation: EPRG FrameworkDomestic MarketingExtensionMulti-DomesticMarketingGlobal Marketing(Ethnocentric)(Polycentric)(Regio/Geocentric)

Generally, four distinctive approaches dominate strategic thinking ininternational marketing:Strategic Orientation: EPRG FrameworkOpposite of ethnocentrism Management of these multinational firms place importanceon international operations as a source for profitsManagement believes that each country is unique andallows each to develop own marketing strategies locallyHome country marketing practices will succeed elsewherewithout adaptation; however, international marketing isviewed as secondary to domestic operations

Generally, four distinctive approaches dominate strategic thinking ininternational marketing:Strategic Orientation: EPRG FrameworkRegiocentric and Geocentric are synonymous with a GlobalMarketing Orientation where a uniform, standardizedmarketing strategy is used for several countries, countries ina region, or the entire worldSees the world as one market and develops a standardizedmarketing strategy for the entire world

INTERNATIONAL MKTG & GLOBAL MKTGInternationalization may thought as 1) Process 2) An end result 3) A way of ThinkingA company becomes more involved and committed to serve markets outside home country.A multinational company treats each foreign market as separate and distinct ,developing differentiated products and marketing specifically for each of the markets.The global companies operate as if entire world , or a major region of the world , were a single entity .Such companies would sell the same product(s) in the same way everywhere. **

LIMITATIONS Three factors limit to general applicability of this approach.Very significant differences in consumer demands and in marketing requirements exist country to country.As income rise , many consumers tend to become less price sensitive and willing to pay more to get products and services.Thirdly , a move toward more flexible production systems in some industries has lowered (though failed to eliminate) the cost advantage of very large scale production.**

SELECTED US COMPANIES & THEIR INT TRADE**

CompanyGlobal Revenues ($Bilions)% Revenue from Outside US Wal-Mart40124 %Ford14651.9GE18253.7Citi group5274.8HP11868.2Boeing60.938.9Intel37.685.4Coca Cola3177.1Apple8.340.7Starbucks10.420.8

JOHN DEERE ( US) VS. HYUNDAI(S KOREA)**

TOP 10 COUNTRIES TRADE WITH US($ BILLION) **

CountryTotal tradeExportsImportsBalance Canada429204225-19Mexico305129176-47Japan1485197-46China36669297-228Germany1144371-28UK934548-3South Korea682939-10Taiwan461828-10Dutch483216+16Italy341024-14

In addition to U.S. economic assistance, a move toward international cooperation among trading nations was manifest in the negotiation (19861994) of the General Agreement on Tariffs and Trade (GATT). International trade had ground to a halt following World War I when nations followed the example set by the U.S. passage of the Smoot-Hawley Act (1930), which raised average U.S. tariffs on more than 20,000 imported goods to levels in excess of 60 percent. In retaliation, 60 countries erected high tariff walls, and international trade stalled, along with most economies. A major worldwide recession catapulted the worlds economies into the Great Depression when trade all but dried up**

FOREIGN ACQUISITIONS OF US COMPANIES**

INDIAN COMPANIES ACQUIRING FOREIGN FIRMS **

BuyerTargetSectorAmount ($ mn)Stake %VideoconDaewoo elecCon Durable696NATata TeaEnergybeverages67030Dr ReddyBetapharmPharma572100SuzlonHunsenEnergy565100VSNLTeleglobeTelecom239100Tata CoffeeEight O ClockBeverages220100Tata ChemBrunner MondChemicals11336.5ApeejayPremier foodsBevereges138NATata SteelMilleniumSteel131100AppolloDunlop Tyres66100

DEVELOPING GLOBAL AWARENESS Opportunities in global business abound for those who are prepared to confront myriad obstacles with optimism and a willingness to continue learning new ways.The successful businessperson in the 21st century will have global awareness and a frame of reference that goes beyond a region or even a country and encompasses the world. To be globally aware is to have (1) tolerance of cultural differences and (2) knowledge of cultures, history, world market potential, and global economic, social, and political trends**

GLOBAL MARKETING At global marketing , the profound change is seen in the orientation of the company towards the markets and its planning.Company treats entire globe as its one market. Market segmentation is no longer restricted to its own countrys boundaryEntire operation orgn structure, source of finance, production, marketing takes global perspective.

**

MAJOR CONCERNS OF MARKETING MANAGERS Developing new productsDeveloping relationship with suppliers, distributors, even customersFewer but stronger global competitorsEnhanced price competitionGreater regional integration and government regulationsDeveloping a marketing culture.

**

BALANCE OF PAYMENTS (1)A nations balance-of-payments statement presents an overall view of its international economic position and is an important economic measure used by treasuries, central banks, and other government agencies whose responsibility is to maintain external and internal economic stability. A balance of payments represents the difference between receipts from foreign countries on one side and payments to them on the other. On the plus side ,balance of payments are merchandise export sales; money spent by foreign tourists; payments to the India for insurance, transportation, and similar services; payments of dividends and interest on investments abroad; return on capital invested abroad; new foreign investments in India and foreign government payments to the India .**

On the minus side are the costs of goods imported, spending by Indian tourists overseas, new overseas investments, and the cost of foreign military and economic aid. A deficit results when international payments are greater than receipts. It can be reduced or eliminated by increasing a countrys international receipts (i.e., gain more exports to other countries or more tourists from other countries) and/or reducing expenditures in other countries.**

A balance-of-payments statement includes three accounts: the current account , a record of all merchandise exports, imports, and services plus unilateral transfers of funds; The capital account , a record of direct investment, portfolio investment, and short-term capital movements to and from countries; andthe official reserves account , a record of exports and imports of gold, increases or decreases in foreign exchange, and increases or decreases in liabilities to foreign central banks. Of the three, the current account is of primary interest to international business.**

DEGREE OF ADAPTATION Business customs can be grouped into imperatives , customs that must be recognized and accommodated; electives , customs to which adaptation is helpful but not necessary; and exclusives , customs in which an outsider must not participate. An international marketer mustappreciate the nuances of cultural imperatives, cultural electives, and cultural exclusives**

IMPERATIVESBEIJING, CHINA: GermanChancellor Angela Merkel and Chinese Prime Minister Wen Jiabao toast after the EUChina Business Summit at the Great Hall of the People in Beijing.The summit was boosted by the settlement of a trade row that had left 80 million Chinese-made garments piled up in European seaports, unable to be delivered to shops under a quota pact agreed to at the time. Drinking half a bottle is a cultural elective, but taking a sip is more of an imperative in this case.**

**

THE FOUR RISKS IN INTERNATIONALIZATION **

*