Chapter 19

The Global Marketplace

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Global Market Place

• Globalization (Refers to the increasing unification of the world's economic order through reduction of such barriers to international trade as tariffs, export fees, and import quotas)

• Global firm (A firm that is operating in several countries, gains R&D, production, marketing and financial advantages in its cost and reputation that are not available to purely domestic competitors)

• Tariff (A tax levied by a government against certain imported, designed to raise revenue or protect domestic firms)

• Quota (A limit on the amount of goods that an importing country will accept in certain product categories)

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International countertrade

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Free Trade Areas

• Two or more countries agree to abolish all internal barriers to trade amongst themselves

• Countries continue independent trade policies with countries outside agreement

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Trade Agreements• General Agreement on Tariffs and Trade (GATT)• Australia-US Free Trade Agreement (AUSFTA),• Australia-Thailand Free Trade Agreement • World Trade Organisation (WTO)• Australia-NZ Closer Economic Relations Trade

Agreement (ANZCERTA)• North American Free Trade Area (NAFTA)• European Union (EU) • Association of South East Asian Nations (ASEAN)• Asia Pacific Economic Cooperation (APEC)• International Monetary Fund (IMF)

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How to enter the market

• Exporting (Entering foreign market by selling goods produced in the company’s home country, often with little modification)

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Market Entry (Cont.)

• Manufacturing overseas – Joint ventures (Entering market by joiningWith foreign companies to produce or market a product)

– Licensing/Franchising

– Contract manufacturing (A joint venture in whicha company contracts with manufacturers in a foreign marketto produce or provide its service)

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Market Entry (Cont.)

• Manufacturing overseas – Management contracting (A joint venturein which the domestic firm supplies the management Know-how to a foreign company that supplies the capital; the domestic firm exports management services rather than product)

– Joint ownership (A joint venture in which a company joins investors in a foreign market to create alocal business in which the company shares joint ownershipand control)

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Market Entry (Cont.)

– FDI ( Entering a foreign market by developingforeign-based assembly or manufacturing facilities)

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Market Entry (Cont.)

– Acquisition– Strategic alliances

• All subject to government requirements

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Standardized global Marketing

• An international marketing strategy for using basically the same marketing strategy and mix in all the company’s international markets. – Encouraged by:

• Economies - scale, manufacturing, marketing, research and development• Convergence of tastes• Absence of competition

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Adapted global marketing• An international marketing strategy for

adjusting the marketing strategy and mix elements to each international target market, bearing more costs but hoping for a larger market share and return.

Encouraged by

• Variation in consumer needs and tastes• Differing conditions for product use• Variations in ability to afford item offered • Influence of government• Legal requirements• Lack of adequate support systems

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