International Marketing

Perspectives & Paradigms

Borders Have Become Meaningless

& there’s no place to hide…Borders Have Become Meaningless

& there’s no place to hide…

Trans-National* Cross-Cultural

High Speed/ Low Cost

Transportation & Communication

The entire globe is now tied

together as a single

community operating 24/7/365

After more than a century of electric technology, we have extended our central nervous system in a global embrace, abolishing both space & time”

-Marshall McLuhan, Understanding Media- 1955

The Global Village DriverThe Global Village Driver

The further & faster people are able to

travel & communicate… the greater the

amount of interaction & influence

Cable TelevisionPay Television ServicesDirect Broadcast Satellite [DBS]MMDS and LMDSDigital TelevisionStreaming MediaDigital RadioMultimedia Computers and Video GamesThe Internet and World Wide WebInternet CommerceOffice TechnologiesVirtual RealityHome VideoDigital AudioDistance LearningLocal and Long Distance TelephonyWireless TelephonyBroadband NetworksResidential Gateways and Home NetworksSatellite Communications

source >> Future Technologies Inc. [www.fti.com]

Digital agecommunication

technologies

Rise of the “Global Village”Rise of the “Global Village”Rise of the “Global Village”Rise of the “Global Village”

…… not just the “shrinking” of time & space

The new electronic media have transcended time & space w/ “virtual mobility”

Time, Mobility & Economic Growth

http://www.flexibility.co.uk/issues/transport/time-mobility.htm

Time, Mobility & Economic Growth

http://www.flexibility.co.uk/issues/transport/time-mobility.htm

Birth of the Global VillageBirth of the Global Village

COMPUTERSHOSTS IN INTERNET (MILLONS)

5.000.000

20.000.000

25.000.000

25

20

15

10

5

01969 JUL.

1989SEP.1991

JUL.1992

OCT.1993

ENER.1995

ABR1996

FEB.1997

NOV.1997

MAR.1994

JUL.1995

SEP.1996

JUL.1997

130.0004

Growth Global Data Exchange

97 98 99 0 1 2 3 4 5 6 7 8

4

5

6

Total telephone traffic

International telephone traffic

Data traffic

Tbit/s

Source: Arthur D. Little, 1999

0

25

50

75

100

’72 ’78 ’84 ’90 ’96 ’02 ’08

U.S. GDP

%%

IndustrialIndustrialEconomyEconomy

The eEconomy projected to dominate GDP of United States w/in 3 years

New New “E”conomy“E”conomy

The Global Village

The Global Economy

DismalScientist

One Big World Market: One Big World Market: The Global EconomyThe Global Economy

One Big World Market: One Big World Market: The Global EconomyThe Global Economy

…… the increasing tendency of economies around the world to interact w/ one another as one market instead of many national markets

Along w/ collapse of Time & Space …the collapse of Communism

Along w/ collapse of Time & Space …the collapse of Communism

the GLOBALIZATION OF MARKETS AND ECONOMIES accelerated by acceptance of free enterprise/market system….

Other Driversof Evolution of Global Economy

Other Driversof Evolution of Global Economy

• Gov’t Liberalization / Deregulation

• Explosion in International Trade Agreements / Regional Economic Intergration

Economic Integration thru 130+ Trade Agreements Ranging From:

Economic Integration thru 130+ Trade Agreements Ranging From:

Free Free Trade Trade AreasAreas

Economic UnionsEconomic Unions

Customs UnionsCustoms Unions

Common MarketsCommon Markets

Total Political-Total Political-Economic IntegrationEconomic Integration

$ /Labor Mobility /Labor Mobility

Common External Common External Trade PolicyTrade Policy

US Trade Agreements

World Market Connections

INTERNATIONAL LINKAGES

Trade Flows

Resource Flows

Goods & Services

Capital & Labor

Information &Technology

Money

One Big World Market: One Big World Market: The Global EconomyThe Global Economy

One Big World Market: One Big World Market: The Global EconomyThe Global Economy

The weekly volume of international trade in currencies

exceeds the annual value of trade in goods & services.

The weekly volume of international trade in currencies

exceeds the annual value of trade in goods & services.

• Daily international financial flows now exceed $1.2 trillion.

• From 1990 to 2000, world GDP grew ~ 30%– Total world exports of merchandise &

services increased by 80 %.

• This year- World exports of goods & services predicted to reach $11.4 trillion (24% of world GDP).

One Big World Market: One Big World Market: The Global EconomyThe Global Economy

One Big World Market: One Big World Market: The Global EconomyThe Global Economy

World Bank

Principal U.S. Exports & ImportsPrincipal U.S. Exports & Imports

THE UNITED STATES & WORLD TRADE

Chemicals $49.8

Semiconductors 42.3

Consumer Durables 40.1

Computers 38.6

Generating Equipment 27.6

Aircraft 26.7

Telecommunications 22.2

Automobiles 20.5

Grains 14.4

Nonferrous Metals 12.2

Chemicals $49.8

Semiconductors 42.3

Consumer Durables 40.1

Computers 38.6

Generating Equipment 27.6

Aircraft 26.7

Telecommunications 22.2

Automobiles 20.5

Grains 14.4

Nonferrous Metals 12.2

Automobiles $114.1

Petroleum 103.6

Computers 75.3

Household Appliances 66.4

Clothing 64.3

Chemicals 33.1

Consumer Electronics 32.8

Semiconductors 26.0

Telecommunications 23.2

Iron and Steel 17.7

Automobiles $114.1

Petroleum 103.6

Computers 75.3

Household Appliances 66.4

Clothing 64.3

Chemicals 33.1

Consumer Electronics 32.8

Semiconductors 26.0

Telecommunications 23.2

Iron and Steel 17.7

Exports Amount Imports Amount

Exports to:

Imports from:

Industrial Countries $38BDeveloping Countries 302Total $683

Industrial Countries $38BDeveloping Countries 302Total $683

Industrial Countries $594BDeveloping Countries 573Total $1167

Industrial Countries $594BDeveloping Countries 573Total $1167

U.S. Exports & Imports of GoodsU.S. Exports & Imports of Goods

THE UNITED STATES & WORLD TRADE

Industrial Countries $381Developing Countries 301Total $683

Industrial Countries $594Developing Countries 573Total $1167

U.S. Exports & Imports of Goods U.S. Exports & Imports of Goods

THE UNITED STATES & WORLD TRADE

Imports Exceed Exports By

$484 Billion (2002)That’s over 9,680,000 Jobs at $50,000 Each!

Imports Exceeded Exports by$346 Billion in 1999

Imports Exceeded Exports by$346 Billion in 1999

ChinaChina

• In 2003, China accounted for more than 60% of growth in world trade

• Every week, more than $1 billion in FDI flows into China

• ~15%b annual growth in foreign trade since 1978

• 2003 - world’s 4th largest exporter: $438b after US, Germany and Japan

• 2003 - world’s 6th largest importer: $412b

The Global Village

The Global Economy

The Global Corporation

Evolution of MNC’s & Management StrategiesEvolution of MNC’s & Management Strategies

• Multinational corporations (MNCs)

Companies that maintain significant operations in two or more countries simultaneously but are based in one home country

UN databases

ACHIEVING GLOBAL SYNERGIES

LEVERAGING ASSETS

AND POSITION

Scale Efficiencies

Coordination and Integration

Transfer of Ideas, Experience and Know-how

Scale Efficiencies

Coordination and Integration

Transfer of Ideas, Experience and Know-how

Global Strategy

STRATEGIC

FLEXIBILITY

Production Shifting

Multiple Sourcing

Transfer Pricing

Managing Cash Flow

Production Shifting

Multiple Sourcing

Transfer Pricing

Managing Cash Flow

Multinational CorporationsMultinational Corporations

•In 1970, of the 7,000 multinationals identified by the United Nations, more than 1/2 were from -- the United States & Britain.

•By 1995, less than half of the 36,000 multinationals identified by the United Nations came from four countries: the United States, Japan, Germany, and Switzerland.

Multinational Corporations

•At present, there are 65,000 MNCs* w/ 850,000 affiliates in foreign countries

•MNCs’ total sales amount to almost $19 trillion.

*The U.S. government defines a multinational corporations (MNC) …

as a company that owns or controls 10% .. of at least one foreign business enterprise.

Multinational Corporations

•2/3s of world trade in goods and services is controlled by multinational companies.•Of the 100 largest economies in the world, 51 are corporations.•The sovereignty of nations will perhaps continue to weaken due to multinationals & increasing integration of world economies.

Exporter Exporter

Multi-NationalMulti-National

Trans-NationalTrans-National

GlobalGlobal

Evolution of the International FirmEvolution of the International Firm

• Multinational corporations (MNCs) Companies that maintain significant operations in

two or more countries simultaneously but are based in one home country

• Transnational (TNC) corporation A company that maintains significant operations in

more than one country simultaneously and decentralizes decision making in each operation to the local country

• Global corporations… take an integrated approach across countries and regions and manage for worldwide business leverage & competitive advantage …

The Global CorporationThe Global Corporation

Global Vision Global Leverage Global Sourcing Global Competitive Moves Global Partnerships

The Global Corporation- A Global Mindset

The Global Corporation- A Global Mindset

• Global Identity• Single Corporate

Language• Global Ethical

Standards• Multi-Country Careers

• Cross-Cultural Training• Cross National

employment .. especially management at all levels

The Global Village

The Global Economy

The Global Corporation

Global Marketing Strategy

Global Marketing Strategy DriversGlobal Marketing Strategy Drivers

• Common customer needs• Global customers• Global Distribution &

Communication channels

Core Concepts & Values

CountryA

CountryB

CountryC

CountryD

Develop CoreBusiness Strategy

Translate/Executestrategy in selected countries..

Integrate &leverage global assets & alliances

Global Marketing EvolutionGlobal Marketing Evolution

Requisite Global Marketer Expertise

Cross-BorderTransactionsKnowledge

Country/ MarketKnowledge

Cross-CulturalKnowledge

COUNTRY / MARKET KNOWLEDGECOUNTRY / MARKET KNOWLEDGE

Research & Intelligence• Global Marketing Opportunity &

Target Market Assessment• Market Entry Planning & Strategy

Risk

Return/Control

ExportLicensing

ContractManu-facturing

JointVenture

DirectInvest-ment

CROSS-BORDERTRANSACTIONS NOWLEDGE

CROSS-BORDERTRANSACTIONS NOWLEDGE

• Standards, Regulations & Product Liability

• Currency Risk/ Pricing/ Getting Paid

Risk to Exporter

Least Risk Highest Risk

Confirmed Irrevocable Bank BankCash in Irrevocable Letter of Collection Collection OpenAdvance Letter of Credit Credit Sight Draft Time Draft Account

Cost to Buyer

Highest Cost Least Cost

CROSS CULTURAL KNOWLEDGECROSS CULTURAL KNOWLEDGE

Cross-Cultural

NegotiationSkills

SocialResponsibility

&Government

Relations

Cross-CulturalUnderstanding,

Sensitivity

LanguageProficiency

The Global Economy

The Global Corporation

Global Marketing Strategy

The Global Village

Globalization: + & -Cultural Impacts

NEXT WEEK: Globalization:

As a Business & Marketing Strategy

Global Pricing & Distribution

Considerations

International Marketing

Communication

Political * Legal & Regulatory

Considerations Regional Economic

Integration

Culture * Customs & Business Practices