Transcript Chapter 7
Chapter 7
Reaching
Global Markets
Objectives
• Understand global marketing strategy
• Analyze forces affecting international
marketing efforts
• Understand important trade agreements
• Identify methods of international market entry
• Examine forms of global organizational
structures
• Examine use of marketing mix internationally
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The Nature of
Global Marketing Strategy
• International Marketing
– Developing and performing marketing
activities across national boundaries.
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Environmental Forces
In Global Markets
Competitive
Sociocultural
Technological
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Economic
Political
Legal &
Regulatory
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Competitive Forces
Internationally
• Attend to competitive forces in
target countries
• Identify the interdependence of
global competitors
• Be mindful of global customer
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The Most
Competitive Countries
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Economic Forces Internationally
• Import tariff – duty on goods bought outside the
country and brought in
• Quota – limit on amount of goods an importing
country will accept
• Embargo – government suspension of trade
• Exchange Controls – government restrictions
on amount of particular currency
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Economic Forces
Internationally cont’d
• Balance of Trade – difference in value
between nation’s imports and exports
• Gross Domestic Product (GDP) –
measure of overall economic standing based on
total output of goods and services
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Comparative
Economic Analysis
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Political, Legal and Regulatory
Forces Internationally
• Legal and regulatory infrastructure as a
direct reflection on the political climate
– CIBERs (Centers for International Business
Education and Research)
– International import barriers
– Differing standard of ethics (U.S.’s Foreign
Corrupt Practices Act)
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Sociocultural Forces
Internationally
• Issues – predominant cultural focus
of marketing within global market
– Language
– Symbols
– Social norms, values, perceptions
– Negotiations and decision-making
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Cross-Cultural
Behavioral Differences
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Technological
Forces Internationally
• Advances in technology have advanced
international marketing
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Global Ethical and Social
Responsibility Issues
• Dumping – selling products in domestic
markets at higher prices than in foreign markets
• Cultural relativism – defining business
practices as right or wrong based on differing
moralities within particular cultures
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Least And
Most Corrupt
Countries
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Regional Trade Alliances,
Markets, And Agreements
• North American Free Trade Agreement
(NAFTA) – 1994
• CAFTA-DR – 2005
• European Union (EU) – 1993
• Common Market of the Southern Cone
(MERCOSUR) – 1991
• Asia-Pacific Economic Cooperation
(APEC) – 1989
• World Trade Organization (WTO) – 1995
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Stages Of
International Entry Modes
1) No regular export activities
2) Export via independent representatives
or agents
3) Establish one/more sales subsidiaries
internationally
4) Establish international production or
manufacturing facilities
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Involvement In
Global Marketing
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Importing and Exporting
• Importing – the purchase of products
from a foreign source
• Exporting – the sale of products to
foreign markets
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Trading Company
A company that links buyers and sellers in
different countries.
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Licensing and Franchising
• Licensing – an alternative to direct investment
requiring a license to pay commissions on sales
or supplies used in manufacturing
• Franchising – a form of licensing in which a
franchiser grants a franchisee the right to
market its product in accordance with the
franchiser’s standards.
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International FranchisingBenefits To Franchiser
Does not have to put up large capital
investment
Revenue stream is fairly consistent
Retains control of name and increases
global penetration
Agreements ensure standard of behavior
from franchisees
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Contract Manufacturing
The practice of hiring a foreign firm to
produce a designated volume of the
domestic firm’s product or a component
of it to specification; the final product
carries the domestic firm’s name.
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Specific Forms of
Contract Manufacturing
• Outsourcing
• Offshoring
• Offshore outsourcing
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Joint Ventures
• Joint Venture – partnership between
domestic and foreign firms
• Strategic Alliances – partnerships
formed to create competitive advantage
on a worldwide basis
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Direct Ownership
Direct ownership – a company owns
subsidiaries or other facilities overseas
Multinational enterprise – firm has
operations in many countries
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Ten Largest
Global Corporations
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Global Organizational Structure
• Organizational Structure – the way in
which a firm divides its operations and
coordinates its activities.
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Organizational Architecture
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Global Organizational
Structures cont’d
• Export Departments
• International Divisions
• Internationally Integrated Structures
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International Marketing Mix
• Customization vs. Globalization
– Customization: customizing marketing
strategy to meet different marketing
mixes
– Globalization: development of marketing
strategies that treat the world markets as
a single entity
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Marketing Mix Issues –
Product Element
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Marketing Mix Issues –
Distribution Element
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Marketing Mix Issues –
Promotion Element
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Marketing Mix Issues –
Pricing Element
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Business markets
allow for
customized
global marketing
solutions
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